<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE , 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
VIASYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 36720 43-1777252
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
DAVID M. SINDELAR
CHIEF FINANCIAL OFFICER
101 SOUTH HANLEY ROAD, SUITE 400
ST. LOUIS, MISSOURI 63105
(314) 719-1800
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
JEREMY W. DICKENS
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(A) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
9 3/4% Senior Subordinated Notes due 2007......... $400,000,000 $121,212.12
======================================================================================================
</TABLE>
(a) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
VIASYSTEMS, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE LOCATION IN
THE PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-1
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
-------------------------------- ----------------------
<C> <S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus............................ Cover Page of Registration Statement; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus................... Inside Front and Outside Back Cover Pages of
Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges.... Summary; Summary -- The Company; Risk Factors;
Selected Financial Data
4. Use of Proceeds......................... Use of Proceeds
5. Determination of Offering Price......... Not Applicable
6. Dilution................................ Not Applicable
7. Selling Security Holders................ Not Applicable
8. Plan of Distribution.................... Front Cover Page of Prospectus; Summary; The Exchange
Offer and Plan of Distribution
9. Description of Securities to be
Registered............................ Description of the New Notes
10. Interests of Named Experts and Counsel.. Not Applicable
11. Information with Respect to the
Registrant............................ Cover Page of Registration Statement; Certain
Definitions, Industry Data and Financial
Information; Exchange Rates; Summary; Risk Factors;
Capitalization; Selected Financial Data;
Management's Discussion and Analysis of Results of
Operations and Financial Condition; Business;
Management; Security Ownership of Certain
Beneficial Owners; Certain Transactions;
Description of Senior Credit Facilities; The
Exchange Offer; Description of the New Notes; Legal
Matters and Experts
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................... Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE , 1997
<TABLE>
<S> <C> <C>
OFFER TO EXCHANGE ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
FOR
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007 VIASYSTEMS, INC.
VIASYSTEMS, INC. [LOGO]
</TABLE>
Viasystems, Inc., a Delaware corporation (the "Company") hereby offers, upon the
terms and subject to the conditions set forth in this Prospectus and the letter
of transmittal accompanying this Prospectus (the "Letter of Transmittal," which
together constitute the "Exchange Offer"), to exchange $1,000 principal amount
of 9 3/4% Senior Subordinated Notes due 2007 (the "New Notes") issued by the
Company for each $1,000 principal amount of 9 3/4% Senior Subordinated Notes due
2007 (the "Old Notes") issued by the Company, of which an aggregate principal
amount of $400.0 million is outstanding. The form and terms of the New Notes are
identical to the form and terms of the Old Notes except that the New Notes have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and will not bear any legends restricting their transfer. The New Notes
will evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the benefits of, the Indenture (as defined) governing the Old Notes.
The Exchange Offer is being made in order to satisfy certain contractual
obligations of the Company. See "The Exchange Offer" and "Description of New
Notes." The New Notes and the Old Notes are sometimes collectively referred to
herein as the "Notes".
- --------------------------------------------------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NEW NOTES.
- --------------------------------------------------------------------------------
INTEREST ON THE NEW NOTES IS PAYABLE SEMI-ANNUALLY ON JUNE 1 AND DECEMBER 1 OF
EACH YEAR, COMMENCING ON DECEMBER 1, 1997. THE NEW NOTES WILL MATURE ON JUNE 1,
2007. EXCEPT AS DESCRIBED BELOW, THE COMPANY MAY NOT REDEEM THE NEW NOTES PRIOR
TO JUNE 1, 2002. ON AND AFTER SUCH DATE, THE COMPANY MAY REDEEM THE NEW NOTES,
IN WHOLE OR IN PART, AT ANY TIME AT THE REDEMPTION PRICES SET FORTH HEREIN,
TOGETHER WITH ACCRUED AND UNPAID INTEREST, IF ANY, TO THE DATE OF REDEMPTION. IN
ADDITION, AT ANY TIME AND FROM TIME TO TIME PRIOR TO JUNE 1, 2000, THE COMPANY
MAY, SUBJECT TO CERTAIN REQUIREMENTS, REDEEM UP TO $140.0 MILLION OF THE
AGGREGATE PRINCIPAL AMOUNT OF THE NEW NOTES WITH THE NET CASH PROCEEDS RECEIVED
FROM ONE OR MORE EQUITY OFFERINGS (AS DEFINED), SO LONG AS A PUBLIC MARKET (AS
DEFINED) EXISTS AT THE TIME OF SUCH REDEMPTION, AT A REDEMPTION PRICE EQUAL TO
109.75% OF THE PRINCIPAL AMOUNT TO BE REDEEMED, TOGETHER WITH ACCRUED AND UNPAID
INTEREST, IF ANY, TO THE DATE OF REDEMPTION, PROVIDED THAT AT LEAST $200.0
MILLION OF THE AGGREGATE PRINCIPAL AMOUNT OF NEW NOTES REMAINS OUTSTANDING
IMMEDIATELY AFTER EACH SUCH REDEMPTION. THE NEW NOTES WILL NOT BE SUBJECT TO ANY
SINKING FUND REQUIREMENTS. UPON THE OCCURRENCE OF A CHANGE OF CONTROL (AS
DEFINED), (I) THE COMPANY WILL HAVE THE OPTION, AT ANY TIME ON OR PRIOR TO JUNE
1, 2002, TO REDEEM THE NEW NOTES, IN WHOLE BUT NOT IN PART, AT A REDEMPTION
PRICE EQUAL TO 100% OF THE PRINCIPAL AMOUNT THEREOF PLUS THE APPLICABLE PREMIUM
(AS DEFINED), TOGETHER WITH ACCRUED AND UNPAID INTEREST, IF ANY, TO THE DATE OF
REDEMPTION, AND (II) IF THE COMPANY DOES NOT SO REDEEM THE NEW NOTES OR IF SUCH
CHANGE OF CONTROL OCCURS AFTER JUNE 1, 2002, THE COMPANY WILL BE REQUIRED TO
MAKE AN OFFER TO REPURCHASE THE NEW NOTES AT A PRICE EQUAL TO 101% OF THE
PRINCIPAL AMOUNT THEREOF, TOGETHER WITH ACCRUED AND UNPAID INTEREST, IF ANY, TO
THE DATE OF REPURCHASE. SEE "DESCRIPTION OF NEW NOTES."
THE NEW NOTES WILL BE UNSECURED AND WILL BE SUBORDINATED TO ALL EXISTING AND
FUTURE SENIOR INDEBTEDNESS (AS DEFINED) OF THE COMPANY. THE NEW NOTES WILL RANK
pari passu with any future Senior Subordinated Indebtedness (as defined) of the
Company and will rank senior to all Subordinated Indebtedness (as defined) of
the Company. The Indenture under which the New Notes will be issued (the
"Indenture") will permit the Company and its Restricted Subsidiaries (as
defined) to incur additional indebtedness, including Senior Indebtedness,
subject to certain limitations. See "Description of New Notes." As of March 31,
1997, on a pro forma basis after giving effect to the 1997 Transactions (as
defined) and the net proceeds from the sale of the Old Notes (the "Original
Offering"), the aggregate principal amount of the Company's outstanding Senior
Indebtedness would have been approximately $432.4 million (excluding unused
commitments) and the Company would have had no Senior Subordinated Indebtedness,
other than the New Notes, and no Subordinated Indebtedness outstanding. See
"Description of New Notes -- Ranking and Subordination." On the same pro forma
basis as of March 31, 1997, the New Notes would have effectively ranked junior
to approximately $627.5 million of accrued liabilities and obligations of the
Company's consolidated subsidiaries, including borrowings under and guarantees
in respect of the Senior Credit Facilities. See "Description of New
Notes -- Ranking and Subordination."
- --------------------------------------------------------------------------------
The Company will accept for exchange any and all Old Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on , 1997,
unless extended (as so extended, such time and date being the "Expiration
Date"). Tenders of Old Notes may be withdrawn at any time prior to the
Expiration Date. The Exchange Offer is subject to certain customary conditions.
See "The Exchange Offer."
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes pursuant to the Exchange Offer, where such Old 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 New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed, for a period of 90 days after the Expiration Date, to make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
No public market existed for the Old Notes before the Exchange Offer. The
Company currently does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system, and no active public market for the New Notes is currently anticipated.
The Company will pay all the expenses incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange pursuant to the Exchange Offer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 4
AVAILABLE INFORMATION
As a result of the filing of its Registration Statement with the Commission
on Form S-1 under the Securities Act, with respect to the New Notes (the
"Registration Statement"), the Company will become subject to the informational
requirements of the Exchange Act, and in accordance therewith file reports and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information may be inspected and copied at
the public reference facilities of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60611, and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained at prescribed rates by writing to the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is hereby made to such exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. Copies of the Registration
Statement and the exhibits thereto are on file with the Commission and may be
examined without charge at the public reference facilities of the Commission
described above. Copies of such materials can also be obtained at prescribed
rates by writing to the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The reports, proxy
statements and other information may also be obtained from the web site that the
Commission maintains at http://www.sec.gov.
The Company is required by the Indenture to furnish the holders of the New
Notes with copies of the annual reports and of the information, documents and
other reports specified in Sections 13 and 15(d) of the Exchange Act, as long as
any New Notes are outstanding.
i
<PAGE> 5
CERTAIN DEFINITIONS, INDUSTRY DATA
AND FINANCIAL INFORMATION
As used in this Prospectus, unless the context requires otherwise, (i)
"Viasystems Group" means Viasystems Group, Inc., which became the Company's
corporate parent in April 1997; (ii) "Circo Craft" means Circo Craft Co. Inc.
and its subsidiary, which Viasystems Group acquired in October 1996 and
contributed to the Company in April 1997; (iii) "Viasystems Technologies" means
Viasystems Technologies Corp. (which acquired substantially all of the assets of
the Interconnection Technologies Unit of the Microelectronics Group of Lucent
Technologies Inc. in December 1996), which Viasystems Group contributed to the
Company in April 1997; (iv) "Forward Group" means Forward Group PLC and its
subsidiaries, which Viasystems Group acquired and contributed to the Company in
April 1997; (v) "Chips" means Interconnection Systems (Holdings) Limited ("ISL")
and its subsidiaries, which were acquired by Chips Holdings, Inc. in April 1997
and acquired by the Company concurrently with the consummation of the Original
Offering; and (vi) the "Company" means Viasystems, Inc., a wholly-owned
subsidiary of Viasystems Group, and the businesses formerly conducted by Circo
Craft, Viasystems Technologies, Forward Group, Chips and any of their
predecessors.
The Company relies on and refers to information it has received from
various industry analysts regarding the markets for its principal products,
printed circuit boards ("PCBs") and backpanel assemblies ("backpanels"). Such
information was available from a consistent source only for the United States
and European PCB markets and the North American and European backpanel markets.
This Prospectus discusses certain financial information of Viasystems
Group, Circo Craft, Viasystems Technologies, Forward Group and Chips on a
combined historical basis. For limitations on the reliance that should be placed
on such information, see "Summary -- Summary Supplemental Historical Combined
and Pro Forma Financial Data." The historical combined financial data has been
derived from the financial data of each of the following entities for the
periods indicated:
<TABLE>
<CAPTION>
FISCAL YEARS FISCAL FIRST QUARTERS
----------------------------------------------------------- --------------------------------------
1994 1995 1996 1996 1997
----------------- ----------------- --------------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Viasystems Group......... -- -- August 28 (inception) -- Three Months Ended
to December 31, 1996 March 31, 1997
Circo Craft.............. December 31, 1994 December 31, 1995 9 months ended Three Months Ended --
September 30, 1996 March 31, 1996
Viasystems Technologies.. December 31, 1994 December 31, 1995 11 months ended Three Months Ended --
November 30, 1996 March 31, 1996
Forward Group............ January 31, 1995 January 31, 1996 January 31, 1997 Three Months Ended Three Months Ended
March 31, 1996 March 31, 1997
Chips.................... March 31, 1995 March 29, 1996 April 4, 1997 Three Months Ended Three Months Ended
March 29, 1996 April 4, 1997
</TABLE>
ii
<PAGE> 6
EXCHANGE RATES
For the convenience of the reader, the Company has, in certain instances in
this Prospectus, translated certain financial data from its Canadian and United
Kingdom businesses into United States dollars ("U.S.$" or "$"). The following
table reflects the exchange rates used to translate Canadian dollar ("C$")
amounts for Circo Craft and British pound sterling ("U.K.L") amounts for Forward
Group and Chips into United States dollar amounts for the dates indicated. The
Company does not represent that the Canadian dollar or British pound sterling
amounts shown in this Prospectus could have been converted into United States
dollars at the quoted exchange rates.
CIRCO CRAFT
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<CAPTION>
December 31, 1994 December 31, 1995 September 30, 1996 March 31, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C>
C$1.40 = U.S.$1.00 C$1.36 = U.S.$1.00 C$1.36 = U.S.$1.00 C$1.36 = U.S.$1.00
</TABLE>
FORWARD GROUP
<TABLE>
<CAPTION>
January 31, 1995 January 31, 1996 January 31, 1997 March 31, 1996 March 31, 1997
-------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
U.K.L .63 = U.S.$1.00 U.K.L .66 = U.S.$1.00 U.K.L .62 = U.S.$1.00 U.K.L .66 = U.S.$1.00 U.K.L .61 = U.S.$1.00
</TABLE>
CHIPS
<TABLE>
<CAPTION>
March 29, 1996 April 4, 1997
March 31, 1995 (quarterly and annual) (quarterly and annual)
-------------------- -------------------- --------------------
<S> <C> <C>
U.K.L .62 = U.S.$1.00 U.K.L .66 = U.S.$1.00 U.K.L .61 = U.S.$1.00
</TABLE>
Source: The Wall Street Journal.
iii
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless the context otherwise requires, references
herein to the New Notes following the consummation of the Exchange Offer assume
that all outstanding Old Notes are tendered and exchanged for New Notes pursuant
to the Exchange Offer.
THE COMPANY
GENERAL
The Company is the second largest manufacturer and marketer of printed
circuit boards ("PCBs"), and one of the largest manufacturers and marketers of
backpanel assemblies ("backpanels"), in the world. PCBs are the basic platforms
used to interconnect microprocessors, integrated circuits and other components
essential to the functioning of virtually all electronic systems, ranging from
sophisticated computers and industrial products to basic household appliances.
Backpanels are used in electronic systems to distribute and ground power, to
connect PCBs, power supplies and other elements, and to relay information into
and out of electronic systems. The Company currently has 16 manufacturing
facilities, strategically located in North America, Europe, and South Africa.
The Company's principal executive offices are located at 101 South Hanley
Road, Suite 400, St. Louis, Missouri 63105 and its telephone number is (314)
719-1800.
OWNERSHIP AND MANAGEMENT
Hicks Must, Tate & Furst, Incorporated ("Hicks Muse") and Mills & Partners,
Inc. ("Mills & Partners") formed Viasystems Group in August 1996 to make
strategic acquisitions of PCB manufacturers and backpanel assemblers and to
integrate those acquisitions into a global enterprise that is the preferred
manufacturer and marketer of complex PCBs and backpanels.
Hicks Muse is a private investment firm with offices in Dallas, New York,
St. Louis and Mexico City that specializes in leveraged acquisitions,
recapitalizations and other principal investing activities.
With respect to the Company, Hicks Muse is combining its financial
expertise with the operating management experience of Mills & Partners.
Organized in 1985 by James N. Mills, Mills & Partners consists of a group of
senior operating executives who manage a portfolio of companies in a variety of
industries. Mills & Partners and Hicks Muse have established an exclusive
relationship to pursue leveraged acquisitions of diversified commercial and
industrial companies that Mills & Partners will manage.
RECENT HISTORY
In October 1996, Viasystems Group completed the acquisition of Circo Craft,
a rigid PCB manufacturer located in Canada, for a cash purchase price of
approximately $129.9 million. In connection with that transaction, Hicks Muse
and certain affiliates invested approximately $68.0 million in the common stock
of Viasystems Group.
In December 1996, Viasystems Technologies, a wholly owned subsidiary of
Viasystems Group, acquired substantially all the assets of the Interconnection
Technologies Unit of the Microelectronics Group (the "Lucent Division") of
Lucent Technologies, a rigid PCB manufacturer and backpanel assembler located in
the United States, for cash consideration of approximately $170.0 million, plus
the issuance of $30.0 million of preferred stock to Lucent Technologies. In
connection with that transaction, Hicks Muse and its affiliates invested
approximately $7.1 million of additional equity in Viasystems Group, consisting
entirely of preferred stock. In addition, simultaneously with the acquisition of
the Lucent Division, Hicks Muse and certain affiliates exchanged approximately
$38.0 million of the Viasystems Group common stock previously issued to them for
$38.0 million of
1
<PAGE> 8
Viasystems Group's preferred stock. The combination of Circo Craft and the
former Lucent Division created one of the largest independent manufacturers of
PCBs and backpanels in North America.
In April 1997, an affiliate of Hicks Muse acquired Forward Group, a rigid
PCB manufacturer located in the United Kingdom, for a purchase price of
approximately $236.3 million (including the issuance of loan notes in the
principal amount of approximately $23.9 million to certain former shareholders
of the Forward Group (the "Forward Group Loan Notes")), which was funded with
$216.0 million of borrowings under a tender facility (the "Tender Facility") and
the proceeds from the issuance to Hicks Muse of $40.0 million of the preferred
stock of the acquiring entity. Subsequently, Viasystems Group acquired Forward
Group for cost, consisting of the assumption of the Tender Facility and the
Forward Group Loan Notes. In consideration for Hicks Muse's transfer of Forward
Group to Viasystems Group, Viasystems Group issued to Hicks Muse and certain of
its affiliates $40.0 million of Viasystems Group's preferred stock. Concurrently
with that transaction, Viasystems Group organized the Company as its direct
subsidiary and contributed to it the capital stock of Circo Craft, Viasystems
Technologies and Forward Group. The Company applied the proceeds from a
subordinated credit facility (the "Subordinated Credit Facility") to repay the
Tender Facility and to repay $20.0 million of existing indebtedness.
In April 1997, an affiliate of Hicks Muse ("Chips Holdings") acquired
Interconnection Systems (Holdings) Limited, a rigid PCB manufacturer located in
the United Kingdom (the "Chips Acquisition"). In connection with that
transaction, Hicks Muse and its affiliates invested $140.0 million in the equity
capital of Chips Holdings. Concurrently with the consummation of the Original
Offering, Viasystems Group acquired Chips Holdings (the "Chips Merger") in
consideration for the issuance to Hicks Muse and certain affiliates of
Viasystems Group common stock valued at $140.0 million. In connection with the
Chips Merger, Viasystems Group assumed approximately $437.5 million of loan
notes incurred to finance the Chips Acquisition (the "Chips Loan Notes" and,
together with the Forward Group Loan Notes, the "Loan Notes"). Concurrently with
the consummation of the Chips Merger, Hicks Muse and its affiliates exchanged
the $85.0 million liquidation preference of Viasystem Group's preferred stock
owned by them for an equivalent amount of Viasystem Group's common stock. See
"Security Ownership of Certain Beneficial Owners" and "Certain Transactions."
Following the Chips Merger, the Chips operating subsidiaries became
indirect wholly-owned subsidiaries of the Company. To facilitate the Chips
Merger, the Company negotiated an amendment to its existing credit agreement
(the "Senior Credit Facilities"). See "Capitalization" and "Description of
Senior Credit Facilities."
The Circo Craft acquisition, the Lucent Division acquisition, the Forward
Group acquisition, and the Chips Merger are collectively referred to as the
"Transactions." The foregoing transactions, excluding the acquisitions of Circo
Craft and the Lucent Division (both of which occurred in 1996), are collectively
referred to as the "1997 Transactions."
2
<PAGE> 9
THE EXCHANGE OFFER
The Exchange Offer......... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, Old Notes representing $400
million aggregate principal amount are
outstanding. The terms of the New Notes and the
Old Notes are substantially identical in all
material respects, except that the New Notes will
be freely transferable by the holders thereof
except as otherwise provided herein. See
"Description of New Notes."
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to the Company, the
Company believes that New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes
may be offered for resale, sold and otherwise
transferred by any registered person receiving
the New Notes, whether or not that person is the
registered holder (other than any such holder or
such other person that is an "affiliate" of the
Company within the meaning of Rule 405 under the
Securities Act), without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that (i) the New
Notes are acquired in the ordinary course of
business of that holder or such other person,
(ii) neither the holder nor such other person is
engaging in or intends to engage in a
distribution of the New Notes, and (iii) neither
the holder nor such other person has an
arrangement or understanding with any person to
participate in the distribution of the New Notes.
See "The Exchange Offer -- Purpose and Effect."
Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes, where
those Old Notes were acquired by the
broker-dealer as a result of its market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of these New Notes.
See "Plan of Distribution."
Registration Rights
Agreement................ The Old Notes were sold by the Company on June 6,
1997, in a private placement in reliance on
Section 4(2) of the Securities Act and
immediately resold by the initial purchasers
thereof in reliance on Rule 144A under the
Securities Act (the "Original Offering"). In
connection with the sale, the Company entered
into an Exchange and Registration Rights
Agreement with the initial purchasers of the Old
Notes (the "Registration Rights Agreement")
requiring the Company to make the Exchange Offer.
The Registration Rights Agreement further
provides that the Company must use its reasonable
best efforts to (i) cause the Registration
Statement with respect to the Exchange Offer to
be declared effective on or before November 13,
1997 and (ii) consummate the Exchange Offer on or
before December 13, 1997. See "The Exchange
Offer -- Purpose and Effect."
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, , 1997, or such later
date and time to which it is extended by the
Company.
3
<PAGE> 10
Withdrawal................. The tender of the Old Notes pursuant to the
Exchange Offer may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the
Expiration Date. Any Old Notes not accepted for
exchange for any reason will be returned without
expense to the tendering holder thereof as
promptly as practicable after the expiration or
termination of the Exchange Offer.
Interest on the New
Notes and Old Notes...... Interest on each New Note will accrue from the date
of issuance of the Old Note for which the New
Note is exchanged or from the date of the last
periodic payment of interest on such Old Note,
whichever is later. No additional interest will
be paid on Old Notes tendered and accept for
exchange.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by the
Company. See "The Exchange Offer -- Certain
Conditions to Exchange Offer."
Procedures for Tendering
Old Notes.................. Each holder of the Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a copy thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
Letter of Transmittal, or the copy, together with
the Old Notes and any other required
documentation, to the Exchange Agent (as defined)
at the address set forth herein. Persons holding
the Old Notes through the Depository Trust
Company ("DTC") and wishing to accept the
Exchange Offer must do so pursuant to the DTC's
Automated Tender Offer Program, by which each
tendering participant will agree to be bound by
the Letter of Transmittal. By executing or
agreeing to be bound by the Letter of
Transmittal, each holder will represent to the
Company that, among other things, (i) the New
Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business
of the person receiving such New Notes, whether
or not such person is the registered holder of
the Old Notes, (ii) neither the holder nor any
such other person is engaging in or intends to
engage in a distribution of such New Notes, (iii)
neither the holder nor any such other person has
an arrangement or understanding with any person
to participate in the distribution of such New
Notes, and (iv) neither the holder nor any such
other person is an "affiliate," as defined under
Rule 405 promulgated under the Securities Act, of
the Company. Pursuant to the Registration Rights
Agreement, the Company is required to file a
"shelf" registration statement for a continuous
offering pursuant to Rule 415 under the
Securities Act in respect of the Old Notes if (i)
because of any change in law or applicable
interpretations thereof by the staff of the
Commission, the Company determines that it is not
permitted to effect the Exchange Offer as
contemplated hereby, (ii) validly tendered Old
Notes are not exchanged for New Notes by December
13, 1997, (iii) any holder of Private Exchange
Securities (as defined) so requests within 60
days of the Exchange
4
<PAGE> 11
Offer, (iv) any applicable law or interpretations
do not permit any holder of Old Notes to
participate in the Exchange Offer or (v) any
holder of Old Notes that participates in the
Exchange Offer does not receive freely
transferable New Notes in exchange for tendered
securities.
Acceptance of Old Notes and
Delivery of New Notes.... The Company will accept for exchange any and all
Old Notes which are properly tendered (and not
withdrawn) in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange
Offer will be delivered promptly following the
Expiration Date. See "The Exchange Offer -- Terms
of the Exchange Offer."
Exchange Agent............. The Bank of New York is serving as Exchange Agent
(the "Exchange Agent") in connection with the
Exchange Offer.
Federal Income Tax
Considerations........... The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Considerations."
Effect of Not Tendering.... Old Notes that are not tendered or that are
tendered but not accepted will, following the
completion of the Exchange Offer, continue to be
subject to the existing restrictions upon
transfer thereof. The Company will have no
further obligation to provide for the
registration under the Securities Act of such Old
Notes.
5
<PAGE> 12
THE NEW NOTES
Issuer..................... Viasystems, Inc.
Securities Offered......... $400,000,000 aggregate principal amount of 9 3/4%
Senior Subordinated Notes due 2007.
Maturity................... June 1, 2007.
Interest Payment Dates..... Interest on the New Notes will be payable
semi-annually in arrears on June 1 and December 1
of each year, commencing December 1, 1997.
Sinking Fund............... None.
Optional Redemption........ Except as described below, the Company may not
redeem the New Notes prior to June 1, 2002. On and
after such date, the Company may redeem the New
Notes, in whole or in part, at the redemption
prices set forth herein, together with accrued and
unpaid interest, if any, to the date of redemption.
In addition, at any time and from time to time on
or prior to June 1, 2000, the Company may redeem up
to $140.0 million of the aggregate principal amount
of the New Notes with the net cash proceeds of one
or more Equity Offerings, so long as a Public
Market exists at the time of redemption, at a
redemption price equal to 109.75% of the principal
amount to be redeemed, together with accrued and
unpaid interest, if any, to the date of redemption,
provided that at least $200.0 million of the
aggregate principal amount of the New Notes remains
outstanding after each such redemption. See
"Description of New Notes -- Optional Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, (i) the
Company will have the option, at any time on or
prior to June 1, 2002, to redeem the New Notes in
whole but not in part at a redemption price equal
to 100% of the principal amount thereof plus the
Applicable Premium, plus accrued and unpaid
interest, if any, to the date of redemption, and
(ii) if the Company does not so redeem the New
Notes or if such Change of Control occurs after
June 1, 2002, the Company will be required to make
an offer to repurchase the New Notes at a price
equal to 101% of the principal amount thereof,
together with accrued and unpaid interest, if any,
to the date of purchase. See "Description of New
Notes -- Change of Control."
Ranking.................... The New Notes will be unsecured and will be
subordinated in right of payment to all existing
and future Senior Indebtedness of the Company. The
New Notes will rank pari passu with any future
Senior Subordinated Indebtedness of the Company and
will rank senior to all Subordinated Indebtedness
of the Company. As of March 31, 1997, on a pro
forma basis after giving effect to the 1997
Transactions and the Original Offering, the
aggregate principal amount of the Company's
outstanding Senior Indebtedness would have been
approximately $432.4 million (excluding unused
commitments) and the Company would have had no
Senior Subordinated Indebtedness, other than the
New Notes, and no Subordinated Indebtedness
outstanding. On the same pro forma basis, as of
March 31, 1997, the New Notes would have
effectively ranked junior to approximately $627.5
million of accrued liabilities and obligations of
the Company's consolidated subsidiaries, in-
6
<PAGE> 13
cluding borrowings under and guarantees in respect
of the Senior Credit Facilities. See "Description
of New Notes -- Ranking and Subordination."
Restrictive Covenants...... The Indenture limits, among other things: (i) the
incurrence of additional indebtedness by the
Company and its Restricted Subsidiaries; (ii) the
payment of dividends on, and redemption of, capital
stock of the Company and its Restricted
Subsidiaries and the redemption of certain
subordinated obligations of the Company and its
Restricted Subsidiaries; (iii) investments; (iv)
sale of assets and Restricted Subsidiary stock; (v)
transactions with affiliates; and (vi)
consolidations, mergers and transfers of all or
substantially all of the Company's assets. The
Indenture also prohibits certain restrictions on
distributions from Restricted Subsidiaries;
however, all of these limitations and prohibitions
are subject to a number of important qualifications
and exceptions. See "Description of New
Notes -- Certain Covenants."
Use of Proceeds............ There will be no cash proceeds to the Company from
the Exchange Offer. The Company used the net
proceeds from the Original Offering: (i) to repay
the Subordinated Credit Facility; (ii) to repay
indebtedness under the Senior Credit Facilities;
and (iii) to pay related fees and expenses.
RISK FACTORS
Prospective investors should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors set forth under "Risk Factors" for risks involved with an investment in
the New Notes.
7
<PAGE> 14
SUMMARY SUPPLEMENTAL HISTORICAL COMBINED AND PRO FORMA FINANCIAL DATA
The following table presents summary supplemental historical combined
financial data of Viasystems Group, Circo Craft, Viasystems Technologies,
Forward Group and Chips on an aggregate basis for the periods indicated. The
financial data for Viasystems Group, Circo Craft, Viasystems Technologies,
Forward Group and Chips used in the preparation of the summary supplemental
historical combined financial data has been derived from the audited and
unaudited financial statements of each entity for the periods indicated. In the
opinion of management, the unaudited financial statements of each entity include
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation. The financial data for Viasystems Technologies reflects the
results of operations of the Lucent Division, which was a captive producer of
PCBs and backpanels for Lucent Technologies. Accordingly, historical financial
results for Viasystems Technologies may not be indicative of its results of
operations as an independent entity.
This combined data should be read in consideration of the fact that such
data has not been prepared in accordance with generally accepted accounting
principles ("GAAP"), which do not allow for the aggregation of financial data
for entities that are not under common ownership. Accordingly, the summary
supplemental historical combined data does not reflect the effect of the
acquisitions by Viasystems Group, other than the effect of the acquisitions of
Circo Craft at October 1, 1996 and the Lucent Division at December 1, 1996, and,
therefore, is not comparable to results subsequent to the acquisitions. In
addition, the accounting policies used by the individual companies are not
necessarily consistent or comparable. Nevertheless, management believes that the
aggregate financial information shown below may be helpful in understanding the
past operations of the companies combined and in evaluating an investment in the
Notes.
The financial data of Circo Craft, Forward Group, and Chips used in the
preparation of the summary supplemental historical combined and pro forma
financial data shown below has been derived from the financial statements of
each entity prepared in accordance with Canadian GAAP or U.K. GAAP, as
appropriate, and adjusted for differences between U.S. GAAP and Canadian GAAP
for Circo Craft and between U.S. GAAP and U.K. GAAP for Forward Group and Chips
(see the notes to the consolidated financial statements of Circo Craft, Forward
Group, and Chips, included elsewhere herein). The data set forth below reflects
translations using currency exchange rates published in The Wall Street Journal.
See "Exchange Rates."
The pro forma financial data of the Company for the fiscal year ended
December 31, 1996 and the fiscal first quarter ended March 31, 1997, has been
derived from the financial data of each entity for the periods indicated in
"Certain Definitions, Industry Data and Financial Information." The pro forma
statement of operations and other related data give effect to the Transactions,
the Original Offering and the Exchange Offer as if they had occurred at the
beginning of the indicated period. The pro forma balance sheet data as of March
31, 1997 gives effect to the 1997 Transactions, the Original Offering and the
Exchange Offer as though they had occurred at the balance sheet date. Neither
the summary supplemental historical combined financial information nor the pro
forma financial data are necessarily indicative of either the future results of
operations or the results of operations that would have occurred if those events
had been consummated on the indicated dates. The following information should be
read in conjunction with the consolidated financial statements of Viasystems
Group, Circo Craft, Viasystems Technologies, Forward Group, and Chips, "Selected
Financial Data," "Unaudited Pro Forma Financial Information," and, in each case,
the related notes, and "Management's Discussion and Analysis of Results of
Operations and Financial Condition," all included elsewhere herein.
8
<PAGE> 15
SUMMARY SUPPLEMENTAL HISTORICAL COMBINED AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL COMBINED FISCAL HISTORICAL COMBINED -----------------------
YEARS FIRST FISCAL QUARTERS FISCAL
------------------------------ --------------------- YEAR FIRST FISCAL
1994 1995 1996 1996 1997 1996 QUARTER 1997
-------- -------- -------- --------- --------- -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales....................... $564,598 $727,570 $872,424 $208,019 $224,069 $872,424 $ 224,069
Cost of goods sold.............. 432,440 570,980 643,351 155,332 168,407 623,873 168,407
Selling, general and
administrative expenses....... 65,132 71,412 79,470 18,089 17,889 75,803 17,889
Depreciation and amortization... 37,876 50,299 65,750 14,945 18,250 86,778 21,801
Write-off of acquired in-process
research and development(1)... -- -- 50,800 -- -- 50,800 --
Restructuring charges(2)........ -- -- 2,006 -- -- 2,006 --
-------- -------- -------- -------- -------- -------- ----------
Operating income.............. $ 29,150 $ 34,879 $ 31,047 $ 19,653 $ 19,523 33,164 15,972
========= ========= ========= ========= =========
Interest expense, net(3)........ 77,597 19,591
Amortization of deferred
financing costs............... 9,422 2,356
Other income.................... (1,054) (190)
-------- ----------
Loss before income taxes...... (52,801) (5,785)
Benefit from income taxes....... (2,438) (2,424)
-------- ----------
Net loss...................... $(50,363) $ (3,361)
========= =============
OTHER DATA:
EBITDA(4)....................... $ 67,026 $ 85,178 $149,603 $ 34,598 $ 37,773 $172,748 $ 37,773
EBITDA margin(5)................ 11.9% 11.7% 17.1% 16.6% 16.9% 19.8% 16.9%
Capital expenditures............ $ 49,329 $ 85,438 $ 93,978 $ 30,291 $ 33,574 $ 93,978 $ 33,574
Ratio of EBITDA to interest
expense, net.................. 2.2x 2.2x(6)
Ratio of net debt to
EBITDA(7)..................... 4.7x
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents....... $ 10,213
Working capital................. 52,612
Total assets.................... 1,262,356
Total debt, including current
maturities.................... 832,352
Stockholder's equity............ 234,821
</TABLE>
- ---------------
(1) Represents charges relating to the write-off of acquired in-process research
and development costs associated with the purchase accounting for the Circo
Craft and Lucent Division acquisitions. The write-off relates to acquired
research and development for projects that do not have a future alternative
use. See Note 1 to Consolidated Financial Statements of Viasystems Group.
(2) Represents restructuring charges related to the consolidation and
rationalization of several facilities at Forward Group.
(3) Represents interest expense net of interest income.
(4) EBITDA is defined as operating income plus depreciation, amortization and
certain non-cash charges in the amounts of $50,800 relating to the write-off
of acquired in-process research and development and $2,006 of restructuring
charges for the historical combined and pro forma fiscal year 1996. The
Company believes that EBITDA provides additional information for determining
its ability to meet debt service requirements. EBITDA does not represent and
should not be considered as an alternative to net income or cash flow from
operations as determined by GAAP, and EBITDA does not necessarily indicate
whether cash flow will be sufficient for cash requirements. Charges of
$14,565, $18,987 $7,900, and $3,449 net of estimated additional
administrative costs to be incurred, for the historical combined fiscal
years 1994, 1995, 1996, and the historical combined first fiscal quarter
1996 respectively, incurred with respect to corporate allocations to the
Lucent Division by Lucent Technologies, which are not expected to be
incurred by the Company are included in the historical combined results of
operations and have not been eliminated to calculate EBITDA.
(5) EBITDA margin is defined as EBITDA divided by net sales expressed as a
percentage.
(6) Represents ratio of EBITDA to pro forma interest expense, net for the twelve
month period ended March 31, 1997; EBITDA on a pro forma basis for the
twelve months ended March 31, 1997 would have been $176,254. The ratio of
EBITDA to interest expense, net for the first fiscal quarter 1997 is 1.9
times.
(7) Represents ratio of net debt to EBITDA for the twelve month period ended
March 31, 1997; EBITDA on a pro forma basis for the twelve months ended
March 31, 1997 would have been $176,254. For the purposes of this
calculation, net debt consists of total debt (including current maturities)
net of cash and cash equivalents.
9
<PAGE> 16
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully the following risk factors
before purchasing the Notes offered hereby.
SUBSTANTIAL LEVERAGE
The Company has indebtedness that is substantial in relation to its
stockholder's equity. As of March 31, 1997, on a pro forma basis after giving
effect to the 1997 Transactions, the Original Offering and the Exchange Offer,
the Company would have had approximately $832.4 million of indebtedness
outstanding, and there would have been approximately $146.5 million available
for future borrowings for general corporate purposes and working capital needs
and an additional $100.0 million available for future acquisitions, subject to
certain conditions under the Senior Credit Facilities. See "Capitalization" and
"Description of the Senior Credit Facilities." On the same pro forma basis, the
Company's earnings would have been insufficient to cover fixed charges by
approximately $52.8 million and $5.8 million for the fiscal year ended December
31, 1996 and the first fiscal quarter ended March 31, 1997, respectively. The
Company may incur additional indebtedness in the future, subject to certain
limitations to be contained in the Indenture and the Senior Credit Facilities,
and intends to do so in order to fund future acquisitions as part of its
business strategy. See "Description of New Notes" and "Description of Senior
Credit Facilities."
The Company's high degree of leverage could have several important
consequences to the holders of the New Notes, including, but not limited to, the
following: (i) the Company will have significant cash requirements to service
debt, reducing funds available for operations and future business opportunities
and increasing the Company's vulnerability to adverse general economic and
industry conditions and competition; (ii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate or other purposes, may be limited; (iii) the
Company's leveraged position and the covenants that will be contained in the
Indenture and the Senior Credit Facilities could limit the Company's ability to
compete, as well as its ability to expand, including through acquisitions, and
to make capital improvements; (iv) the Company may be more leveraged than
certain of its competitors, which may place the Company at a competitive
disadvantage; and (v) the Company's ability to refinance the New Notes in order
to pay the principal of the New Notes at maturity or upon a Change of Control
may be adversely affected.
A portion of the consolidated debt of the Company bears interest at a
floating rate; therefore, the financial results of the Company are and will
continue to be affected by changes in prevailing interest rates.
ABILITY TO SERVICE DEBT
The Company's ability to pay interest and principal upon the Senior Credit
Facilities, to pay interest on the Notes, and to satisfy its other debt
obligations will depend upon its future operating performance, which will be
affected by prevailing economic conditions and financial, business and other
factors, certain of which will be beyond its control. In addition, amounts owing
under the Senior Credit Facilities will become due prior to the maturity of the
Notes and such amounts may need to be refinanced. There can be no assurance that
future borrowings or equity refinancing will be available for the payment or
refinancing of the Company's indebtedness. If the Company is unable to service
its indebtedness, however, whether in the ordinary course of business or upon
acceleration of such indebtedness, the Company will be forced to pursue one or
more alternative strategies, such as restructuring or refinancing its
indebtedness, selling assets, reducing or delaying capital expenditures or
seeking additional equity capital. There can be no assurance that any of these
strategies could be effected on satisfactory terms, if at all. See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition -- Liquidity and Capital Resources."
10
<PAGE> 17
RESTRICTIVE DEBT COVENANTS
The Indenture and the Senior Credit Facilities contain certain covenants
that restrict, among other things, the Company's ability to incur additional
indebtedness, incur liens, pay dividends or make certain other restricted
payments, make investments, consummate certain asset sales, enter into certain
transactions with affiliates, impose restrictions on the ability of a subsidiary
to pay dividends or make certain payments to the Company, merge or consolidate
with any other person or sell, assign, transfer, lease, convey, or otherwise
dispose of all or substantially all of the assets of the Company. In addition,
the Senior Credit Facilities contain certain other and more restrictive
covenants including restrictions on prepaying indebtedness, such as the New
Notes, and will also require the Company to maintain specified financial ratios
and to satisfy certain financial condition tests. The Company's ability to meet
these financial ratio and financial condition tests can be affected by events
beyond its control and there can be no assurance that the Company will meet
those tests. A breach of any of these covenants could result in a default under
the Senior Credit Facilities or the Indenture. Upon the occurrence of an event
of default under the Senior Credit Facilities, the lenders thereunder could
elect to declare all amounts outstanding thereunder, together with accrued
interest, to be immediately due and payable. If the Company were unable to pay
those amounts, the lenders thereunder could proceed against the collateral
granted to them to secure that indebtedness. Substantially all the assets of the
Company, including the stock of certain of its subsidiaries, are pledged as
collateral to secure the Company's obligations under the Senior Credit
Facilities. If the indebtedness under the Senior Credit Facilities were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of the
Company, including the New Notes. In addition, if a default occurs with respect
to Senior Indebtedness, such as the Senior Credit Facilities, the subordination
provisions of such Senior Indebtedness would likely restrict payments to holders
of New Notes. See "Description of New Notes -- Certain Covenants" and
"Description of Senior Credit Facilities."
SUBORDINATION OF NOTES TO SENIOR INDEBTEDNESS
The payment of principal, premium, if any, and interest on, and any other
amounts owing in respect of, the New Notes will be subordinated to the prior
payment in full in cash or cash equivalents of all existing and future Senior
Indebtedness of the Company. In the event of the bankruptcy, liquidation,
dissolution, reorganization or other winding-up of the Company, the assets of
the Company will be available to pay obligations on the New Notes only after all
Senior Indebtedness has been so paid in full; accordingly there may not be
sufficient assets remaining to pay amounts due on any or all of the New Notes
then outstanding. In addition, under certain circumstances, the Company may not
pay principal of, premium, if any, or interest on, or any other amounts owing in
respect of the New Notes, or purchase, redeem or otherwise retire the New Notes,
in the event of certain defaults with respect to Senior Indebtedness, including
Senior Indebtedness under the Senior Credit Facilities.
As of March 31, 1997, on a pro forma basis after giving effect to the 1997
Transactions, the Original Offering and the Exchange Offer, there would have
been approximately $432.4 million of Senior Indebtedness outstanding
(represented by approximately $49.2 million of direct borrowings by the Company
under the Senior Credit Facilities, $319.3 million for the Chips Reimbursement
Obligation, $24.2 million of Forward Group Loan Notes and $39.6 million of other
indebtedness). In addition, on the same pro forma basis there would have been
approximately $146.5 million available under the Senior Credit Facilities as of
March 31, 1997 for general corporate purposes and working capital needs of the
Company and its subsidiaries and an additional $100.0 million available for
future acquisitions, all of which would be Senior Indebtedness if borrowed. Of
the amount available to be borrowed as of March 31, 1997 on a pro forma basis,
approximately $96.5 million would have been available for borrowing by the
Company's foreign subsidiaries. Additional Senior Indebtedness may be incurred
by the Company from time to time, subject to certain restrictions. See
"Description
11
<PAGE> 18
of New Notes -- Ranking and Subordination," "-- Certain Covenants," and
"Description of the Senior Credit Facilities."
ENCUMBRANCES ON ASSETS TO SECURE SENIOR CREDIT FACILITIES
In addition to being subordinated to all existing and future Senior
Indebtedness of the Company, the New Notes will not be secured by any assets of
the Company or its subsidiaries; however, obligations under the Senior Credit
Facilities are secured by a pledge of all the capital stock of the Company's
direct U.S. subsidiaries, 65% of the voting stock of its direct foreign
subsidiaries and 100% of the preferred stock of its direct foreign subsidiaries,
and the tangible and intangible assets of the U.S. subsidiaries (including 65%
of the voting stock of their direct foreign subsidiaries) and certain foreign
subsidiaries (including Forward Group and Circo Craft) to secure their
respective obligations only, and will be guaranteed by Viasystems Group, with
such guaranty secured by a pledge of the capital stock of the Company. In
addition, the Company has guaranteed the obligations of its foreign subsidiaries
for borrowings under the Senior Credit Facilities and the Company's U.S.
subsidiaries have guaranteed the obligations of the Company under the Senior
Credit Facilities, including obligations arising under the Company's guarantees.
If the Company becomes insolvent or is liquidated, or if payment under any of
the Senior Credit Facilities is accelerated, the lenders under the Senior Credit
Facilities will be entitled to exercise the remedies available to a secured
lender under applicable law pursuant to the Senior Credit Facilities.
Accordingly, such lenders will have a prior claim with respect to such assets.
See "Description of Senior Credit Facilities."
HOLDING COMPANY STRUCTURE
The New Notes are effectively subordinated to the obligations of the
Company's subsidiaries, including the guarantee by its U.S. subsidiaries of
obligations of the Company under the Senior Credit Facilities, because the
Company is a holding company. In the event of an insolvency, liquidation or
other reorganization of any of the subsidiaries of the Company, the creditors of
the Company (including the holders of the New Notes), as well as shareholders of
the Company, will have no right to proceed against the assets of such
subsidiaries or to cause the liquidation or bankruptcy of such subsidiaries
under applicable bankruptcy laws. Creditors of such subsidiaries, including
lenders under the Senior Credit Facilities, would be entitled to payment in full
from such assets before the Company, as a shareholder, would be entitled to
receive any distribution therefrom. Except to the extent that the Company itself
may be a creditor with recognized claims against such subsidiaries, claims of
creditors of such subsidiaries will have priority with respect to the assets and
earnings of such subsidiaries over the claims of creditors of the Company,
including claims under the New Notes. In addition, as a result of the Company
being a holding company, the Company's operating cash flow and its ability to
service its indebtedness, including the New Notes, is dependent upon the
operating cash flow of its subsidiaries and the payment of funds by such
subsidiaries to the Company in the form of loans, dividends or otherwise. At
March 31, 1997, after giving pro forma effect to the 1997 Transactions, the
Original Offering and the Exchange Offer, the subsidiaries of the Company would
have had aggregate liabilities, including trade payables and accrued expenses,
of $627.5 million, including amounts borrowed under the Senior Credit Facilities
and guarantees of borrowings made by the Company under the Senior Credit
Facilities. As of March 31, 1997 after giving pro forma effect to the 1997
Transactions, the Original Offering and the Exchange Offer, the Company's
foreign subsidiaries would have additional availability under the Senior Credit
Facilities of $96.5 million.
NO PRIOR HISTORY OF COMBINED OPERATIONS
Prior to their respective acquisitions, the operations of Circo Craft,
Viasystems Technologies, Forward Group and Chips were conducted as separate and
distinct businesses, each with its own management team, sales and administrative
personnel, and manufacturing facilities. The Company
12
<PAGE> 19
anticipates that the current operating management of the various subsidiaries
will continue to manage their respective operations and that Mills & Partners
will be responsible for the overall management of the Company. There can be no
assurance that the Company can successfully integrate these operations. See
"Summary -- Transactions" and "Business."
ABILITY TO IMPLEMENT THE COMPANY'S OPERATING AND ACQUISITION STRATEGY
No assurances can be given that the Company or its management team will be
able to implement successfully the operating strategy described herein,
including the ability to identify, negotiate and consummate future acquisitions
on terms management considers favorable. No assurances can be given that the
Company will successfully implement its operating strategies in the future.
The Company may from time to time pursue the acquisitions of other
companies, assets or product lines that complement or expand its existing
business. Acquisitions involve a number of risks that could adversely affect the
Company's operating results, including the diversion of management's attention,
the costs of assimilating the operations and personnel of the acquired
companies, and the potential loss of employees of the acquired companies. No
assurance can be given that any acquisition by the Company will not materially
and adversely affect the Company or that any such acquisition will enhance the
Company's business.
The ability of the Company to implement its operating strategy and to
consummate future acquisitions will require significant additional debt and/or
equity capital, particularly in light of the Company's significant and ongoing
anticipated capital expenditures, and no assurance can be given as to whether,
and on what terms, such additional debt and/or equity capital will be available.
The Company has responded to a letter from the United Kingdom's Office of
Fair Trading ("OFT"), the governmental entity responsible for antitrust control
in the United Kingdom, requesting information regarding Chips and Forward Group
and their respective market shares in the United Kingdom to determine whether
the Fair Trading Act of 1973 applies to the Chips Acquisition. Although no
assurances can be given, the Company believes, after consultation with counsel,
that no adverse consequence will arise from such OFT inquiry.
FLUCTUATIONS IN OPERATING RESULTS; VARIABILITY OF ORDERS
The Company's operating results are affected by a number of factors,
including the timing of orders from and shipments to major customers, the volume
of orders relative to the Company's capacity, the timing of expenditures in
anticipation of future sales, pricing pressures, variations in product mix,
start-up expenses relating to new manufacturing facilities and economic
conditions in the electronics industry. Many of these factors are outside the
control of the Company. Because a significant portion of the Company's operating
expenses are fixed, even a relatively small revenue shortfall can have a
disproportionate effect on the Company's results of operations. Results of
operations in any period should not be considered indicative of the results to
be expected for any future period.
The level and timing of orders placed by the Company's customers vary due
to a number of factors, including customer attempts to manage inventory, changes
in the customers' manufacturing strategies and variation in demand for customer
products due to, among other things, technological change, new product
introductions, product life-cycles, competitive conditions or general economic
conditions. Because the Company generally does not obtain long-term purchase
orders or commitments from its customers, it must attempt to anticipate the
future volume of orders based on discussions with its customers. A substantial
portion of sales in a given quarter may depend on obtaining orders for products
to be manufactured and shipped in the same quarter in which those orders are
received. The Company relies on its estimate of anticipated future volumes when
making commitments regarding the level of business that it will seek and accept,
the mix of products that it intends to manufacture, the timing of production
schedules and the levels and utilization of personnel and other resources. A
variety of conditions, both specific to the individual customer and
13
<PAGE> 20
generally affecting the customer's industry, may cause customers to cancel,
reduce or delay orders that were previously made or anticipated. A significant
portion of the Company's backlog at any time may be subject to cancellation or
postponement without penalty. The Company cannot assure the timely replacement
of canceled, delayed or reduced orders. Significant or numerous cancellations,
reductions or delays in orders by a customer or group of customers could
materially adversely affect the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition."
CUSTOMER CONCENTRATION; RELIANCE ON LUCENT TECHNOLOGIES
Sales to Lucent Technologies for fiscal years 1994, 1995, and 1996
accounted for approximately 49%, 39%, and 35% of the Company's combined net
sales, respectively. Lucent Technologies produces telecommunications systems,
including telecommunications switching, transmission and wireless communications
equipment, all of which utilize the Company's products. Any adverse development
or lack of success by Lucent Technologies in any of these product areas could
have a material adverse effect on the Company's business and results of
operations. See "Business -- Markets and Customers."
The Company anticipates that Lucent Technologies will continue to be its
largest customer for at least the next few years, in part because of the
five-year supply agreement (the "Lucent Agreement") that the Company entered
with Lucent Technologies as of November 26, 1996, which agreement will be
renewed upon the satisfaction of certain performance requirements for two
additional one-year periods and thereafter on an ongoing basis until either
party terminates the agreement on 18 months' notice. No assurance can be given,
however, that the contract with Lucent Technologies will be renewed for
additional periods or extended or replaced upon its final expiration.
The Lucent Agreement requires that by January 1, 1999 the Company's prices
for the products supplied to Lucent Technologies shall be reduced to an agreed
upon benchmark standard. Effective January 1, 1997, the Company has reduced
prices on certain products supplied to Lucent Technologies pursuant to the
Lucent Agreement. The financial data for Viasystems Technologies included herein
reflects its results of operations while Viasystems Technologies was a captive
producer for Lucent Technologies. Historical results of Viasystems Technologies
may not be indicative of its results of operations as an independent entity. The
Lucent Agreement also requires Lucent Technologies to make minimum annual
purchases, subject to certain penalties for failing to satisfy such minimum
purchase amounts.
On a combined basis, the Company's five largest customers accounted for
approximately 53% of the Company's net sales for the fiscal year 1996. Although
there is no assurance the Company's principal customers will continue to
purchase products from the Company at past levels, the Company expects a
significant portion of its revenue will continue to be concentrated within a
small number of customers. The loss of, or significant curtailment of purchases
by, one or more of these customers could have a material adverse effect on the
Company. See "Business -- Markets and Customers."
TECHNOLOGICAL CHANGE, PROCESS DEVELOPMENT AND PROCESS DISRUPTION
The market for the Company's products and services is characterized by
rapidly changing technology and continuing process development. The future
success of the Company's business will depend in large part upon its ability to
maintain and enhance its technological capabilities, develop and market products
and services that meet changing customer needs, and successfully anticipate or
respond to technological changes on a cost-effective and timely basis. Research
and development expenses are expected to increase as manufacturers make demands
for higher technology and smaller PCBs. In addition, the PCB and backpanel
industry could in the future encounter competition from new or revised
technologies that render existing electronic interconnect technology less
competitive or obsolete or technologies that may reduce the number of PCBs
required in electronic components. There can be no assurance that the Company
will effectively respond to the technological requirements of the changing
market. To the extent the Company
14
<PAGE> 21
determines that new technologies and equipment are required to remain
competitive, the development, acquisition and implementation of such
technologies and equipment are likely to continue to require significant capital
investment by the Company. There can be no assurance that capital will be
available for these purposes in the future or that investments in new
technologies will result in commercially viable technological processes.
Moreover, the Company's business involves highly complex manufacturing processes
that could in the future be subject to periodic failure or disruption. Process
disruptions can result in delays in certain product shipments. There can be no
assurance that failures or disruptions will not occur in the future. The loss of
revenue and earnings to the Company from such a technological change, process
development or process disruption, as well as any disruption of the Company's
operations resulting from a natural disaster such as an earthquake, fire or
flood, could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Industry -- Overview,"
"Business -- Business Strategy," "-- Products and Services," and
" -- Manufacturing."
DEPENDENCE ON ELECTRONICS INDUSTRY
The electronics industry, which encompasses the Company's principal
customers, is characterized by intense competition, relatively short product
life-cycles and significant fluctuations in product demand. In addition, the
electronics industry is generally subject to rapid technological change and
product obsolescence. Furthermore, the electronics industry is subject to
economic cycles and has in the past experienced, and is likely in the future to
experience, recessionary periods. A recession or any other event leading to
excess capacity or a downturn in the electronics industry would likely have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition," "Industry -- Overview" and
"Business -- Markets and Customers."
INTERNATIONAL OPERATIONS
A significant portion of the Company's operations are conducted in foreign
countries, and are subject to risks that are inherent in operating abroad,
including governmental regulation, changes in import duties, trade restrictions,
work stoppages, currency restrictions and other restraints and burdensome taxes.
The Company's operations worldwide and the products it sells are subject to
numerous governmental regulations and inspections. Although the Company believes
it is substantially in compliance with such regulations, changes in legislation
or regulations and actions by regulators, including changes in administration
and enforcement policies, may from time to time require operational improvements
or modifications at various locations or the payment of fines and penalties, or
both.
The Company is subject to a variety of governmental regulations in certain
countries where it markets its products, including import quotas and tariffs,
and taxes.
The Company's operations involve transactions in a variety of currencies.
The results of its operations may be significantly affected by fluctuations of
currency exchange rates. Such fluctuations are significant to the Company's
operations because many of its costs are incurred in currencies different from
those that are received from the sale of its products in foreign markets, and
there is normally a time lag between the incurrence of such costs and collection
of the related sales proceeds. The Company engages from time to time in various
hedging activities to minimize potential losses on cash flows originating in
foreign currencies.
INTELLECTUAL PROPERTY
The Company's success depends in part on proprietary technology and
manufacturing techniques. The Company has few patents for these proprietary
techniques and chooses to rely primarily on trade secret protection. Litigation
may be necessary to protect the Company's
15
<PAGE> 22
technology, to determine the validity and scope of the proprietary rights of
others or to defend against claims of patent infringement. The Company is not
aware of any pending or threatened claims that affect any of the Company's
intellectual property rights. If any infringement claim is asserted against the
Company, the Company may seek to obtain a license of the other party's
intellectual property rights. There is no assurance that a license would be
available on reasonable terms or at all. Litigation with respect to patents or
other intellectual property matters could result in substantial costs and
diversion of management and other resources and could have a material adverse
effect on the Company.
ENVIRONMENTAL MATTERS
The Company's operations are regulated under a number of federal, state,
local and foreign environmental laws and regulations, which govern, among other
things, the discharge of hazardous materials into the air and water as well as
the handling, storage and disposal of such materials. Compliance with these
environmental laws are major considerations for all PCB manufacturers because
metals and other hazardous materials are used in the manufacturing process. In
addition, because the Company is a generator of hazardous wastes, the Company,
along with any other person who arranges for the disposal of such wastes, may be
subject to potential financial exposure for costs associated with the
investigation and remediation of sites at which it has arranged for the disposal
of hazardous wastes, if such sites become contaminated. This is true even if the
Company fully complies with applicable environmental laws. In addition, it is
possible that in the future new or more stringent requirements could be imposed.
See "Business -- Environmental."
COMPETITION
The PCB and backpanel industries are highly fragmented and characterized by
intense competition. The Company believes that its major competitors are large
U.S. and international independent and captive producers that also manufacturer
multilayer PCBs and provide backpanels and other electronic assemblies. In
addition, OEMs with captive PCB and backpanel manufacturing operations may seek
orders in the open market to fill excess capacity, thereby increasing price
competition. Moreover, the Company may face additional competitive pressures as
a result of changes in technology. See "-- Technological Change, Process
Development and Process Disruption."
During periods of recession or economic slowdown in the electronics
industry and other periods when excess capacity exists, electronics OEMs become
more price sensitive, which could have a material adverse effect on PCB and
backpanel pricing. In addition, the Company believes that price competition from
PCB and backpanel manufacturers in Asia and other locations may play an
increasing role in the PCB and backpanel markets in which the Company competes.
Competition in the industry has also increased due to the consolidation trend in
the industry, which results in potentially better capitalized, and more
effective competitors. Price has become the most important competitive issue as:
(i) competition from Pacific Rim competitors has intensified; (ii) U.S. and
European manufacturers have shifted production overseas; (iii) the price of
products in end-user industries has declined; (iv) technology and material
enhancements have improved efficiencies and reduced production costs; and (v)
improved quality control has resulted in higher yields. The Company's basic
interconnect technology is generally not subject to significant proprietary
protection, and companies with significant resources or international operations
may enter the market. Increased competition could result in price reductions,
reduced margins or loss of market share, any of which could materially adversely
affect the Company's business, financial condition and results of operations.
LABOR RELATIONS
Approximately 35% of the Company's employees are unionized. Approximately
660 employees of the Company at Forward Group's United Kingdom facilities are
governed by a collective
16
<PAGE> 23
bargaining agreement that is terminable by either party upon three months
notice. Approximately 95 employees of the Company at Forward Group's South
Africa facility are governed by a collective bargaining agreement that is
negotiated annually. A prolonged dispute at one or more facilities could have a
material adverse effect on the Company.
CONTROLLING STOCKHOLDERS
100% of the common stock of the Company is owned by Viasystems Group, which
in turn is controlled by an affiliate of Hicks Muse. As a result, Hicks Muse
effectively will be able to elect all the members of the Board of Directors of
Viasystems Group and therefore direct the management and policies of the
Company. The interests of Hicks Muse and its affiliates may differ from the
interests of holders of the Notes. See "Summary -- Recent History," "Security
Ownership of Certain Beneficial Owners" and "Certain Transactions."
ERISA CONSIDERATIONS
The Hicks, Muse, Tate & Furst Equity Fund III, L.P. ("Fund III") is a
private investment fund which is managed by an affiliate of Hicks Muse and which
was formed for the principal purpose of making investments in companies. Fund
III currently owns at least 80% of the total outstanding common stock of
Viasystems Group and thereby indirectly possesses at least 80% of the total
combined voting power and total value of shares of all classes of stock of the
Company. Fund III also currently owns and may acquire at least 80% of the total
combined voting power or the total value of shares of all classes of stock of
other companies, some of which may sponsor or contribute to pension plans
subject to Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 412 of the Internal Revenue Code of 1986, as
amended ("Code"). In accordance with the provisions of ERISA and the Code, the
Company is a member of a controlled group of corporations or a group of trades
or businesses under common control that includes Fund III ("Fund III ERISA
Group"), and each member of such group is jointly and severally liable for
certain unfunded pension liabilities and pension contributions which arise
during such member's inclusion within such group. While Hicks Muse expects each
member of the Fund III ERISA Group to satisfy its pension-related obligations
with respect to its employees to the fullest extent permitted by law, without
assistance from other members of the Fund III ERISA Group, there are no
assurances that an insolvency, bankruptcy or other condition would not occur at
one member of the Fund III ERISA Group which could result in a liability to
other members of the Fund III ERISA Group (including the Company). Hicks Muse is
not currently aware of any accrued and unpaid pension contribution, or
termination of or withdrawal from a pension plan subject to Title IV of ERISA or
Section 412 of the Code at any member of the Fund III ERISA Group which would
have a material adverse effect on the Company.
LIMITATION ON CHANGE OF CONTROL
Upon a Change of Control, the Company may be required to offer to purchase
all of the New Notes then outstanding at 101% of their principal amount, plus
accrued interest to the date of repurchase. If a Change of Control were to
occur, there can be no assurance that the Company would have sufficient funds to
pay the purchase price for all of the New Notes that the Company might be
required to purchase. In the event that the Company were required to purchase
New Notes pursuant to a Change of Control Offer (as defined), the Company
expects that it would require third party financing; however, there can be no
assurance that the Company would be able to obtain such financing on favorable
terms, if at all. In addition, the Senior Credit Facilities restricts the
Company's ability to repurchase the New Notes, including pursuant to a Change of
Control Offer. A Change of Control will result in an event of default under the
Senior Credit Facilities and may cause the acceleration of other Senior
Indebtedness, if any, in which case the subordination provisions of the New
Notes would require payment in full of the Senior Credit Facilities and any such
Senior Indebtedness before repurchase of the Notes. See "Description of New
Notes -- Change of
17
<PAGE> 24
Control" and "Description of Senior Credit Facilities." The inability to repay
Senior Indebtedness, if accelerated, and to purchase all of the tendered Notes,
would constitute an event of default under the Indenture.
FRAUDULENT CONVEYANCE
The incurrence of indebtedness (such as the New Notes) in connection with
the Transactions and payments to consummate the Transactions with the proceeds
thereof are subject to review under relevant federal and state fraudulent
conveyance statutes in a bankruptcy or reorganization case or a lawsuit by or on
behalf of creditors of the Company. Under these statutes, if a court were to
find that obligations (such as the New Notes) were incurred with the intent of
hindering, delaying or defrauding present or future creditors or that the
Company received less than a reasonably equivalent value of fair consideration
for those obligations and, at the time of the occurrence of the obligations, the
obligor either: (i) was insolvent or rendered insolvent by reason thereof; (ii)
was engaged or was about to engage in a business or transaction for which its
remaining unencumbered assets constituted unreasonably small capital; or (iii)
intended to or believed that it would incur debts beyond its ability to pay such
debts as they matured or became due, such court could void the Company's
obligations under the New Notes, subordinate the New Notes to other indebtedness
of the Company or take other action detrimental to the holders of the New Notes.
Some courts have held that an obligor's purchase of its own capital stock does
not constitute reasonably equivalent value or fair consideration for
indebtedness incurred to finance that purchase.
The measure of insolvency for purposes of a fraudulent conveyance claim
will vary depending upon the law of the jurisdiction being applied. Generally,
however, a company will be considered insolvent at a particular time if the sum
of its debts at that time is greater than the then fair value of its assets or
if the fair saleable value of its assets at that time is less than the amount
that would be required to pay its probable liability on its existing debts as
they become absolute and mature. The Company believes that, after giving effect
to the Transactions, the Company will be: (i) neither insolvent nor rendered
insolvent by the incurrence of indebtedness in connection with the Transactions;
(ii) in possession of sufficient capital to run its business effectively; and
(iii) incurring debts within its ability to pay as the same mature or become
due.
There can be no assurance, however, as to what standard a court would apply
to evaluate the parties' intent or to determine whether the Company was
insolvent at the time of, or rendered insolvent upon consummation of, the
Transactions or that, regardless of the standard, a court would not determine
that the Company was insolvent at the time of, or rendered insolvent upon
consummation of, the Transactions.
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES
Prior to the Exchange Offer, there was no public market for the Old Notes.
The Company does not intend to apply for a listing of the New Notes, on a
securities exchange or on any automated dealer quotation system. There is
currently no established market for the New Notes and there can be no assurance
as to the liquidity of markets that may develop for the New Notes, the ability
of the holders of the New Notes to sell their New Notes or the prices at which
such holders would be able to sell their New Notes. If such markets were to
exist, the New Notes could trade at prices that may be lower than the initial
market value thereof, depending upon many factors, including prevailing interest
rates and the markets for similar securities.
The liquidity of, and trading market for, the New Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.
18
<PAGE> 25
USE OF PROCEEDS
The Company will not receive any cash proceeds from the Exchange Offer. The
Company used the net proceeds from the Original Offering (approximately $386.0
million), to (i) repay all amounts outstanding under the Tranche A Loan (as
defined) under the Senior Credit Facilities; (ii) repay a portion of the Tranche
C Loan (as defined) under the Senior Credit Facilities; (iii) repay all amounts
outstanding under the Canadian Term Loan (as defined) under the Senior Credit
Facilities; (iv) repay all amounts outstanding under the Chips Revolving Loan
(as defined); and (v) repay all amounts outstanding under the Subordinated
Credit Facility. See "Capitalization" and "Description of Senior Credit
Facilities."
The Tranche A Loan matured on December 31, 2002, and bears interest, at the
Company's option, at a rate per annum equal to (i) 1.5% above the Alternate Base
Rate, or (ii) 2.5% above the Eurocurrency Base Rate. The Tranche C Loan matures
on June 30, 2005 and bears interest, at the Company's option, at a rate per
annum equal to (i) 2.5% above the Alternate Base Rate, or (ii) 3.5% above the
Eurocurrency Base Rate. The Canadian Term Loan matured on December 31, 2002 and
loans denominated in U.S. dollars bear interest, at the Company's election, at
either (i) the Eurocurrency Base Rate (as defined in the Senior Credit Facility)
plus 2.5% or (ii) the Canadian Alternate Base Rate (as defined in the Senior
Credit Facilities) plus 1.5%, and those loans denominated in Canadian dollars
bear interest, at the Company's option, at a rate per annum equal to (i) the
Canadian Bankers Acceptance Discount Rate plus 2.5%, or (ii) the Canadian Prime
Rate (as defined) plus 1.5%. Pursuant to the Senior Credit Facilities, the Chips
Revolving Loan will have a maturity date of November 30, 2002, and will bear
interest at LIBOR plus 2.5%. The Subordinated Credit Facility had an initial
maturity date of April 11, 1998. At May 30, 1997, the interest rate on such
borrowings (calculated as a fixed spread over a floating interest rate index)
was 14.5% per annum. See "Summary -- Recent History" and "Description of Senior
Credit Facilities."
19
<PAGE> 26
SELECTED FINANCIAL DATA
VIASYSTEMS GROUP, INC.
The selected information below presents financial information of Viasystems
Group for the period during which Circo Craft and Viasystems Technologies were
operated by Viasystems Group and prior to the formation of the Company and
Viasystems Group's contribution of its assets to the Company in April 1997. The
data for the period from inception (August 28, 1996) to December 31, 1996 has
been derived from the audited consolidated financial statements of Viasystems
Group. The data for the three months ended March 31, 1997, has been derived from
the unaudited condensed consolidated financial statements of Viasystems Group.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation. The following information should
be read in conjunction with the audited and unaudited condensed consolidated
financial statements of Viasystems Group and the notes thereto, the "Unaudited
Pro Forma Financial Information," and "Management's Discussion and Analysis of
Results of Operations and Financial Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
FROM INCEPTION THREE MONTHS
(AUGUST 28, 1996) TO ENDED
DECEMBER 31, 1996 MARCH 31, 1997
---------------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................................ $ 50,400 $119,884
Cost of goods sold............................... 42,052 90,069
Selling, general and administrative expenses..... 3,844 11,155
Depreciation and amortization.................... 4,635 8,475
Write-off of acquired in-process research and
development(1)................................. 50,800 --
-------- --------
Operating income (loss)........................ (50,931) 10,185
Interest expense................................. 2,503 5,055
Amortization of deferred financing costs......... 470 937
Other expense (income)........................... 262 (52)
-------- --------
Income (loss) before income taxes.............. (54,166) 4,245
Provision (benefit) for income taxes............. (5,424) 1,574
-------- --------
Net income (loss).............................. $(48,742) $ 2,671
======== ========
OTHER DATA:
EBITDA(2)........................................ $ 4,504 $ 18,660
Capital expenditures............................. 3,563 8,712
Ratio of earnings to fixed charges(3)............ N/A 1.7x
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents........................ $ 16,117 $ 3,556
Working capital.................................. 44,938 45,163
Total assets..................................... 387,741 394,644
Total debt, including current maturities......... 265,620 263,576
Stockholders' equity............................. 54,973 57,647
</TABLE>
- ---------------
(1) Represents charges relating to the write-off of acquired in-process research
and development costs associated with the acquisitions of Circo Craft and
the Lucent Division. The write-off relates to acquired research and
development for projects that do not have a future alternative use. See
"Notes to Consolidated Financial Statements of Viasystems Group."
(2) EBITDA is defined as operating income (loss) plus depreciation, amortization
and the non-cash charge in the amount of $50,800 relating to the write-off
of acquired in-process research and development. EBITDA does not represent
and should not be considered as an alternative to net income or cash flow
from operations as determined by GAAP. EBITDA does not necessarily indicate
whether cash flow will be sufficient for cash requirements. The Company
believes that EBITDA provides additional information for determining its
ability to meet debt service requirements.
(3) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent income (loss) before income taxes plus fixed charges.
"Fixed charges" consist of interest expense, amortization of deferred
financing costs and the component of rental expense that management believes
is representative of the interest component of rent expense. Earnings were
insufficient to cover fixed charges by $54,166 for the period August 28,
1996 to December 31, 1996.
20
<PAGE> 27
CIRCO CRAFT CO. INC.
The selected information below represents the financial information of
Circo Craft for the periods indicated. The data for the four fiscal years ended
December 31, 1995, and the nine months ended September 30, 1996 (the period
prior to the acquisition of Circo Craft by Viasystems Group), and the three
months ended March 31, 1996, set forth in Canadian GAAP in C$, has been derived
from the audited and unaudited condensed consolidated financial statements of
Circo Craft. In the opinion of management, the unaudited condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation. The consolidated
financial statements of Circo Craft have been prepared in accordance with
Canadian GAAP, which differs in certain significant respects from U.S. GAAP (see
Note 12 to the consolidated financial statements of Circo Craft). The data for
the two years ended December 31, 1995, the nine months ended September 30, 1996,
and the three months ended March 31, 1996, set forth in U.S. GAAP in U.S.$, has
been derived from the audited and unaudited condensed consolidated financial
statements of Circo Craft and adjusted for differences between Canadian GAAP and
U.S. GAAP. The following information should be read in conjunction with the
audited and unaudited condensed consolidated financial statements of Circo Craft
and the notes thereto, the "Unaudited Pro Forma Financial Information," and
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
THREE
NINE MONTHS MONTHS
FISCAL YEARS ENDED DECEMBER 31, ENDED ENDED
-------------------------------------------- SEPTEMBER 30, MARCH 31,
1992 1993 1994(1) 1995(1) 1996 1996
-------- --------- --------- --------- ------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CANADIAN GAAP (IN C$)
STATEMENT OF OPERATIONS DATA:
Net sales............................................ C$94,010 C$106,244 C$151,825 C$185,156 C$129,633 C$ 41,357
Cost of goods sold................................... 74,200 88,788 124,929 148,788 101,532 33,611
Selling, general and administrative expenses......... 7,395 7,908 10,079 11,087 7,969 2,445
Depreciation and amortization........................ 7,095 7,296 7,160 7,931 8,456 2,509
-------- --------- --------- --------- --------- ---------
Operating income................................... 5,320 2,252 9,657 17,350 11,676 2,792
Interest expense..................................... 854 337 515 852 646 228
Other income......................................... -- -- (195) (915) (880) (284)
Expenses related to sale(2).......................... -- -- -- -- 5,907 --
-------- --------- --------- --------- --------- ---------
Income before income taxes......................... 4,466 1,915 9,337 17,413 6,003 2,848
Provision for income taxes........................... 1,429 1,854 2,719 5,564 3,847 1,362
-------- --------- --------- --------- --------- ---------
Net income before non controlling interest......... C$ 3,037 C$ 61 C$ 6,618 C$ 11,849 C$ 2,156 C$ 1,486
======== ========= ========= ========= ========= =========
OTHER DATA:
EBITDA(3)............................................ C$12,415 C$ 9,548 C$ 16,817 C$ 25,281 C$ 20,132 C$ 5,301
Capital expenditures................................. 2,704 11,072 6,679 23,764 13,058 4,461
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents.................................................. C$ 7,202 C$ 19,231 C$ 28,438
Working capital............................................................ 34,260 40,057 41,909
Total assets............................................................... 101,175 128,964 134,725
APPROXIMATE AMOUNTS IN U.S. GAAP (IN U.S.$)
STATEMENT OF OPERATIONS DATA:
Net sales.................................................................. $ 102,029 $ 142,750 $ 95,318 $ 30,410
Cost of goods sold......................................................... 87,509 109,403 74,656 24,714
Selling, general and administrative expenses............................... 7,298 7,975 5,935 1,804
Depreciation and amortization.............................................. 5,114 5,832 6,218 1,845
--------- --------- --------- ---------
Operating income......................................................... 2,108 19,540 8,509 2,047
Interest expense........................................................... 368 626 475 168
Other income............................................................... (139) (673) (647) (209)
Expenses related to sale(2)................................................ -- -- 4,343 --
--------- --------- --------- ---------
Income before income taxes............................................... 1,879 19,587 4,338 2,088
Provision for income taxes................................................. 2,016 4,470 2,706 898
--------- --------- --------- ---------
Net income (loss) before non controlling interest........................ $ (137) $ 15,117 $ 1,632 $ 1,190
========= ========= ========= =========
OTHER DATA:
EBITDA(3).................................................................. $ 7,222 $ 25,372 $ 14,727 $ 3,892
Capital expenditures....................................................... 4,771 17,474 9,601 3,280
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents.................................................. $ 3,359 $ 12,206 $ 15,744
Working capital............................................................ 18,054 29,454 30,815
Total assets............................................................... 65,099 94,826 99,063
</TABLE>
- ---------------
(1) Under Canadian GAAP in effect at the time, the Company recognized certain
revenues related to a gain on an out-of-court settlement in 1994. Under U.S.
GAAP, that gain would have been deferred and recognized in 1995.
(2) Represents non-recurring expenses incurred in connection with the sale of
Circo Craft to Viasystems Group which includes, among others, brokerage and
legal fees.
(3) EBITDA is defined as operating income plus depreciation and amortization.
The Company believes that EBITDA provides additional information for
determining its ability to meet debt service requirements. 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 EBITDA does not necessarily indicate whether cash flow will
be sufficient for cash requirements.
21
<PAGE> 28
VIASYSTEMS TECHNOLOGIES CORP.
The selected information below presents financial information of the Lucent
Division (renamed Viasystems Technologies) for the periods indicated. The
unaudited financial data for the fiscal years ended December 31, 1992 and 1993
and the three months ended March 31, 1996, has been derived from the unaudited
financial statements of Viasystems Technologies which, in the opinion of
management of the Company, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation. The data for the
fiscal years ended December 31, 1994 and 1995, and the eleven months ended
November 30, 1996 (the period prior to the acquisition of the Lucent Division by
Viasystems Technologies), has been derived from the audited statements of
operations of Viasystems Technologies. Presentation of balance sheet data for
Viasystems Technologies is not meaningful because such business was a division
of Lucent Technologies for the periods indicated. In addition, Viasystems
Technologies was a captive producer for Lucent Technologies and historical
financial results for Viasystems Technologies may not be indicative of its
results of operations as an independent entity. The following information should
be read in conjunction with the audited financial statement of Viasystems
Technologies and the notes thereto, the "Unaudited Pro Forma Financial
Information," and "Management's Discussion and Analysis of Results of Operations
and Financial Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
THREE
ELEVEN MONTHS MONTHS
FISCAL YEARS ENDED DECEMBER 31, ENDED ENDED
----------------------------------------- NOVEMBER 30, MARCH 31,
1992 1993 1994 1995 1996 1996
-------- -------- -------- -------- ------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................... $247,458 $262,364 $310,559 $325,047 $325,102 $92,551
Cost of goods sold.................. 205,175 217,277 238,623 274,824 244,313 71,430
Selling, general and administrative
expenses.......................... 29,525 24,259 42,930 42,445 34,792 10,479
Depreciation and amortization....... 17,405 17,606 16,111 16,378 18,317 5,547
-------- -------- -------- -------- -------- -------
Operating income (loss)........... (4,647) 3,222 12,895 (8,600) 27,680 5,095
Interest expense(1)................. -- -- 5 204 917 28
Other income........................ (191) (249) (75) (94) (228) (114)
-------- -------- -------- -------- -------- -------
Income (loss) before income
taxes........................... (4,456) 3,471 12,965 (8,710) 26,991 5,181
Provision (benefit) for income
taxes............................. (1,737) 1,319 4,927 (3,310) 10,257 2,072
-------- -------- -------- -------- -------- -------
Net income (loss)................. $ (2,719) $ 2,152 $ 8,038 $ (5,400) $ 16,734 $ 3,109
======== ======== ======== ======== ======== =======
OTHER DATA:
EBITDA(2)........................... $ 12,758 $ 20,828 $ 29,006 $ 7,778 $ 45,997 $10,642
Capital expenditures................ 11,804 9,823 16,884 22,173 16,485 3,920
</TABLE>
- ---------------
(1) Interest expense represents interest incurred on capital leases.
(2) EBITDA is defined as operating income (loss) plus depreciation and
amortization. The Company believes that EBITDA provides additional
information for determining its ability to meet debt service requirements.
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 EBITDA does not necessarily indicate whether cash
flow will be sufficient for cash requirements. Charges of $10,069, $8,896,
$14,565, $18,987, $7,900 and $3,449, net of estimated additional
administrative costs to be incurred, for fiscal years ended 1992, 1993,
1994, 1995, the eleven months ended November 30, 1996 and the three months
ended March 31, 1996, respectively, incurred with respect to corporate
allocations to the Lucent Division by Lucent Technologies, which are not
expected to be incurred by the Company are included in the historical
results of operations and have not been eliminated to calculate EBITDA.
22
<PAGE> 29
FORWARD GROUP PLC
The selected information below presents financial information of Forward
Group for the periods indicated. The data for the five fiscal years ended
January 31, 1997, set forth in U.K. GAAP in U.K.L, has been derived from the
audited consolidated financial statements of Forward Group. The data for the
three months ended March 31, 1996 and 1997, has been derived from the unaudited
condensed consolidated financial statements of Forward Group. In the opinion of
management the unaudited condensed consolidated financial statements contain all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation. The consolidated financial statements of Forward Group have
been prepared in accordance with U.K. GAAP, which differs in certain significant
respects from U.S. GAAP (see Note 25 to the consolidated financial statements of
Forward Group included elsewhere herein). The data for the three fiscal years
ended January 31, 1997 and the three months ended March 31, 1996 and 1997, set
forth in U.S. GAAP in U.S.$, has been derived from the audited and unaudited
condensed financial statements of Forward Group and adjusted for differences
between U.K. GAAP and U.S. GAAP. The following information should be read in
conjunction with the audited and unaudited condensed consolidated financial
statements of Forward Group and the notes thereto, the "Unaudited Pro Forma
Financial Information," and "Management's Discussion and Analysis of Results of
Operations and Financial Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ENDED JANUARY 31, ----------------------
------------------------------------------------------ MARCH 31, MARCH 31,
1993 1994 1995 1996 1997 1996 1997
-------- -------- -------- --------- --------- --------- ---------
(POUNDS AND DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
U.K. GAAP (IN U.K.L)
--------------------
STATEMENT OF OPERATIONS DATA:
Net sales....................................... L 12,459 L 20,663 L 23,819 L 66,839 L 105,029 L 25,907 L 25,287
Costs of goods sold............................. 6,868 11,505.. 17,032 49,850 79,030 19,065 18,938
Selling, general and administrative expenses.... 3,290 5,856 3,179 6,425 11,189 2,007 2,271
Depreciation and amortization................... 914 1,143 1,215 2,701 4,694 921 1,265
Restructuring charges(1)........................ -- -- -- 1,244 -- --
-------- -------- -------- --------- --------- --------- ---------
Operating income.............................. 1,387 2,159 2,393 7,863 8,872 3,914 2,813
Interest expense................................ 213 208 228 412 996 159 381
Other income.................................... (57) (75) (52) (113) (229) (113) (40)
Gain on disposal of discontinued operation(2)... -- -- (1,503) -- -- -- --
Expense related to sale(3)...................... -- -- -- -- -- 1,318
-------- -------- -------- --------- --------- --------- ---------
Income before income taxes.................... 1,231 2,026 3,720 7,564 8,105 3,868 1,154
Provision for income taxes...................... 428 699 744 2,641 2,707 1,276 833
-------- -------- -------- --------- --------- --------- ---------
Net income.................................... L 803 L 1,327 L 2,976 L 4,923 L 5,398 L 2,592 L 321
======== ======== ======== ========= ========= ========= =========
OTHER DATA:
EBITDA(4)....................................... L 2,301 L 3,302 L 3,608 L 10,564 L 14,810 L 4,835 L 4,078
Capital expenditures............................ 1,423 3,050 2,724 4,678 11,841 3,488 1,494
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents....................... L 3 L 4 L 3 L 789 L -- L --
Working capital................................. (561) (94) 1,245 1,898 (3,074) (3,610)
Total assets.................................... 8,997 13,968 15,589 51,124 60,282 63,721
APPROXIMATE AMOUNTS IN U.S. GAAP (IN U.S.$)
-------------------------------------------
STATEMENT OF OPERATIONS DATA:
Net sales............................................................ $ 37,808 $ 101,271 $ 169,402 $ 39,253 $ 41,454
Costs of goods sold.................................................. 27,035 75,530 127,468 28,886 31,046
Selling, general and administrative expenses......................... 5,046 9,682 17,789 2,995 3,657
Depreciation and amortization........................................ 1,935 4,223 7,855 1,450 2,152
Restructuring charges(1)............................................. -- -- 2,006 -- --
-------- --------- --------- --------- ---------
Operating income................................................... 3,792 11,836 14,284 5,922 4,599
Interest expense..................................................... 362 624 1,606 241 625
Other income......................................................... (83) (171) (369) (171) (66)
Gain on disposal of discontinued operation(2)........................ (2,417) -- -- -- --
Expense related to sale(3)........................................... -- -- -- -- 2,161
-------- --------- --------- --------- ---------
Income before income taxes......................................... 5,930 11,383 13,047 5,852 1,879
Provision for income taxes........................................... 2,362 4,018 4,452 1,948 1,387
-------- --------- --------- --------- ---------
Net income......................................................... $ 3,568 $ 7,365 $ 8,595 $ 3,904 $ 492
======== ========= ========= ========= =========
OTHER DATA:
EBITDA(4)............................................................ $ 5,727 $ 16,059 $ 24,145 $ 7,372 $ 6,751
Capital expenditures................................................. 4,324 7,088 19,098 5,285 2,449
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents............................................ $ 5 $ 1,195 $ -- $ --
Working capital...................................................... 2,434 3,868 (4,958) (5,917)
Total assets......................................................... 24,022 85,665 108,719 116,088
</TABLE>
- ---------------
(1) Represents non-recurring restructuring charges related to the consolidation
and rationalization of several facilities at Forward Group.
(2) Represents the gain recognized from the sale of an unrelated business in
December 1994.
(3) Represents non-recurring expenses incurred in connection with the sale of
Forward Group which includes, among others, brokerage and legal fees.
(4) EBITDA is defined as operating income plus depreciation, amortization and
the non-cash charges related to the restructuring of facilities discussed in
note (1) above in the amount of L1,244, with respect to the U.K. GAAP
presentation, and $2,006, with respect to the U.S. GAAP presentation. The
Company believes that EBITDA provides additional information for determining
its ability to meet debt service requirements. EBITDA does not represent and
should not be considered as an alternative to net income or cash flow from
operations as determined by generally accepted accounting principles, and
EBITDA does not necessarily indicate whether cash flow will be sufficient
for cash requirements.
23
<PAGE> 30
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED ("CHIPS")
The selected information below presents financial information of Chips as
of and for the periods indicated. The data as of and for the fiscal years ended
April 2, 1993, April 1, 1994, March 31, 1995, March 29, 1996, and April 4, 1997
set forth in U.K.L, has been derived from the audited consolidated financial
statements of Chips. The data for the three months ended March 29, 1996 and
April 4, 1997, has been derived from the unaudited condensed consolidated
financial statements of Chips. In the opinion of management of the Company, the
unaudited condensed consolidated financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation. The results for the three months ended March 29, 1996 and April 4,
1997, are included in the statement of operations data for the fiscal years
ended March 29, 1996 and April 4, 1997. The consolidated financial statements of
Chips have been prepared in accordance with U.K. GAAP, which differs in certain
significant respects from U.S. GAAP (see Note 25 to the consolidated financial
statements of Chips included elsewhere herein). The data as of and for the
fiscal years ended March 31, 1995, March 29, 1996 and April 4, 1997, and for the
three months ended March 29, 1996, and April 4, 1997, set forth in U.S. GAAP in
U.S.$, has been derived from the audited and unaudited condensed consolidated
financial statements of Chips and adjusted for differences between U.K. GAAP and
U.S. GAAP. The following information should be read in conjunction with the
audited and unaudited condensed consolidated financial statements of Chips and
the notes thereto, the "Unaudited Pro Forma Financial Information," and
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED THREE MONTHS ENDED
------------------------------------------------------- ---------------------
APRIL 2, APRIL 1, MARCH 31, MARCH 29, APRIL 4, MARCH 29, APRIL 4,
1993 1994 1995 1996 1997 1996 1997
-------- -------- --------- --------- --------- --------- ---------
(POUNDS AND DOLLARS IN THOUSANDS)
U.K. GAAP (IN U.K.L)
--------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................... L 36,750 L 51,852 L 70,805 L 104,611 L 141,643 L 30,231 L 38,266
Costs of goods sold.......................... 25,793 36,024 49,149 73,407 94,466 19,999 28,848
Selling, general and administrative
expenses................................... 4,207 6,264 6,242 7,522 10,514 1,869 1,895
Depreciation and amortization................ 3,198 6,561 10,822 17,302 19,123 4,415 5,050
-------- -------- -------- -------- --------- -------- --------
Operating income........................... 3,552 3,003 4,592 6,380 17,540 3,948 2,473
Interest expense............................. 830 449 921 807 818 262 260
Other income................................. (27) (200) (109) -- (44) -- (44)
-------- -------- -------- -------- --------- -------- --------
Income before income taxes................. 2,749 2,754 3,780 5,573 16,766 3,686 2,257
Provision for income taxes................... 997 1,488 2,539 4,422 6,874 2,015 668
-------- -------- -------- -------- --------- -------- --------
Net income................................. L 1,752 L 1,266 L 1,241 L 1,151 L 9,892 L 1,671 L 1,589
======== ======== ========= ======== ======== ======= ========
OTHER DATA:
EBITDA(1).................................... L 6,750 L 9,564 L 15,414 L 23,682 L 36,663 L 8,363 L 7,523
Capital expenditures......................... 5,292 11,434 14,477 25,544 27,591 11,752 13,672
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents.................... L 33 L 27 L 2,087 L 2,636 L 26,244 L 26,244
Working capital.............................. 1,027 (2,948) (1,094) (5,851) 11,516 11,516
Total assets................................. 26,928 36,067 52,616 67,349 129,921 129,921
APPROXIMATE AMOUNTS IN U.S. GAAP (IN U.S.$)
-------------------------------------------
STATEMENT OF OPERATIONS DATA:
Net sales......................................................... $114,202 $158,502 $ 232,202 $ 45,805 $ 62,731
Costs of goods sold............................................... 79,273 111,223 154,862 30,302 47,292
Selling, general and administrative expenses...................... 9,858 11,310 17,110 2,811 3,077
Depreciation and amortization..................................... 14,716 23,866 28,725 6,103 7,623
-------- -------- --------- -------- ---------
Operating income................................................ 10,355 12,103 31,505 6,589 4,739
Interest expense.................................................. 1,485 1,223 1,341 397 426
Other income...................................................... (176) -- (72) -- (72)
-------- -------- --------- -------- ---------
Income before income taxes...................................... 9,046 10,880 30,236 6,192 4,385
Provision for income taxes........................................ 3,355 3,915 10,020 2,358 576
-------- -------- --------- -------- ---------
Net income...................................................... $ 5,691 $ 6,965 $ 20,216 $ 3,834 $ 3,809
======== ======== ========= ========= =========
OTHER DATA:
EBITDA(1)......................................................... $ 25,071 $ 35,969 $ 60,230 $ 12,692 $ 12,362
Capital expenditures.............................................. 23,350 38,703 45,231 17,806 22,413
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents......................................... $ 3,366 $ 3,994 $ 43,023 $ 43,023
Working capital................................................... (1,092) (5,954) 23,403 23,403
Total assets...................................................... 72,892 94,953 172,872 172,872
</TABLE>
- ---------------
(1) EBITDA is defined as operating income plus depreciation and amortization.
The Company believes that EBITDA provides additional information for
determining its ability to meet debt service requirements. 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 EBITDA does not necessarily indicate whether cash flow will
be sufficient for cash requirements.
24
<PAGE> 31
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the "Pro Forma
Financial Information") of the Company is based on the audited and unaudited
condensed consolidated financial statements of Viasystems Group, the audited and
unaudited condensed consolidated financial statements of Circo Craft, the
audited and unaudited condensed financial statements of Viasystems Technologies,
the audited and unaudited condensed consolidated financial statements of Forward
Group, and the audited and unaudited condensed consolidated financial statements
of Chips, all included elsewhere herein. The unaudited pro forma statement of
operations for the year ended December 31, 1996 gives effect to the acquisitions
of Circo Craft, Viasystems Technologies and Forward Group, the Chips Merger and
the consummation of the Original Offering and the Exchange Offer, as though each
such transaction had occurred at January 1, 1996. The unaudited pro forma
statement of operations for the three months ended March 31, 1997, gives effect
to the 1997 Transactions, the consummation of the Original Offering and the
Exchange Offer, as though such transactions had occurred at January 1, 1996. The
pro forma balance sheet as of March 31, 1997, gives effect to the acquisition of
Forward Group, the Chips Merger, the consummation of the Original Offering and
the Exchange Offer as though each such transaction had occurred at such date.
The financial data for Circo Craft, Forward Group and Chips used in the
preparation of the Pro Forma Financial Information has been adjusted for the
differences between Canadian GAAP or U.K. GAAP, as the case may be, and U.S.
GAAP (see notes to the consolidated financial statements of Circo Craft, Forward
Group and Chips, all included elsewhere herein).
The Pro Forma Financial Information gives effect to pro forma adjustments
that are based upon available information and certain assumptions that the
Company believes are reasonable. The acquisitions of Forward Group and the Chips
Merger will be accounted for using the purchase method of accounting. The
purchase price in excess of the book value of net assets as of March 31, 1997
for Forward Group and as of April 4, 1997 for Chips has been allocated to
goodwill for purposes of the pro forma presentation. The final allocations of
purchase prices will be determined based upon independent appraisals and other
estimates of fair value. The Pro Forma Financial Information does not give
effect to certain charges permitted under GAAP and expected to be recorded in
the Company's second quarter related to the anticipated write-off of acquired
in-process research and development costs associated with the acquisition of
Forward Group and the Chips Merger. It is anticipated that a portion of the
acquired intangibles will be identified as in-process research and development
and written off for research and development projects that do not have a future
alternative use to the acquired in-process research and development projects.
The amount assigned to acquired in-process research and development may be a
significant portion of the purchase price of Forward Group and Chips. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition." The Pro Forma Financial Information should be read in conjunction
with the historical financial statements of Viasystems Group, Circo Craft,
Viasystems Technologies, Forward Group and Chips, and the related notes thereto,
all included elsewhere herein.
The Pro Forma Financial Information does not purport to be indicative of
the results that would have been obtained had such transactions been completed
as of the assumed dates and for the periods presented or that may be obtained in
the future.
25
<PAGE> 32
VIASYSTEMS, INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ORIGINAL
OFFERING AND
1997 1997 EXCHANGE
HISTORICAL TRANSACTIONS TRANSACTIONS OFFER ADJUSTED
COMBINED(1) ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
----------- ------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 46,579 $(36,366)(2) $ 10,213 $ -- $ 10,213
Accounts receivable............. 134,400 -- 134,400 -- 134,400
Inventories..................... 66,702 -- 66,702 -- 66,702
Prepaid expenses and other...... 8,219 -- 8,219 -- 8,219
-------- -------- ---------- ------- ----------
Total current assets..... 255,900 (36,366) 219,534 -- 219,534
Property, plant and equipment,
net............................. 341,824 -- 341,824 -- 341,824
Deferred financing costs, net..... 26,616 33,054(3) 59,670 14,000(4) 73,670
Intangible assets, net............ 59,264 568,064(5) 627,328 -- 627,328
-------- -------- ---------- ------- ----------
Total assets............. $683,604 $564,752 $1,248,356 $14,000 $1,262,356
======== ======== ========== ======= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term
obligations................... $ 38,712 $(26,329)(6) $ 12,383 $ -- $ 12,383
Accounts payable................ 71,866 -- 71,866 -- 71,866
Accrued and other liabilities... 64,287 -- 64,287 -- 64,287
Income taxes payable............ 18,386 -- 18,386 -- 18,386
-------- -------- ---------- ------- ----------
Total current
liabilities............ 193,251 (26,329) 166,922 -- 166,922
Deferred taxes.................... 9,225 -- 9,225 -- 9,225
Long-term obligations, less
current maturities.............. 313,469 492,500(6) 805,969 14,000(7) 819,969
Other noncurrent liabilities...... 16,019 15,400(8) 31,419 -- 31,419
Stockholder's equity.............. 151,640 83,181(9) 234,821 -- 234,821
-------- -------- ---------- ------- ----------
Total liabilities and
stockholder's equity... $683,604 $564,752 $1,248,356 $14,000 $1,262,356
======== ======== ========== ======= ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Balance Sheet.
26
<PAGE> 33
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) The following historical balance sheets of Viasystems Group and Forward
Group as of March 31, 1997, and Chips as of April 4, 1997 were derived from
the unaudited interim financial statements of Viasystems Group and Forward
Group and the audited financial statements of Chips included elsewhere
herein.
<TABLE>
<CAPTION>
VIASYSTEMS FORWARD HISTORICAL
GROUP GROUP CHIPS COMBINED
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............... $ 3,556 $ -- $ 43,023 $ 46,579
Accounts receivable..................... 60,131 30,833 43,436 134,400
Inventories............................. 39,789 11,943 14,970 66,702
Prepaid expenses and other.............. 6,709 1,510 -- 8,219
-------- -------- -------- --------
Total current assets............ 110,185 44,286 101,429 255,900
Property, plant and equipment, net........ 211,596 59,251 70,977 341,824
Deferred financing costs, net............. 26,616 -- -- 26,616
Intangible assets, net.................... 46,247 12,551 466 59,264
-------- -------- -------- --------
Total assets.................... $394,644 $116,088 $172,872 $683,604
======== ======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term
obligations.......................... $ 10,691 $ 19,472 $ 8,549 $ 38,712
Accounts payable........................ 18,871 18,534 34,461 71,866
Accrued and other liabilities........... 34,214 7,323 22,750 64,287
Income taxes payable.................... 1,246 4,874 12,266 18,386
-------- -------- -------- --------
Total current liabilities....... 65,022 50,203 78,026 193,251
Deferred taxes............................ 4,035 5,190 -- 9,225
Long-term obligations, less current
maturities.............................. 252,885 10,520 50,064 313,469
Other noncurrent liabilities.............. 15,055 964 -- 16,019
Stockholder's equity...................... 57,647 49,211 44,782 151,640
-------- -------- -------- --------
Total liabilities and
stockholder's equity............ $394,644 $116,088 $172,872 $683,604
======== ======== ======== ========
</TABLE>
(2) Adjustment reflects the assumption that cash on hand at March 31, 1997 would
have been used in lieu of a portion of the debt financing applied to
consummate the 1997 Transactions.
(3) Adjustment reflects the deferred financing costs incurred in connection with
the 1997 Transactions.
(4) Adjustment reflects estimated fees and expenses of the Original Offering and
the Exchange Offer.
(5) Adjustment reflects the purchase price of Forward Group and Chips in excess
of the book value of net assets acquired. The purchase price in excess of
book value has been allocated to goodwill for purposes of the pro forma
presentation. The final allocations of purchase prices will be determined
based upon independent appraisals and other estimates of fair value.
27
<PAGE> 34
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(6) Adjustments reflect the consummation of the 1997 Transactions to show pro
forma combined debt as follows:
<TABLE>
<S> <C>
Chips Reimbursement Obligation.............................. $319,250
Forward Group Loan Notes.................................... 24,243
Subordinated Credit Facility................................ 216,000
--------
Total............................................. 559,493
Less:
Repayment of Tranche A Loan............................... (20,000)
Repayment of Forward Group and Chips debt -- long-term
portion................................................ (46,993)
--------
Net impact to long-term obligations, less current
maturities................................................ $492,500
========
Repayment of Forward Group and Chips debt -- current
maturities................................................ $(26,329)
========
</TABLE>
(7) Adjustment reflects the change in long-term obligations related to the
Original Offering and the Exchange Offer and use of proceeds therefrom as
follows:
<TABLE>
<S> <C>
Issuance of 9 3/4% Senior Subordinated Notes due 2007....... $ 400,000
Repayment of:
Canadian Revolving Loan................................... (1,231)
Tranche A Loan............................................ (45,000)
Tranche B Loan............................................ (5,774)
Tranche C Loan............................................ (55,000)
Canadian Term Loan........................................ (62,995)
Subordinated Credit Facility.............................. (216,000)
---------
Total............................................. $ 14,000
=========
</TABLE>
(8) Adjustment reflects other non-current liabilities incurred in connection
with the Transactions.
(9) Adjustment reflects:
<TABLE>
<S> <C>
Capital contribution related to the acquisition of Forward
Group..................................................... $ 40,000
Capital contribution related to the acquisition of Chips.... 140,000
Transaction costs related to capital contributions.......... (2,826)
--------
Net equity contribution................................... 177,174
Less:
Purchase accounting adjustment to eliminate the historical
stockholders' equity of Forward Group and Chips........ (93,993)
--------
Net adjustment to stockholder's equity............ $ 83,181
========
</TABLE>
28
<PAGE> 35
VIASYSTEMS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ORIGINAL
OFFERING
AND EXCHANGE
HISTORICAL TRANSACTIONS TRANSACTIONS OFFER
COMBINED(1) ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA(2)
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............................. $872,424 $ -- $872,424 $ -- $872,424
Costs of goods sold................... 643,351 (19,478)(3) 623,873 -- 623,873
Selling, general and administrative
expenses............................ 79,470 (3,667)(4) 75,803 -- 75,803
Depreciation and amortization......... 65,750 21,028(5) 86,778 -- 86,778
Write-off of acquired in-process
research and development............ 50,800 -- 50,800 -- 50,800
Restructuring charges................. 2,006 -- 2,006 -- 2,006
-------- -------- -------- -------- --------
Operating income.................... 31,047 2,117 33,164 -- 33,164
Interest expense, net(6).............. 6,842 70,589(7) 77,431 166(8) 77,597
Amortization of deferred financing
costs............................... 470 7,552(9) 8,022 1,400(10) 9,422
Expenses related to sale.............. 4,343 (4,343)(11) -- -- --
Other income.......................... (1,054) -- (1,054) -- (1,054)
-------- -------- -------- -------- --------
Income (loss) before income taxes... 20,446 (71,681) (51,235) (1,566) (52,801)
Provision (benefit) for income
taxes............................... 22,011 (23,823)(12) (1,812) (626)(12) (2,438)
-------- -------- -------- -------- --------
Net loss......................... $ (1,565) $(47,858) $(49,423) $ (940) $(50,363)
======== ======== ======== ======== ========
EBITDA(13)............................ $149,603 $ 23,145(3)(4) $172,748 $ -- $172,748
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges(14)......................... N/A N/A
</TABLE>
See accompanying notes to Unaudited Pro Forma Statement of Operations.
29
<PAGE> 36
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(1) The following combined historical operating data of Viasystems Group for the
period from inception (August 28, 1996) to December 31, 1996, Circo Craft
for the nine months ended September 30, 1996 (the period prior to the
acquisition of Circo Craft by Viasystems Group), Viasystems Technologies for
the eleven months ended November 30, 1996 (the period prior to the
acquisition of the Lucent Division by Viasystems Technologies), Forward
Group for the year ended January 31, 1997, and Chips for the year ended
April 4, 1997 was derived from the audited historical statements of
operations of Viasystems Group, Circo Craft, Viasystems Technologies,
Forward Group, and Chips all included elsewhere herein.
<TABLE>
<CAPTION>
VIASYSTEMS CIRCO VIASYSTEMS FORWARD COMBINED
GROUP CRAFT TECHNOLOGIES GROUP CHIPS HISTORICAL
---------- ------- ------------ -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales................ $ 50,400 $95,318 $325,102 $169,402 $232,202 $872,424
Costs of goods sold...... 42,052 74,656 244,313 127,468 154,862 643,351
Selling, general and
administrative
expenses............... 3,844 5,935 34,792 17,789 17,110 79,470
Depreciation and
amortization........... 4,635 6,218 18,317 7,855 28,725 65,750
Write-off of acquired in-
process research and
development............ 50,800 -- -- -- -- 50,800
Restructuring charges.... -- -- -- 2,006 -- 2,006
-------- ------- -------- -------- -------- --------
Operating income
(loss).............. (50,931) 8,509 27,680 14,284 31,505 31,047
Interest expense......... 2,503 475 917 1,606 1,341 6,842
Amortization of deferred
financing costs........ 470 -- -- -- -- 470
Expenses related to
sale................... -- 4,343 -- -- -- 4,343
Other expense (income)... 262 (647) (228) (369) (72) (1,054)
-------- ------- -------- -------- -------- --------
Income (loss) before
income taxes........ (54,166) 4,338 26,991 13,047 30,236 20,446
Provision (benefit) for
income taxes........... (5,424) 2,706 10,257 4,452 10,020 22,011
-------- ------- -------- -------- -------- --------
Net income (loss)... $(48,742) $ 1,632 $ 16,734 $ 8,595 $ 20,216 $ (1,565)
======== ======= ======== ======== ======== ========
EBITDA................... $ 4,504 $14,727 $ 45,997 $ 24,145 $ 60,230 $149,603
======== ======= ======== ======== ======== ========
</TABLE>
(2) The Unaudited Pro Forma Statement of Operations does not reflect the
following non-recurring charges that will result from the 1997 Transactions
and the Original Offering. Such charges are, or are anticipated to be,
recorded in the first and second quarters of 1997. See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition -- Anticipated Second Quarter Adjustments":
(a) Write-off anticipated to be recorded in the second quarter of $7,478 of
debt financing fees associated with the acquisition of Forward Group.
(b) Write-off anticipated to be recorded in the second quarter of acquired
in-process research and development related to the acquisitions of
Forward Group and Chips. The Company is currently undertaking an
appraisal to determine the value to be assigned to this intangible
asset and written off in accordance with U.S. GAAP.
(c) Expenses of the seller of approximately $2,161 related to the
acquisition of Forward Group have been recorded by Forward Group as of
March 1997. See "Viasystems, Inc. Unaudited Pro Forma Statement of
Operations for the Three Months Ended March 31, 1997" and accompanying
notes thereto.
30
<PAGE> 37
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(3) Adjustment reflects the following:
<TABLE>
<S> <C>
(a) Effect on cost of goods sold as
a result of purchase accounting
adjustments.................... $ (1,844)
(b) Elimination of corporate
allocations to the Lucent
Division by Lucent Technologies
that are not anticipated to be
incurred by the Company on a
stand-alone basis.............. (6,004)
(c) Savings associated with the
change to certain benefits of
manufacturing personnel........ (11,630)
---------
Total......................... $ (19,478)
=========
(4) Adjustment reflects the following:
(a) Elimination of corporate
allocations to the Lucent
Division by Lucent Technologies
that are not anticipated to be
incurred by the Company on a
stand-alone basis, net of
estimated additional
administrative costs to be
incurred....................... $ (1,896)
(b) Elimination of public company
expenses not anticipated to be
incurred by the Company........ (1,771)
---------
Total......................... $ (3,667)
=========
</TABLE>
(5) Adjustment reflects the full year effect of the acquisitions of the Lucent
Division and Circo Craft and the full year effect of the amortization of
goodwill related to the acquisition of Forward Group and Chips. For pro
forma purposes, goodwill related to the acquisitions of Forward Group and
Chips is being amortized over 40 years. The actual amortization of Forward
Group and Chips intangibles will be based upon an appraisal after giving
effect to the write-off of acquired in-process research and development.
While the Company cannot presently determine the amount to be assigned to
acquired in-process research and development, the Company believes that 40
years results in a fair estimation of the annual amortization to be
incurred.
(6) Interest expense, net, is interest expense net of interest income. A
one-half of one percent change in interest rates would impact interest
expense by approximately $317 in the aggregate for borrowings under the
Tranche B Loan, the Tranche C Loan, the Canadian Term Loan, and the Forward
Group Loan Notes remaining outstanding on a pro forma basis after giving
effect to the Transactions, the Original Offering and the Exchange Offer.
(7) Adjustment reflects the net impact to interest expense of the following
borrowings as if the Transactions had been consummated as of the beginning
of the period:
<TABLE>
<S> <C>
Senior Credit Facilities:
Canadian Revolving Loan -- $1,235 at 8.0%................. $ 99
Tranche A Loan -- $35,000 at 8.0%......................... 2,800
Tranche B Loan -- $55,000 at 8.5%......................... 4,675
Tranche C Loan -- $55,000 at 9.0%......................... 4,950
Canadian Term Loan -- $63,345 at 5.5%..................... 3,484
Chips Reimbursement Obligation(a)......................... 30,258
Forward Group Loan Notes -- $23,852 at 7.0%................. 1,669
Subordinated Credit Facility -- $216,000 at 12.1%........... 26,190
Other -- $41,324 at 8.0%.................................... 3,306
-------
77,431
Elimination of historical interest.......................... (6,842)
-------
$70,589
=======
</TABLE>
--------------------
(a) Interest on the Chips Reimbursement Obligation consists of:
<TABLE>
<S> <C>
Chips Loan Notes -- $437,500 at 6.2%................... $27,213
Letter of credit fee -- $346,463 at 2.5%............... 8,662
Letter of credit fee on the Cash Collateral
Reimbursement Account -- $118,250 at 0.25%............ 296
Less: Interest income on the Cash Collateral
Reimbursement Account -- $118,250 at 5.0%............. (5,913)
-------
$30,258
=======
</TABLE>
31
<PAGE> 38
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(8) Adjustment reflects the net impact to interest expense as a result of the
Original Offering and the Exchange Offer:
<TABLE>
<S> <C>
Issuance of Senior Subordinated Notes due 2007 -- $400,000
at 9.75%................................................ $ 39,000
Repayment of:
Canadian Revolving Loan -- $1,235 at 8.0%................ (99)
Tranche A Loan -- $35,000 at 8.0%........................ (2,800)
Tranche B Loan -- $15,420 at 8.5%........................ (1,311)
Tranche C Loan -- $55,000 at 9.0%........................ (4,950)
Canadian Term Loan -- $63,345 at 5.5%.................... (3,484)
Subordinated Credit Facility -- $216,000 at 12.1%........ (26,190)
--------
$ 166
========
</TABLE>
(9) Adjustment reflects the amortization of deferred financing costs associated
with the Transactions as if the Transactions had been consummated as of the
beginning of the period. These costs are amortized over the term of the
related debt using the effective interest method and the straight-line
method, which approximates the effective interest method.
(10) Adjustment reflects the amortization of deferred financing costs associated
with the Original Offering and the Exchange Offer as if the Original
Offering and the Exchange Offer had been consummated as of the beginning of
the period. These costs are amortized over the term of the related debt
using the straight-line method, which approximates the effective interest
method.
(11) Adjustment reflects the elimination of expenses of Circo Craft related to
the acquisition of Circo Craft.
(12) Adjustments reflect the pro forma tax effect of the adjustments described
above.
(13) EBITDA is defined as operating income plus depreciation, amortization and
certain non-cash charges in the amount of $50,800 relating to the write-off
of acquired in-process research and development and $2,006 of restructuring
charges for fiscal year 1996. The Company believes that EBITDA provides
additional information for determining its ability to meet debt service
requirements. 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 EBITDA does not necessarily
indicate whether cash flow will be sufficient for cash requirements.
(14) For purposes of calculating the ratio of earnings to fixed charges
available to cover fixed charges, "earnings" represent earnings before
income taxes plus fixed charges. "Fixed charges" consist of interest on all
indebtedness, amortization of deferred financing costs and the portion
(approximately 1/3) of rental expenses that management believes is
representative of the interest component of rent expense. Earnings on a pro
forma basis were insufficient to cover fixed charges by $52,801.
32
<PAGE> 39
VIASYSTEMS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ORIGINAL
OFFERING AND
HISTORICAL TRANSACTIONS TRANSACTIONS EXCHANGE OFFER
COMBINED(1) ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA(2)
------------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales.............................. $224,069 $ -- $224,069 $ -- $224,069
Costs of goods sold.................... 168,407 -- 168,407 -- 168,407
Selling, general and administrative
expenses............................. 17,889 -- 17,889 -- 17,889
Depreciation and amortization.......... 18,250 3,551(3) 21,801 -- 21,801
-------- -------- -------- ----- --------
Operating income..................... 19,523 (3,551) 15,972 -- 15,972
Interest expense, net(4)............... 6,106 13,150(5) 19,256 335(6) 19,591
Amortization of deferred financing
costs................................ 937 1,069(7) 2,006 350(8) 2,356
Expenses related to sale............... 2,161 (2,161)(9) -- -- --
Other income........................... (190) -- (190) -- (190)
-------- -------- -------- ----- --------
Income (loss) before income taxes.... 10,509 (15,609) (5,100) (685) (5,785)
Provision (benefit) for income taxes... 3,537 (5,687)(10) (2,150) (274)(10) (2,424)
-------- -------- -------- ----- --------
Net loss.......................... $ 6,972 $ (9,922) $ (2,950) $(411) $ (3,361)
======== ======== ======== ===== ========
EBITDA(11)............................. $ 37,773 $ -- $ 37,773 $ -- $ 37,773
======== ======== ======== ===== ========
Ratio of earnings to fixed
charges(12).......................... N/A N/A
</TABLE>
See accompanying notes to Unaudited Pro Forma Statement of Operations.
33
<PAGE> 40
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS)
(1) The following combined interim operating data of Viasystems Group and
Forward Group for the three month period ended March 31, 1997, and of Chips
for the three month period ended April 4, 1997 was derived from the
unaudited interim statement of operations all included elsewhere herein.
<TABLE>
<CAPTION>
VIASYSTEMS FORWARD COMBINED
GROUP GROUP CHIPS HISTORICAL
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Net sales...................................... $119,884 $ 41,454 $62,731 $224,069
Costs of goods sold............................ 90,069 31,046 47,292 168,407
Selling, general and administrative expenses... 11,155 3,657 3,077 17,889
Depreciation and
amortization................................. 8,475 2,152 7,623 18,250
-------- -------- ------- --------
Operating income............................. 10,185 4,599 4,739 19,523
Interest expense............................... 5,055 625 426 6,106
Amortization of deferred financing costs....... 937 -- -- 937
Expenses related to sale....................... -- 2,161 -- 2,161
Other income................................... (52) (66) (72) (190)
-------- -------- ------- --------
Income before income taxes................... 4,245 1,879 4,385 10,509
Provision for income taxes..................... 1,574 1,387 576 3,537
-------- -------- ------- --------
Net income................................ $ 2,671 $ 492 $ 3,809 $ 6,972
========= ========= ======== =========
EBITDA......................................... $ 18,660 $ 6,751 $12,362 $ 37,773
========= ========= ======== =========
</TABLE>
(2) The Unaudited Pro Forma Statement of Operations does not reflect the
following non-recurring charges that will result from the 1997 Transactions
and the Original Offering. Such charges are anticipated to be recorded in
the second quarter. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition -- Anticipated Second Quarter
Adjustments":
(a) Write-off of $7,478 of debt financing fees associated with the
acquisition of Forward Group.
(b) Write-off of acquired in-process research and development related to
the acquisitions of Forward Group and Chips. The Company is currently
undertaking an appraisal to determine the value to be assigned to this
intangible asset and written off in accordance with U.S. GAAP.
(3) Adjustment reflects the three month effect of the acquisitions of Forward
Group and Chips. For pro forma purposes, goodwill related to the acquisition
of Forward Group and Chips is being amortized over 40 years. The actual
amortization of intangibles will be based upon an appraisal after giving
effect to the write-off of acquired in-process research and development.
While the Company cannot presently determine the amount to be assigned to
acquired in-process research and development, the Company believes that 40
years results in a fair estimation of the annual amortization to be
incurred.
(4) Interest expense, net, is interest expense net of interest income. A
one-half of one percent change in interest rates would impact interest
expense by approximately $92 in the aggregate for borrowings under the
Tranche B Loan, and the Forward Group Loan Notes remaining outstanding on a
pro forma basis after giving effect to the 1997 Transactions, the Original
Offering and the Exchange Offer.
34
<PAGE> 41
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(5) Adjustment reflects the net impact to interest expense of the following
borrowings as if the 1997 Transactions had been consummated as of January
1, 1996:
<TABLE>
<S> <C>
Senior Credit Facilities:
Canadian Revolving Loan -- $1,231 at 5.8%................. $ 18
Tranche A Loan -- $45,000 at 8.1%......................... 908
Tranche B Loan -- $55,000 at 8.6%......................... 1,178
Tranche C Loan -- $55,000 at 9.1%......................... 1,247
Canadian Term Loan -- $62,995 at 5.5%..................... 871
Chips Reimbursement Obligation(a)......................... 7,565
Forward Group Loan Notes -- $24,243 at 7.0%................. 429
Subordinated Credit Facility -- $216,000 at 11.6%........... 6,247
Other -- $39,633 at 8.0%.................................... 793
-------
19,256
Elimination of historical interest.......................... (6,106)
-------
$13,150
=======
</TABLE>
--------------------
(a) Interest on the Chips Reimbursement Obligation consists of:
<TABLE>
<S> <C>
Chips Loan Notes -- $437,500 at 6.2%.................... $ 6,803
Letter of credit fee -- $346,463 at 2.5%................ 2,166
Letter of credit fee on the Cash Collateral
Reimbursement Account -- $118,250 at 0.25%............. 74
Less: Interest income on the Cash Collateral
Reimbursement Account -- $118,250 at 5.0%.............. (1,478)
-------
$ 7,565
=======
</TABLE>
(6) Adjustment reflects the net impact to interest expense as a result of the
Original Offering and the Exchange Offer:
<TABLE>
<S> <C>
Issuance of Senior Subordinated Notes due 2007 -- $400,000
at 9.75%.................................................. $ 9,750
Repayment of:
Canadian Revolving Loan -- $1,231 at 5.8%................. (18)
Tranche A Loan -- $45,000 at 8.1%......................... (908)
Tranche B Loan -- $5,774 at 8.6%.......................... (124)
Tranche C Loan -- $55,000 at 9.1%......................... (1,247)
Canadian Term Loan -- $62,995 at 5.5%..................... (871)
Subordinated Credit Facility -- $216,000 at 11.6%......... (6,247)
--------
$ 335
========
</TABLE>
(7) Adjustment reflects the amortization of deferred financing costs associated
with the 1997 Transactions as if the 1997 Transactions had been consummated
as of the beginning of the period. These costs are amortized over the term
of the related debt using the effective interest method and the
straight-line method, which approximates the effective interest method.
(8) Adjustment reflects the amortization of deferred financing costs associated
with the Original Offering and the Exchange Offer as if the Original
Offering and the Exchange Offer had been consummated as of the beginning of
the period. These costs are amortized over the term of the related debt
using the straight-line method, which approximates the effective interest
method.
(9) Adjustment reflects the elimination of expenses of Forward Group related to
the acquisition of Forward Group.
(10) Adjustments reflect the pro forma tax effect of the adjustments described
above.
(11) EBITDA is defined as operating income plus depreciation and amortization.
The Company believes that EBITDA provides additional information for
determining its ability to meet debt service requirements. 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 EBITDA does not necessarily indicate whether cash flow will
be sufficient for cash requirements.
35
<PAGE> 42
VIASYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(12) For purposes of calculating the ratio of earnings to fixed charges
available to cover fixed charges, "earnings" represent earnings before
income taxes plus fixed charges. "Fixed charges" consist of interest on all
indebtedness, amortization of deferred financing costs and the portion
(approximately 1/3) of rental expenses that management believes is
representative of the interest component of rent expense. Earnings on a pro
forma basis were insufficient to cover fixed charges by $5,785.
36
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
Hicks Muse and Mills & Partners formed Viasystems Group in August 1996 to
make strategic acquisitions of PCB manufacturers and backpanel assemblers and to
integrate those acquisitions into a global enterprise that is the preferred
manufacturer and marketer of PCBs and backpanels. In October 1996, Viasystems
Group completed the acquisition of Circo Craft, a rigid PCB manufacturer, for a
cash purchase price of approximately $129.9 million. In December 1996,
Viasystems Technologies, a wholly owned subsidiary of Viasystems Group, acquired
substantially all the assets of the Lucent Division, in a transaction valued at
$200.0 million. The combination of Circo Craft and the former Lucent Division
created one of the largest independent manufacturers of PCBs and backpanels in
North America. Prior to its acquisition by Viasystems Technologies, the Lucent
Division was a captive supplier of Lucent Technologies. Accordingly, its
historical results of operations are not indicative of the results of operations
to be expected for a stand-alone enterprise.
In April 1997, an affiliate of Hicks Muse acquired Forward Group, a rigid
PCB manufacturer located in the United Kingdom, for a cash purchase price of
approximately $236.0 million. Subsequently, Viasystems Group acquired Forward
Group from the Hicks Muse affiliate. Concurrently with that transaction,
Viasystems Group organized the Company as its direct subsidiary and contributed
to it the capital stock of Circo Craft, Viasystems Technologies and Forward
Group.
In April 1997, Chips Holdings acquired Chips. Concurrently with the
consummation of the Original Offering, Viasystems Group acquired Chips in
consideration for the issuance to Hicks Muse and certain of its affiliates of
Viasystems Group's common stock valued at $140.0 million. In connection with the
Chips Merger, Viasystems Group assumed the Chips Loan Notes. Following the Chips
Merger, the Chips operating subsidiaries became indirect wholly-owned
subsidiaries of the Company. See "Summary -- Recent History."
To facilitate a meaningful comparison, the following discussion and
analysis is based on the combined historical results of fiscal year-end
operations of Viasystems Group, Circo Craft, Viasystems Technologies, Forward
Group and Chips. The financial data of the Company for the fiscal years
discussed below, has been derived from the financial data of each entity for the
periods indicated in "Certain Definitions, Industry Data and Financial
Information." This combined data should be read in consideration of the fact
that such data has not been prepared in accordance with generally accepted
accounting principles ("GAAP"), which do not allow for the aggregation of
financial data for entities that are not under common ownership. Accordingly,
the summary historical combined data does not reflect the effect of the
acquisitions by Viasystems Group, other than the effect of the acquisitions of
Circo Craft at October 1, 1996 and the Lucent Division at December 1, 1996, and,
therefore, is not comparable to results subsequent to the acquisitions. In
addition, the accounting policies used by the individual companies are not
necessarily consistent or comparable. Nevertheless, management believes that the
aggregate financial information shown below may be helpful in understanding the
past operations of the companies combined and in evaluating an investment in the
Notes. See "Summary -- Summary Supplemental Historical Combined and Pro Forma
Financial Data."
The financial data of Circo Craft, Forward Group, and Chips used in the
preparation of the historical combined financial data shown below has been
adjusted for differences between U.S. GAAP and Canadian GAAP for Circo Craft and
between U.S. GAAP and U.K. GAAP for Forward Group and Chips (see notes to the
consolidated financial statements of Circo Craft, Forward Group, and Chips,
included elsewhere herein). In addition, the results of operations of Circo
Craft have been converted from Canadian dollars into U.S. dollars, and the
results of operations of Forward Group and Chips have been converted from
British pounds into U.S. dollars. See "Exchange Rates."
37
<PAGE> 44
The following table presents the major components of the statement of
operations (i) on a supplemental historical combined basis and (ii) expressed as
a percentage of net sales on a historical combined basis.
<TABLE>
<CAPTION>
SUPPLEMENTAL HISTORICAL COMBINED
SUPPLEMENTAL HISTORICAL COMBINED FISCAL YEARS FIRST FISCAL QUARTERS
------------------------------------------------------ -----------------------------------
1994 1995 1996 1996 1997
---------------- ---------------- ---------------- ---------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............ $564,598 100.0% $727,570 100.0% $872,424 100.0% $208,019 100.0% $224,069 100.0%
Cost of goods sold... 432,440 76.6 570,980 78.5 643,351 73.7 155,332 74.7 168,407 75.2
Selling, general and
administrative
expenses........... 65,132 11.5 71,412 9.8 79,470 9.1 18,089 8.7 17,889 8.0
Depreciation and
amortization....... 37,876 6.7 50,299 6.9 65,750 7.5 14,945 7.2 18,250 8.1
Write-off of acquired
in-process research
and
development(1)..... -- -- -- -- 50,800 5.8 -- -- -- --
Restructuring
charges(2)......... -- -- -- -- 2,006 0.2 -- -- -- --
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Operating income... $ 29,150 5.2% $ 34,879 4.8% $ 31,047 3.6% $ 19,653 9.4% $ 19,523 8.7%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
OTHER DATA:
EBITDA(3)............ $ 67,026 11.9% $ 85,178 11.7% $149,603 17.1% $ 34,598 16.6% $ 37,773 16.9%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
- ---------------
(1) Represents charges relating to the write-off of acquired in-process research
and development costs associated with the acquisitions of Circo Craft and
the Lucent Division. The write-off relates to acquired research and
development projects that were not deemed to have a future alternative use.
See Note To Consolidated Financial Statements of Viasystems Group.
(2) Represents restructuring charges related to the consolidation and
rationalization of several facilities at Forward Group.
(3) EBITDA is defined as operating income plus depreciation, amortization and
certain non-cash charges in the amount of $50,800 relating to the write-off
of acquired in process research and development and $2,006 of restructuring
charges for historical combined fiscal year 1996. The Company believes that
EBITDA provides additional information for determining its ability to meet
debt service requirements. EBITDA does not represent and should not be
considered as an alternative to net income or cash flow from operations as
determined by GAAP, and EBITDA does not necessarily indicate whether cash
flow will be sufficient for cash requirements. Charges of $14,565, $18,987,
$7,900 and $3,499, net of estimated additional administrative costs to be
incurred, for fiscal years 1994, 1995, 1996 and for the first fiscal quarter
1996, respectively, incurred with respect to corporate allocations to the
Lucent Division by Lucent Technologies, which are not expected to be
incurred by the Company are included in the results of operations and have
not been eliminated to calculate EBITDA.
RESULTS OF OPERATIONS
COMBINED FIRST FISCAL QUARTER 1997 TO COMBINED FIRST FISCAL QUARTER 1996
Net Sales. Net sales for the first fiscal quarter of 1997 were $224.1
million, representing a $16.1 million, or 7.7%, increase over the first fiscal
quarter of 1996. This sales increase was due to volume growth and the impact of
three small acquisitions by Forward Group after the first fiscal quarter of
1996. In North America, the volume growth was mostly in the automotive sector,
while telecommunications sector sales remained relatively flat. In Europe, the
volume growth was primarily within the telecommunications and computer sectors.
The impact of the three acquisitions made by Forward Group after the first
fiscal quarter of 1996 resulted in a sales increase of $4.7 million for the
first fiscal quarter of 1997 over the first fiscal quarter of 1996.
Cost of Goods Sold. Cost of goods sold for the first fiscal quarter of 1997
was $168.4 million, representing a $13.1 million, or 8.4%, increase over the
first fiscal quarter of 1996, due primarily to the increased net sales volume
for the first fiscal quarter of 1997. Cost of goods sold as a percentage of net
sales increased to 75.2% for the first fiscal quarter of 1997 from 74.7% for the
first
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<PAGE> 45
fiscal quarter of 1996. This increase was due primarily to the impact of the
above-mentioned acquisitions, which historically have had a higher cost of goods
sold percentage, and the scrapping of certain products due to a process
changeover.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the first fiscal quarter of 1997 were $17.9 million,
representing a $0.2 million, or 1.1%, decrease over the first fiscal quarter of
1996. The decrease in selling, general and administrative expenses was due
primarily to the elimination of corporate charges from Lucent Technologies. As a
percentage of net sales, selling, general and administrative expenses decreased
to 8.0% for the first fiscal quarter of 1997 from 8.7% for the first fiscal
quarter of 1996.
EBITDA. EBITDA for the first fiscal quarter of 1997 was $37.8 million,
representing a $3.2 million, or 9.2%, increase over the first fiscal quarter of
1996. As a percentage of net sales, EBITDA increased to 16.9% for the first
fiscal quarter of 1997 compared to 16.6% for the first fiscal quarter of 1996.
COMBINED FISCAL 1996 COMPARED TO COMBINED FISCAL 1995
Net Sales. Net sales for fiscal 1996 were $872.4 million, representing a
$144.8 million, or 19.9%, increase over fiscal 1995. Internally generated net
sales increased $67.4 million over fiscal 1995 due to increased demand for
higher layer count PCBs and more complex backpanels. This growth was partially
offset by industry wide price declines for PCBs and backpanels, particularly for
higher layer count products. Notwithstanding these general price declines, the
Company's product mix continued to shift toward higher priced, higher layer
count PCBs and more complex backpanels. Fiscal 1996 net sales were favorably
affected by the full-year impact of Forward Group's June 1995 acquisition of
Exacta Circuits, a medium to high volume manufacturer of rigid PCBs in Europe,
and three other smaller companies which added $49.5 million in net sales in
fiscal 1996. Furthermore, net sales were favorably affected by changes in
exchange rates between fiscal 1996 and fiscal 1995 which resulted in a $27.9
million increase in net sales.
Net sales in North America for fiscal 1996 were $470.8 million,
representing a $3.0 million, or 0.6%, increase over fiscal 1995. This increase
was due primarily to increased demand for higher layer count PCBs and more
complex backpanels by the telecommunications industry, offset by industry wide
price declines. Net sales in Europe for fiscal 1996 were $401.6 million,
representing a $141.8 million, or 54.6%, increase over fiscal 1995. Internal net
sales in Europe grew $64.4 million primarily from increased sales of higher
layer count PCBs for the telecommunications and computer industries. Forward
Group's acquisition of Exacta Circuits contributed $49.5 million to the
improvement in European fiscal 1996 net sales over fiscal 1995. Favorable
currency exchange rate changes contributed $27.9 million to the increase in
European fiscal 1996 net sales.
Cost of Goods Sold. Cost of goods sold for fiscal 1996 was $643.4 million,
representing a $72.4 million, or 12.7%, increase over fiscal 1995, due almost
entirely to the increased net sales volume for fiscal 1996, including sales of
higher margin, higher layer count PCBs and more complex backpanels. Cost of
goods sold as a percentage of net sales decreased to 73.7% for fiscal 1996 from
78.5% for fiscal 1995 as a result of the favorable impact of productivity
improvements achieved by the Company.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for fiscal 1996 were $79.5 million, representing a $8.1
million, or 11.3%, increase over fiscal 1995. The increase in selling, general
and administrative expenses was due primarily to the fiscal 1996 increase in net
sales. As a percentage of net sales, selling, general and administrative
expenses decreased to 9.1% for fiscal 1996 from 9.8% for fiscal 1995.
Write-off of Acquired In-Process Research and Development. As part of its
purchase accounting for the Circo Craft and Viasystems Technologies
acquisitions, the Company retained an independent appraiser to value the assets
acquired. The appraisal valued acquired in-process research
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<PAGE> 46
development projects for which there was no alternative future use at
approximately $50.8 million. In accordance with U.S. GAAP, the Company wrote off
the value of that intangible asset.
EBITDA. EBITDA for fiscal 1996 was $149.6 million, representing a $64.4
million, or 75.6%, increase over fiscal 1995. As a percentage of net sales,
EBITDA increased to 17.1% for fiscal 1996 from 11.7% for fiscal 1995.
COMBINED FISCAL 1995 COMPARED TO COMBINED FISCAL 1994
Net Sales. Net sales for fiscal 1995 were $727.6 million, representing a
$163.0 million, or 28.9%, increase over fiscal 1994. The Company's net sales
growth was due primarily to an increase in demand for PCBs and backpanels and
the June 1995 acquisition of Exacta Circuits by Forward Group. Lower pricing in
fiscal 1995 partially offset the unit increases as a result of the reduction by
Viasystems Technologies, previously a captive producer for Lucent Technologies,
of prices across all product lines sold to Lucent Technologies, its largest
customer. Notwithstanding these general price declines, the Company's product
mix continued to shift toward higher priced, higher layer count PCBs and more
complex backpanels. The acquisition of Exacta Circuits increased net sales for
fiscal 1995 by $54.9 million.
Net sales in North America for fiscal 1995 were $467.8 million,
representing a $55.2 million, or 13.4%, increase over fiscal 1994. This increase
was due primarily to increased demand in the telecommunications, computer and
automotive industries, somewhat offset by lower pricing as discussed above. Net
sales in Europe for fiscal 1995 were $259.8 million, representing a $107.8
million, or 70.9%, increase over fiscal 1994. This growth was primarily the
result of increased demand for higher layer count PCBs and more complex
backpanels and the acquisition of Exacta Circuits.
Cost of Goods Sold. Cost of goods sold for fiscal 1995 was $571.0 million,
representing a $138.6 million, or 32.1%, increase over fiscal 1994. This
increase was due primarily to the increased net sales volume for fiscal 1995,
including sales of higher margin, higher layer count PCBs and more complex
backpanels sold in fiscal 1995 and the acquisition of Exacta Circuits. Cost of
goods sold as a percentage of net sales increased to 78.5% for fiscal 1995 from
76.6% for fiscal 1994 due primarily to the downward pricing pressure in North
America discussed above.
Selling, General and Administrative Expenses. Selling, general, and
administrative expenses for fiscal 1995 were $71.4 million, representing a $6.3
million, or 9.6%, increase over fiscal 1994 due primarily to increased net sales
volume. As a percentage of net sales, these expenses decreased to 9.8% for
fiscal 1995 from 11.5% for fiscal 1994 due primarily to higher absorption of
fixed expenses and the impact of certain productivity improvements instituted in
response to the downward pricing pressure in North America.
EBITDA. EBITDA for fiscal 1995 was $85.2 million, representing an $18.2
million, or 27.1%, increase over fiscal 1994. As a percentage of net sales,
EBITDA decreased to 11.7% for fiscal 1995 from 11.9% for fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
Following the consummation of the Chips Merger and the Original Offering,
the Company's principal liquidity requirements consist of debt service
requirements under the Senior Credit Facilities, the New Notes and other
outstanding indebtedness, and for working capital needs and capital
expenditures. In addition, the acquisition of other businesses by the Company in
the future likely would require external sources of debt and/or equity
financing.
After giving effect to the repayment of a portion of the Tranche C Loan and
all amounts outstanding under the Tranche A Loan, the Canadian Term Loan and the
Chips Revolving Loan, with a portion of the proceeds of the Original Offering,
the remaining Term Loans under the Senior Credit Facilities will require
periodic principal repayments in increasing amounts through the final maturity
of the Senior Credit Facilities in 2005. In addition, borrowings under the
Senior Credit Facilities bear
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<PAGE> 47
interest at floating rates and will require interest payments on varying dates
depending on the interest rate option selected by the Company. The Company has
entered into interest rate hedge agreements that provide a Eurocurrency Base
Rate (as defined) ceiling until March 10, 1998 of 7.0% per annum for up to
$120.0 million of Term Loans for which the Eurodollar Base Rate is in effect and
a ceiling of 8.0% per annum until March 11, 1999. See "Description of Senior
Credit Facilities."
The New Notes will bear interest at the rate of 9 3/4% per annum, which
will be payable semiannually in arrears.
The Chips Loan Notes bear interest initially at the rate of approximately
6.2% per annum and thereafter at a varying discount to the Chase Manhattan
Bank's prime rate. The Company is liable for payment of interest on the Chips
Loan Notes through the Chips Reimbursement Obligation. The holders of the Chips
Loan Notes will receive payment for interest and principal in respect of the
Chips Loan Notes pursuant to "direct-pay" letters of credit issued by Chase
Manhattan Bank Delaware. Any such payments made pursuant to the "direct-pay"
letters of credit will be required to be reimbursed by the Company pursuant to
the Chips Reimbursement Obligation and Bisto pursuant to the Cash Collateral
Reimbursement Obligation. Pursuant to the terms of the Chips Reimbursement
Obligation and the Cash Collateral Reimbursement Obligation, the Company will be
responsible for (a) reimbursing Chase Manhattan Bank Delaware, the issuer under
the Letter of Credit securing the Chips Loan Notes, for drawings to pay (x)
$319.3 million of principal of the Chips Loan Notes and (y) interest on the
Chips Loan Notes less any portion of such interest actually paid by Bisto.
Accordingly, to the extent the interest income earned by Bisto on the $118.3
million of cash it holds is insufficient to fund interest on $118.3 million
principal amount of the Chips Loan Notes, the Company will be required pursuant
to the terms of the Chips Reimbursement Obligation to fund any such shortfall.
When principal is paid on the Chips Loan Notes pursuant to the "direct-pay"
letters of credit, the first $118.3 million of principal payments will be funded
by Bisto and the remainder will be funded by the Company. In order to fund such
principal, the Senior Credit Facilities contain a committed, unfunded term loan
facility that may be drawn upon by the Company so that it may satisfy its
reimbursement obligations in respect of the $319.3 million principal amount of
the Chips Loan Notes. See "Description of Senior Credit Facilities."
The Company's capital expenditures were $49.3 million, $85.4 million, and
$94.0 million in fiscal years 1994, 1995 and 1996, respectively, and $30.3
million and $33.6 million for the first fiscal quarters ended 1996 and 1997,
respectively. The Company estimates that in fiscal 1997, on a pro forma basis,
it will spend approximately $100.0 million on capital expenditures, primarily
for the expansion of capacity, productivity and process improvements and
maintenance. Of this amount, approximately $39.0 million will be spent on the
construction of the Company's new facility in Newcastle, England. The Company's
fiscal 1997 capital expenditures are anticipated to include approximately $20.0
million for maintenance, which the Company believes will provide it with the
ability to maintain its existing volume production levels. The Company's ability
to make capital expenditures is subject to restrictions in the Senior Credit
Facilities. See "Description of Senior Credit Facilities."
The Company expects that its primary sources of cash will be cash from
operating activities and revolving borrowings under the Senior Credit
Facilities. As of March 31, 1997, on a pro forma basis after giving effect to
the consummation of the 1997 Transactions, the Original Offering and the
Exchange Offer, there would have been no amounts outstanding under the Revolving
Loans under the Senior Credit Facilities, and approximately $246.5 million
($100.0 million of which would only be available for future acquisitions) of
available borrowing capacity thereunder, subject to certain limitations. The
Company believes that cash from operating activities and Revolving Loans will be
sufficient to fund its debt service requirements, working capital needs, and
capital expenditures for the foreseeable future, although no assurances can be
given in this regard. As noted above, future acquisitions, if any, may require
additional third party financing and there can be no assurance that such funds
would be available on terms satisfactory to the Company, if at all. In addition,
the
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<PAGE> 48
Company's future operating performance and ability to meet its financial
obligations will be subject to future economic conditions and to financial,
business and other factors, many of which will be beyond the Company's control.
INTERNATIONAL OPERATIONS
The Company conducts manufacturing operations in several foreign countries,
including Canada, the United Kingdom, Spain, and South Africa. The Company also
conducts sales and marketing operations in Canada, Mexico, England, Scotland,
Ireland, France, Germany, Spain, Netherlands, Sweden, Israel and South Africa.
Net sales from international operations during fiscal 1996 and the first fiscal
quarter ended 1997 were approximately $531.6 million and $142.0 million, or
60.9% and 63.4% of net sales, respectively.
The Company's international operations may be subject to volatility because
of currency fluctuations, inflation and changes in political and economic
conditions in these countries. Most of the net sales and costs and expenses of
the Company's operations in these countries are denominated in the local
currencies. The financial position and results of operations of the Company's
foreign subsidiaries are measured using the local currency as the functional
currency, although United States dollars would be used if any of these countries
were deemed hyperinflationary in accordance with Statement of Financial
Accounting Standards No. 52 ("FASB 52").
Assets and liabilities and statement of operations' accounts of the
Company's foreign subsidiaries are translated at the balance sheet date and
period-end exchange rate. Translation adjustments, which amounted to
approximately $79,000 and $76,000 at December 31, 1996 and March 31, 1997,
respectively, arise from differences in exchange rates from period to period and
are included on the Company's balance sheet as a cumulative translation
adjustment.
Fluctuations in exchange rates, as well as higher inflation rates, may have
an adverse effect on the Company. The Company may periodically use foreign
currency forward option contracts to offset the effects of exchange rate
fluctuations on cash flows denominated in foreign currencies. The balance of
these contracts as of December 31, 1996 and March 31, 1997 was not material, and
the Company does not use derivative financial instruments for trading or
speculative purposes.
No country in which the Company has significant operations is deemed
hyperinflationary in accordance with FASB 52. Inventories in countries outside
the United States are primarily accounted for using the first-in first-out
(FIFO) basis and, therefore, the charge to cost of sales does not necessarily
reflect current cost. If the Company's operations were restated to reflect
higher cost of goods sold to replace existing inventories, the Company estimates
that reported income would not be significantly decreased.
The Company's financial performance in future periods may be adversely
impacted as a result of changes in the above factors which are largely beyond
the control of the Company. See "Risk Factors -- International Operations."
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ANTICIPATED SECOND QUARTER ADJUSTMENTS
In accordance with principles of purchase accounting, the Company has
retained an appraiser to value all of the assets acquired in the acquisitions of
Forward Group and Chips. Pursuant to GAAP, the Company will record a one-time,
non-cash write-off of certain acquired in-process research and development
projects. Investors should be aware that a significant portion of the purchase
price of Forward Group and Chips may be allocated to acquired in-process
research and development projects and any such portion will be recorded as a
write-off, as described above. In addition, the Company anticipates recording a
one-time, non-cash write-off of financing charges associated with the
acquisition of Forward Group of approximately $7.5 million in accordance with
GAAP.
INFLATION
The Company does not believe that inflation has had a material impact on
its financial position or results of operations.
SEASONALITY
The Company does not believe that its results of operations fluctuate
materially due to seasonality.
VIASYSTEMS GROUP
Viasystems Group's net sales for the period from inception (August 28,
1996) to December 31, 1996 were $50.4 million and cost of goods sold were $42.1
million, or 83.4% of net sales. Selling, general and administrative expenses for
the same period were $3.8 million, or 7.6% of net sales. During the period from
inception (August 28, 1996) to December 31, 1996, net cash provided by operating
activities was $1.7 million. For the same period, Viasystems Group used
approximately $286.3 million in investing activities primarily for the
acquisitions of Circo Craft and the Lucent Division. The acquisitions were
funded through the issuance of $238.3 million of long-term obligations and the
proceeds of $73.8 million of equity offerings offset by $11.4 million of
financing costs.
Viasystems Group's net sales for the three months ended March 31, 1997 were
$119.9 million and cost of goods sold were $90.1 million, or 75.1% of net sales.
Selling, general and administrative expenses for the same period were $11.2
million, or 9.3% of net sales. During the three months ended March 31, 1997, net
cash used in operations was $2.4 million. For the same period, Viasystems Group
used approximately $8.7 million for capital expenditures and repaid
approximately $2.5 million of long-term obligations.
The Company believes that the operating results of Viasystems Group are not
comparable to the operating results expected to be achieved in the future due
to, among other things, the 1997 Transactions, the Original Offering and the
Exchange Offer.
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<PAGE> 50
BUSINESS
GENERAL
The Company is the second largest manufacturer and marketer of PCBs, and
one of the largest manufacturers and marketers of backpanels, in the world. PCBs
are the basic platforms used to interconnect microprocessors, integrated
circuits and other components essential to the functioning of virtually all
electronic systems, ranging from sophisticated computers and industrial products
to basic household appliances. Backpanels are used in electronic systems to
distribute and ground power, to connect PCBs, power supplies and other elements,
and to relay information into and out of electronic systems. The Company
supplies over 800 customers globally, serving, among others, the
telecommunications, computer, automotive, industrial and instrumentation,
military, and consumer electronics industries. The Company currently has 16
manufacturing facilities, strategically located in North America, Europe, and
South Africa, including one of the world's largest PCB and backpanel
manufacturing plants.
PRODUCTS AND SERVICES
The Company's offering of products and services includes the following:
Design and Development. The Company provides design and engineering
assistance in the early stages of product development to assure that both
mechanical and electrical considerations are integrated to achieve a high
quality and cost-effective product. Through development groups located at
various facilities, the Company identifies, develops and markets new
technologies that it believes will benefit its customers. These development
groups work closely with customers during all stages of product life-cycles. For
instance, process design changes and refinements required for volume production
are identified and implemented prior to production. The Company also evaluates
customer designs in light of manufacturing considerations and, when appropriate,
recommends design changes to reduce manufacturing costs or lead times or to
increase manufacturing yields or the quality of finished PCBs.
Quick-Turnaround Prototype. Prototypes typically require lead times of
three to seven days, although lead times can be as short as 24 hours. The
Company provides quick-turnaround prototype services to customers to facilitate
their testing of products in development. Prototype development at the Company
has included multilayer PCBs of up to 24 layers, embedded discrete components,
and various high performance substrates for the high frequency microwave market.
Pre-Production. Pre-production is the manufacture of limited quantities of
PCBs and backpanels during the transition period from prototype to volume
production. Pre-production generally requires quick-turnaround delivery to
accommodate time-to-volume pressures or as a temporary solution for
unpredictable customer demands.
Medium to High Volume Production. Volume production is characterized by
longer lead times and increased emphasis on lower cost as the product moves to
full-scale commercial production. As customers increasingly demand a quick
transition from prototype to volume production, few independent manufacturers
can provide complex PCBs of 18 or more layers in the volume provided by the
Company's larger facilities. The Company operates nine facilities that have
medium and/or high volume PCB production capabilities.
Backpanels. Backpanels are generally larger and thicker PCBs on which
connectors, pins and other components are mounted to interconnect PCBs,
integrated circuits and other electronic components. The Company incorporates
its own PCBs in backpanels to provide customers with a high level of PCB
technology on a quick-turnaround and volume basis. Net sales of backpanels
accounted for, on a combined basis, approximately 22%, 18% and 17% of the
Company's combined net sales during fiscal 1994, 1995 and 1996, respectively.
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<PAGE> 51
Specialty Production. The Company also manufactures the following specialty
products in quick-turnaround and medium to high volume quantities:
High-Performance PCBs. High-performance PCBs are used in electronic
products that require high frequency interconnect solutions, such as
cellular phone base stations and other telecommunications products, and are
manufactured using specialty materials with properties that address the
need for higher operating temperatures, higher frequencies and increased
density. The Company has the expertise and specialized engineering
processes required to manufacture high-performance PCBs with a broad range
of materials and technological requirements.
PCMCIA Products. Personal Computer Memory Card International Association
("PCMCIA") products are credit card-sized, plug-in PCBs, a significant
portion of which are memory and communication cards tailored to the mobile
computing market. PCMCIA production requires the ability to produce very
thin, dense packaging.
MANUFACTURING
The production of PCBs involves a variety of manufacturing disciplines,
including mechanical operations (such as lamination, drilling and routing),
chemical operations (such as copper deposition and etching), and graphics
operations (such as phototool generation, photoprinting and screen printing).
Much of the equipment is automated and highly specialized.
The Company's customers require that their suppliers be qualified under
various industry standards, for manufacture of PCBs, including Bellcore
standards for telecommunications products, and UL (Underwriters Laboratories)
standards for electronics. All of the Company's facilities are ISO-9002
registered. This registration facilitates worldwide acceptance of the Company's
products. ISO-9002 registration is based on successful implementation of certain
quality assurance requirements and includes ongoing monitoring of the Company's
business and periodic compliance audits conducted by an independent quality
assessor.
The Company's primary manufacturing processes are described below:
Drilling. Complex multilayer PCBs require large numbers of small (less than
0.019 inches) holes in order to interconnect the various PCB layers.
Automatic Plating. The Company has custom designed, computer controlled
plating lines that are capable of plating significant volumes of high quality
PCBs. The plating lines are installed above a special purpose basement where
chemicals are prepared and pumped to the manufacturing lines, chemical wastes
are pre-processed and water is pre-treated and recycled.
Automatic Optical Inspection ("AOI") and Electrical Test ("ET")
Equipment. Because defects in complex circuitry cannot be readily detected by
conventional visual inspection, sophisticated AOI and ET equipment is necessary
to improve yields and reduce the potential for customer returns.
Surface Mount Technology. The Company incorporates the use of surface mount
technology to achieve greater component packaging densities. Surface mount
technology allows components to be soldered to the surface of a PCB. The
traditional through-hole technique requires components to be affixed to PCBs by
inserting leads through the board. The use of surface mount technology has
facilitated several overall improvements in PCBs, including: (i) the
miniaturization of PCBs; (ii) end-user innovations using smaller and more
complex designs; and (iii) more reliable interconnection within the PCB.
MARKETS AND CUSTOMERS
The Company provides double-sided PCBs, multilayer PCBs and backpanels to
its diverse customer base. The Company's position as a strategic supplier of
prototype quick-turnaround and medium to high volume PCBs and backpanel assembly
fosters close relationships with customers.
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SALES AND MARKETING
The Company markets its products through its own sales and marketing
organization and manufacturers' representatives. This global sales organization
is structured to ensure geographic coverage and account coordination. As of
April 1, 1997, the Company employed 99 sales and marketing employees, of which
22 are direct sales representatives strategically located throughout 13
countries in North America, Europe, the Middle East and South Africa. The
Company is also represented by 19 manufacturers' representative organizations in
North America. The North American sales organization is divided into 5 regions
which are jointly serviced by direct sales representatives and manufacturers'
representatives. In Europe and South Africa, the Company's sales force is
focused by country and for the specialty products, by customer. North America,
Europe and South Africa each have a support staff of sales engineers, technical
service personnel and customer service organizations to ensure high-quality,
customer-focused service. The global marketing organization further supports the
sales organization through market research, market development and
communications.
The Company has a unique, long-term supplier relationship with Lucent
Technologies, one of the world's leading designers, developers and manufacturers
of telecommunications systems, software and products. To ensure itself a stable
and consistent supply of PCBs and backpanels in the future, Lucent Technologies
entered into a five-year supply agreement with the Company, through Viasystems
Technologies. The agreement contains automatic renewal provisions for two
additional one-year periods upon the Company's satisfaction of certain specified
performance requirements for cost, quality and service. Under the agreement
Lucent Technologies is required to purchase a minimum annual dollar volume of
PCBs and backpanels from the Company. Lucent Technologies is also required to
compensate the Company if Lucent Technologies fails to purchase such minimum
annual dollar volume. The agreement requires that by January 1, 1999 the
Company's prices for products supplied shall be reduced to an agreed upon
benchmark standard. See "Risk Factors -- Customer Concentration; Reliance on
Lucent Technologies." After the expiration of the two additional annual renewal
periods, the agreement continues to renew unless either party terminates the
agreement on 18 months' notice. Lucent Technologies has also designated the
Company as a preferred supplier and afforded it the right to bid for all of
Lucent Technologies' product requirements for which the Company demonstrates
capability.
SUPPLIER RELATIONSHIPS
The Company orders materials and supplies based on purchase orders received
and accepted and seeks to minimize its inventory of materials that are not
identified for use in filling specific orders. Certain raw materials used in the
Company's products consist mainly of inorganic chemicals, copper foil, copper
clad epoxy glass laminate, epoxy glass prepreg and dryfilm resist. Although the
Company uses a select group of suppliers, the materials used in manufacturing
PCBs are generally readily available in the open market. The Company works with
its suppliers to develop just-in-time supply systems which reduce inventory
carrying costs. The Company also maintains a Supplier Certification Program
which evaluates potential vendors on the basis of such factors as quality,
on-time delivery, cost, technical capability, and potential technical
advancement. In addition, the Company works closely with certain of its
suppliers to improve the raw materials used in PCB and backpanel production.
Although adequate amounts of raw materials have been available in the past,
there can be no assurances this will continue in the future. The Company
purchases significant quantities of pins and similar products from Berg
Electronics Corp., which is controlled by Hicks Muse and managed by Mills &
Partners. See "Certain Transactions."
TECHNOLOGY, DEVELOPMENT AND PATENTS
The Company maintains a strong commitment to research and development,
focusing its efforts on enhancing existing product lines as well as developing
new products based on the Company's existing technologies and production
capabilities. The Company's research and development staff
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<PAGE> 53
of over 650 experienced engineers, chemists and laboratory technicians works
together with the Company's sales staff to identify specific needs and develop
innovative, high performance solutions which satisfy those needs. This method of
product development allows the customer to become a member of the development
team, develops close ongoing working relationships between the Company and its
customers and, in many instances, permits the Company to gain an in-depth
understanding of its customers' businesses, thereby enabling it to better
anticipate and serve their needs. The Company also seeks to apply advancements
resulting from this process to other high-margin end user markets.
The Company has developed proprietary techniques and manufacturing
expertise, particularly in the area of complex multilayer PCBs. The Company has
received certain (U.S. and foreign) patents, including patents on advanced
registration and positioning techniques, solder leveling, drilling and pin
insertion, but chooses to rely primarily on trade secret protection. Although
such techniques and expertise are subject to misappropriation or obsolescence,
the Company intends to continue to develop improved methods, processes and
techniques as dictated by the technological needs of the business. See "Risk
Factors -- Intellectual Property."
COMPETITION
The PCB and backpanel industry is highly fragmented and characterized by
intense competition. The Company believes that its major competitors are the
independent and captive producers that manufacture multilayer PCBs and provide
backpanel and other electronic assemblies.
The demand for PCBs has continued to be affected by the development of
smaller, more powerful electronic components requiring less PCB area but a
higher layer count. Expansion of the Company's existing products or services
could expose the Company to new competition. Moreover, new developments in the
electronics industry could render existing technology obsolete or less
competitive and could potentially introduce new competition into the industry.
There can be no assurance that the Company will continue to compete successfully
against present and future competitors or that competitive pressures faced by
the Company will not have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company competes on the basis of product quality, timeliness of
delivery, price, customer technical support and its integrated offering from
development and design through volume production and backpanel assembly.
FACILITIES
In addition to its executive offices in St. Louis, Missouri, the Company
operates 16 principal manufacturing and research facilities located in six
different countries with a total area of approximately 2.2 million square feet.
The Company owns approximately 1.8 million square feet and leases approximately
400,000 square feet. The Company is currently constructing what it believes will
be, upon its completion, the largest PCB manufacturing facility in Europe. The
Company believes its plants and equipment include state-of-the-art technology
and to be well-maintained. Production facilities for certain of the Company's
products are operating at or near capacity.
All of the Company's owned facilities are subject to mortgages pursuant to
the Senior Credit Facilities.
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The Company's facilities are as follows:
<TABLE>
<CAPTION>
SIZE TYPE OF DESCRIPTION OF
LOCATION (APPROX. SQ. FT.) INTEREST PRODUCTS/SERVICES PROVIDED
-------- ----------------- -------- --------------------------
<S> <C> <C> <C>
UNITED STATES
Richmond, Virginia................ 700,000 Owned High volume PCBs and
backpanels
San German, Puerto Rico........... 185,000 Leased(1) High volume inner layer
and high density PCBs
CANADA
Kirkland, Quebec.................. 117,000 Owned High volume, high density
PCBs
Pointe-Claire, Quebec............. 160,000 Owned High volume inner layers
and prototype and
pre-production
Granby, Quebec.................... 103,000 Owned High volume, high density
PCBs
EUROPE
Tres Cantos, Spain................ 5,000 Leased(2) Backpanels
Galashiels, Scotland.............. 121,000 Owned High volume PCBs
Selkirk, Scotland................. 142,000 Owned/Leased(3) High volume complex PCBs
and quick-turnaround
Rugby, England.................... 36,000 Leased(4) Pre-production PCBs
Tamworth, England................. 62,000 Owned Prototype, quick-
turnaround complex PCBs
Telford, England.................. 44,000 Leased(5) Medium volume PCBs
Manchester, England............... 30,000 Owned Advanced prototype and
pre-production PCBs
Portsmouth, England............... 27,000 Leased(6) High reliability thick
film hybrids
South Shields, England............ 320,000 Owned High volume PCBs;
quick-turnaround
Newcastle, England................ 500,000 Under High volume PCBs
construction
SOUTH AFRICA
TI, Wilsonia, East London......... 82,000 Leased(7) Double-sided PCBs
Swift, Fort Jackson, East 22,000 Leased(7) Single-sided PCBs
London..........................
</TABLE>
- ---------------
(1) -- Lease expires December 31, 2002.
(2) -- Lease expires November 11, 1997.
(3) -- Lease portion of facility (approximately 30,000 sq. ft.) expires May 15,
2004 (includes options to renew through May 15, 2024 and to purchase).
(4) -- Lease expires June 24, 2009.
(5) -- Lease expires June 24, 2987 (999 year lease).
(6) -- Lease expires October 1, 2004.
(7) -- Leases expire March 31, 2000.
48
<PAGE> 55
LEGAL
The operations of the Company have from time to time been involved in
claims and litigation. The nature of the Company's business is such that it is
anticipated that the Company will be involved from time to time in claims and
litigation considered to be in the ordinary course of its business. Based on
experience with similar claims and litigation, the Company does not anticipate
that these matters will have a material adverse effect on the Company.
The Company anticipates that it may, from time to time, receive
notifications alleging infringements of patents generally held by other
manufacturers. Disputes over patent infringement are common in the electronics
industry and typically begin with notices of the type described above. Although
the ultimate resolution of the legal action and infringement notices described
above cannot be predicted, the Company believes that such resolution, including
any ultimate liability, will not have a material adverse effect on the Company.
ENVIRONMENTAL
Certain operations of the Company are subject to federal, state, local and
foreign environmental laws and regulations, which govern, among other things,
the discharge of pollutants into the air and water, as well as the handling and
disposal of solid and hazardous wastes. The Company believes that it is in
material compliance with applicable environmental laws and the costs of
compliance with such current or proposed environmental laws and regulations will
not have a material adverse effect on the Company. Further, the Company is not a
party to any claim or proceeding and is not aware of any threatened claim or
proceeding under environmental laws, that could, if adversely decided,
reasonably be expected to have a material adverse effect. Currently, remedial
activities are being undertaken at the Company's facilities in Virginia and
Puerto Rico. While the cost of such remediation could be material, the prior
owners are conducting the requisite remedial actions pursuant to governmental
orders and have agreed to indemnify the Company for costs associated with the
remediations. Accordingly, the Company does not believe that any of these
matters are reasonably likely to have a material adverse effect on the Company.
EMPLOYEES
As of April 1, 1997, the Company had approximately 7,100 employees.
Approximately 2,485 employees, or about 35%, are represented by various unions
pursuant to collective bargaining agreements. The Company has not experienced
any labor problems resulting in a work stoppage, and believes it has good
relations with its employees.
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<PAGE> 56
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the names and positions of the respective directors and
executive officers of the Company. All directors hold office until the next
annual meeting of stockholders of the Company and until their successors are
duly elected and qualified.
<TABLE>
<S> <C> <C>
James N. Mills....................... 59 Chairman of the Board and Chief Executive Officer
of the Company and Viasystems Group
Thomas O. Hicks...................... 51 Director of the Company and Viasystems Group
Jack D. Furst........................ 39 Director of the Company and Viasystems Group
Richard W. Vieser.................... 70 Director of the Company and Viasystems Group
Kenneth F. Yontz..................... 52 Director of the Company and Viasystems Group
Robert N. Mills...................... 55 President, Chief Operating Officer and Director
of the Company and Viasystems Group
David M. Sindelar.................... 39 Senior Vice President, Chief Financial Officer of
the Company and Viasystems Group
Larry S. Bacon....................... 51 Senior Vice President, Human Resources of the
Company
W. Thomas McGhee..................... 61 Secretary and General Counsel of the Company
Gerald C. Nelson..................... 45 Executive Vice President -- Operations of the
Company
James G. Powers...................... 35 Vice President -- Finance of the Company
</TABLE>
James N. Mills has been Chairman of the Board and Chief Executive Officer
of Viasystems Group since January 1997 and the Chairman of the Board and Chief
Executive Officer of the Company since April 1997. Mr. Mills is the Chairman,
President and Chief Executive Officer of Mills & Partners. Mr. Mills is also
Chairman of the Board and Chief Executive Officer of Berg Electronics Corp.,
Chairman of the Board and sole director of Berg Electronics Group, Inc.,
Chairman of the Board and Chief Executive Officer of International Wire Holding
Company, International Wire Group, Inc., Crain Holdings Corp., Crain Industries,
Inc. and Copy USA Holdings Corp. Mr. Mills was Chairman of the Board and Chief
Executive Officer of Jackson Holding Company and Jackson Products, Inc. from
February 1993 through August 1995. Mr. Mills was Chairman of the Board and Chief
Executive Officer of Thermadyne Holdings Corporation from February 1989 through
February 1995. Mr. Mills was Executive Vice President of McGraw-Edison Company
from 1978 to 1985, and served as Industrial Group President and President of the
Bussman Division of the McGraw-Edison Company from 1980 to 1984. Mr. Mills also
serves as a director of Hat Brands Holding Corporation and Hat Brands, Inc.
Thomas O. Hicks has been a director of Viasystems Group since January 1997
and a director of the Company since May 1997. Mr. Hicks is Chairman of the Board
and Chief Executive Officer of Hicks Muse. From 1984 to May 1989, Mr. Hicks was
Co-Chairman of the Board and Co-Chief Executive Officer of Hicks & Haas
Incorporated, a Dallas-based private investment firm. Mr. Hicks serves as a
director of Berg Electronics Corp., Chancellor Broadcasting Company,
International Home Foods, Inc., D.A.C. Vision, Inc., Sybron International
Corporation, Capstar Broadcasting Partners, Inc., Cooperative Computing Holding
Company, Inc., and Neodata Corporation.
Jack D. Furst has been a director of Viasystems Group since August 1996 and
a director of the Company since May 1997. Mr. Furst is a Managing Director and
Principal of Hicks Muse and has held such position since 1989. Mr. Furst has
approximately 15 years of experience in leveraged acquisitions and private
investments. Mr. Furst is involved in all aspects of Hicks Muse's business and
has been actively involved in originating, structuring and monitoring its
investments. Mr. Furst is primarily responsible for managing the relationship
with Mills & Partners. Prior to joining Hicks Muse, Mr. Furst was a Vice
President and subsequently a Partner of Hicks & Haas, Incorporated, a
50
<PAGE> 57
Dallas-based private investment firm from 1987 to May 1989. From 1984 to 1986,
Mr. Furst was a merger and acquisition/corporate finance specialist for The
First Boston Corporation in New York. Before joining First Boston, Mr. Furst was
a financial consultant at Price Waterhouse. Mr. Furst serves on the board of
directors of Neodata Corporation, Desa Holdings Corporation, International Wire
Holding Company and Cooperative Computing, Inc.
Richard W. Vieser has been a director of Viasystems Group since January
1997 and a director of the Company since May 1997. Mr. Vieser is the retired
Chairman of the Board, Chief Executive Officer and President of Lear Siegler,
Inc. (a diversified manufacturing company), the former Chairman of the Board and
Chief Executive Officer of FL Industries, Inc. and FL Aerospace (also
diversified manufacturing companies), and the former President and Chief
Operating Officer of McGraw-Edison Co. He is also a director of Ceridian
Corporation (formerly Control Data Corporation), Berg Electronics Corp., Dresser
Industries, Inc. INDRESCO Inc., Sybron International Corporation and Varian
Associates, Inc.
Kenneth F. Yontz has been a director of Viasystems Group since January 1997
and a director of the Company since May 1997. Mr. Yontz is the Chairman,
President and Chief Executive Officer of Sybron International Corporation, a
manufacturer and marketer of laboratory apparatus products, dental sundry
supplies and orthodontic appliances. Mr. Yontz is also a director of Playtex
Products, Inc. and Berg Electronics Corp. Prior to joining Sybron, Mr. Yontz was
Group Vice President and Executive Vice President of the Allen-Bradley Company.
Mr. Yontz also held various managerial and professional positions with Chemetron
from 1974 to 1980 and at Ford Motor Company from 1966 to 1974.
Robert N. Mills has been a director of Viasystems Group since January 1997
and has been President, Chief Operating Officer since the Company's formation in
April 1997 and a director of the Company since May 1997. Mr. Mills is also Vice
Chairman of Berg Electronics Corp. and served as President of Berg Electronics
Corp. since June 1995, and as Chief Operating Officer of Berg Electronics Corp.
and as President and Chief Executive Officer of Berg Electronics Group since
March 1993. Mr. Mills served as a Vice President of the Berg Electronics Corp.
from March 1993 through June 1995, Mr. Mills is a Vice President of Mills &
Partners, Inc. Prior to joining Berg in March 1993, Mr. Mills was Vice President
of Thermadyne Industries, Inc. and President of Stoody Deloro Stellite and has
held such positions since February 1990 and July 1989, respectively. Prior
thereto, he served as President, Chief Operating Officer and Director of Tridex
Corporation from 1987 through 1989, and Vice President and General Manager of
Elco Corporation, a subsidiary of Wickes Manufacturing Company, from 1983
through 1987. Robert N. Mills is the brother of James N. Mills.
David M. Sindelar has been a Senior Vice President since January 1997 and
Chief Financial Officer of Viasystems Group since its inception and has been
Senior Vice President, Chief Financial Officer and Treasurer of the Company
since its formation in April 1997. Mr. Sindelar is also Senior Vice President
and Chief Financial Officer of Mills & Partners, Berg Electronics Corp.,
International Wire Holding Company, Crain Industries, Inc. and Crain Holdings
Corp. Mr. Sindelar was Senior Vice President and Chief Financial Officer of
Jackson Holding Company from February 1993 through August 1995. From 1987 to
February 1995, Mr. Sindelar held various other positions at Thermadyne Holdings
Corporation including Senior Vice President and Chief Financial Officer, Vice
President -- Corporate Controller and Controller. Mr. Sindelar was employed by
Arthur Andersen & Co. from 1979 to 1987.
Larry S. Bacon has been a Senior Vice President of Viasystems Group since
January 1997 and Senior Vice President of the Company since May, 1997. Mr. Bacon
is also Senior Vice President of Mills & Partners, Berg Electronics Corp., Crain
Industries, Inc., Crain Holdings Corp. and International Wire Holding Company.
Mr. Bacon was Senior Vice President of Jackson Holding Company from February
1993 through August 1995. Previously, Mr. Bacon was Senior Vice President --
Human Resources of Thermadyne Holdings Corporation from September 1987 until
February 1995.
51
<PAGE> 58
Prior to that, he held a variety of senior human resources management positions
with Cooper Industries, McGraw-Edison Company and Hoechst Celanese.
W. Thomas McGhee has been Secretary and General Counsel of Viasystems Group
since January 1997 and has been Secretary of the Company since its formation in
April 1997. Mr. McGhee is also a partner of the law firm of Herzog, Crebs and
McGhee and has held that position since 1987. In addition, Mr. McGhee serves as
Secretary and General Counsel of International Wire Holding Company,
International Wire Group, Inc., Berg Electronics Corp., Crain Industries, Inc.
and Crain Holdings Corp.
Gerald C. Nelson is Executive Vice President, Operations of the Company and
has held that position since May, 1997. Prior to joining the Company, Mr. Nelson
held several executive positions, such as President of the Harness Division of
International Wire Group, Inc. and President and Chief Operating Officer of the
Wear Resistance Division of Thermadyne Industries, Inc.
James G. Powers has been a Vice President of Viasystems Group since April
1997 and a Vice President of the Company since its formation in April 1997.
Prior to joining the Company, Mr. Powers served as Vice President -- Finance of
Crain Industries, Inc. He also held various positions at Berg Electronics Corp.,
including Vice President -- Controller, from June 1993 to August 1995.
Previously, Mr. Powers was Controller of Moog Automotive, Inc. from 1991 through
1993 and was employed by Arthur Andersen & Co. from 1983 to 1991.
COMPENSATION OF DIRECTORS
The directors of Viasystems Group and the Company did not receive
compensation from either Viasystems Group or the Company for services rendered
in that capacity during the prior fiscal year. Directors who are officers,
employees or otherwise an affiliate of Viasystems Group or the Company are not
presently expected to receive compensation for their services as directors.
Directors of Viasystems Group and the Company are entitled to reimbursement of
their reasonable out-of-pocket expenses in connection with their travel to and
attendance at meetings of the board of directors or committees thereof. No
determination has yet been made with respect to annual fees or board attendance
fees, if any, to be paid to directors of Viasystems Group or the Company who are
not also officers, employees, or otherwise an affiliate of Viasystems Group or
the Company.
COMPENSATION OF EXECUTIVE OFFICERS
The executive officers of Viasystems Group and the Company did not receive
any compensation from either Viasystems Group or the Company during the prior
fiscal year. Viasystems Group and the Company have entered into employment
agreements with Messrs. J. Mills, R. Mills, Sindelar and Nelson, and certain
other executive offices of Viasystems Group and the Company. The compensation to
be paid to the executive officers of Viasystems Group and the Company will be
determined by the terms of those agreements, the Chairman of the Board of
Viasystems Group and the Company, and the Board of Directors of Viasystems Group
and the Company.
EMPLOYMENT AGREEMENTS
James N. Mills Executive Employment Agreement. Mr. James N. Mills entered
into an executive employment agreement with Viasystems Group, Viasystems
Technologies and Circo Craft as of January 1, 1997. Pursuant to his employment
agreement, Mr. J. Mills will serve as the Chairman of the Board of Directors and
Chief Executive Officer of Viasystems Group through December 31, 2001, unless
terminated earlier as provided therein. Mr. J. Mills is required to devote such
time as is reasonably necessary to faithfully and adequately supervise the
overall executive management of Viasystems Group and its subsidiaries, both
direct and indirect. Subject to the foregoing limitation on his activities, Mr.
J. Mills is free to participate in other endeavors.
52
<PAGE> 59
The compensation provided to Mr. J. Mills under his executive employment
agreement includes an annual base salary of not less than $395,000, subject to
upward adjustment at the sole discretion of the Board of Directors of Viasystems
Group, and such benefits as are customarily accorded the executives of
Viasystems Group as long as the executive employment agreement is in force. In
addition, Mr. J. Mills is entitled to an annual bonus in an amount determined in
accordance with the Senior Executive Incentive Compensation Plan and
reimbursement for expenses to own and maintain an automobile.
Mr. J. Mills' executive employment agreement also provides that if Mr. J.
Mills' employment is terminated without cause, Mr. J. Mills will continue to
receive his then current salary, which shall not be less than $395,000, for the
longer of the remainder of the period the executive employment agreement is in
force or a period of one year following such termination. The executive
employment agreement terminates upon death or "total disability" (as defined
therein) and no further compensation shall be payable except that he or his
estate, heirs or beneficiaries, as applicable, shall receive his then current
salary for a period of 18 months, in addition to benefits otherwise specifically
provided for. The agreement also provides medical benefits for his and his
spouse's lifetime.
Robert N. Mills Executive Employment Agreement. Mr. Robert N. Mills entered
into an executive employment agreement with Viasystems Group, Viasystems
Technologies and Circo Craft as of January 1, 1997. Pursuant to his employment
agreement, Mr. R. Mills will serve as the President and Chief Operating Officer
of Viasystems Group through December 31, 2001, unless terminated earlier as
provided therein. Mr. R. Mills is required to devote such time as is reasonably
necessary to faithfully and adequately supervise the overall financial
management of Viasystems Group and its subsidiaries, both direct and indirect.
Subject to the foregoing limitation on his activities, Mr. R. Mills is free to
participate in other endeavors.
The compensation provided to Mr. R. Mills under his executive employment
agreement includes an annual base salary of not less than $482,000, subject to
upward adjustment at the sole discretion of the Chairman of the Board of
Directors of Viasystems Group, and such benefits as are customarily accorded the
executives of Viasystems Group as long as the executive employment agreement is
in force. In addition, Mr. R. Mills is entitled to an annual bonus in an amount
determined in accordance with the Senior Executive Incentive Compensation Plan
and reimbursement for expenses to own and maintain an automobile.
Mr. R. Mills' executive employment agreement also provides that if Mr. R.
Mills' employment is terminated without cause, Mr. R. Mills will continue to
receive his then current salary, which shall not be less than $482,000, for the
longer of the remainder of the period the executive employment agreement is in
force or a period of one year following such termination. The executive
employment agreement terminates upon death or "total disability" (as defined
therein) and no further compensation shall be payable except that he or his
estate, heirs or beneficiaries, as applicable, shall receive his then current
salary for a period of 18 months, in addition to benefits otherwise specifically
provided for. The agreement also provides medical benefits for his and his
spouse's lifetime.
David M. Sindelar Executive Employment Agreement. Mr. David M. Sindelar
entered into an executive employment agreement with Viasystems Group, Viasystems
Technologies and Circo Craft as of January 1, 1997. Pursuant to his employment
agreement, Mr. Sindelar will serve as the Senior Vice President and Chief
Financial Officer of Viasystems Group through December 31, 2001, unless
terminated earlier as provided therein. Mr. Sindelar is required to devote such
time as is reasonably necessary to faithfully and adequately supervise the
overall financial management of Viasystems Group and its subsidiaries, both
direct and indirect. Subject to the foregoing limitation on his activities, Mr.
Sindelar is free to participate in other business endeavors.
The compensation provided to Mr. Sindelar under his executive employment
agreement includes an annual base salary of not less than $168,200, subject to
upward adjustment at the sole
53
<PAGE> 60
discretion of the Chairman of the Board of Directors of Viasystems Group, and
such benefits as are customarily accorded the executives of Viasystems Group as
long as the executive employment agreement is in force. In addition, Mr.
Sindelar is entitled to an annual bonus in an amount determined in accordance
with the Senior Executive Incentive Compensation Plan and reimbursement for
expenses to own and maintain an automobile.
Mr. Sindelar's executive employment agreement also provides that if Mr.
Sindelar's employment is terminated without cause, Mr. Sindelar will continue to
receive his then current salary, which shall not be less than $168,200, for the
longer of the remainder of the period the executive employment agreement is in
force or a period of one year following such termination. The executive
employment agreement terminates upon death or "total disability" (as defined
therein) and no further compensation shall be payable except that he or his
estate, heirs or beneficiaries, as applicable, shall receive his then current
salary for a period of 18 months, in addition to benefits otherwise specifically
provided for. The agreement also provides medical benefits for his and his
spouse's lifetime.
Gerald C. Nelson Executive Employment Agreement. Mr. Gerald C. Nelson
entered into an executive employment agreement with Viasystems Group, Viasystems
Technologies and Circo Craft as of January 1, 1997. Pursuant to his employment
agreement, Mr. Nelson will serve as the Senior Vice President -- Operations of
Viasystems Group through December 31, 2001, unless terminated earlier as
provided therein. Mr. Nelson is required to devote such time as is reasonably
necessary to faithfully and adequately supervise the operations of Viasystems
Group and its subsidiaries, both direct and indirect.
The compensation provided to Mr. Nelson under his executive employment
agreement includes an annual base salary of not less than $275,000, subject to
upward adjustment at the sole discretion of the Chairman of the Board of
Directors of Viasystems Group, and such benefits as are customarily accorded the
executive of Viasystems Group as long as the executive employment agreement is
in force. In addition, Mr. Nelson is entitled to an annual bonus in an amount
determined in accordance with the Senior Executive Incentive Compensation Plan
and reimbursement for expenses to own and maintain an automobile.
Mr. Nelson's executive employment agreement also provides that if Mr.
Nelson's employment is terminated without cause, Mr. Nelson will continue to
receive his then current salary, which shall not be less than $275,000, for the
longer of the remainder of the period the executive employment agreement is in
force or a period of one year following such termination. The executive
employment agreement terminates upon death or "total disability" (as defined
therein) and no further compensation shall be payable except that he or his
estate, heirs or beneficiaries, as applicable, shall receive his then current
salary for a period of 18 months, in addition to benefits otherwise specifically
provided for and medical benefits for his lifetime.
BENEFIT PLANS
Stock Option Plan
Viasystems Group has adopted the Viasystems Group, Inc. 1997 Stock Option
Plan (the "Stock Option Plan") pursuant to which incentive and non-qualified
stock options, stock appreciation rights, stock awards, performance awards and
stock units may be issued to such employees of Viasystems Group and any parent
or subsidiary corporation designated by the Board of Directors of Viasystems
Group. A total of 8,409,782 shares of Viasystems Group Common Stock will be
reserved for issuance under the Stock Option Plan, of which 7,420,386 of such
shares were reserved in connection with the Chips Merger and related
transactions. As of the date of this Prospectus, options to purchase an
aggregate of 605,000 shares of Viasystems Group Common Stock subject to the
terms and conditions of the Stock Option Plan are outstanding.
The Stock Option Plan provides that it is to be administered by a committee
of the Board of Directors of Viasystems Group or a subcommittee of such a
committee (the "Committee"). The
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<PAGE> 61
Committee has the authority to grant to any participant one or more stock
options, and to establish the terms and conditions of such options, subject to
certain limitations specified in the Stock Option Plan. For example, the
per-share exercise price of each option must not be less than 100% of the fair
market value of the Viasystems Group Common Stock on the date such option is
granted, and no option may be exercisable later than ten years after the date of
grant. In the event of a change in control (as defined in the Stock Option
Plan), the Committee, in its discretion, may take such actions as it deems
appropriate with respect to outstanding awards, including, without limitation,
accelerating the exercisability or vesting of such awards.
The Stock Option Plan became effective as of February 4, 1997. Effective
concurrent with the consummation of the Chips Merger, the Stock Option Plan was
amended to increase the number of shares of Viasystems Group Common Stock
reserved for issuance under the Stock Option Plan. The Stock Option Plan, as
amended, is subject to stockholder approval and will terminate on February 4,
2007, unless sooner terminated by the Committee.
Performance Options
On November 26, 1996, Viasystems Group granted options (the "Performance
Options") to purchase 1,085,187 shares of Viasystems Group Common Stock. Messrs.
J. Mills and Sindelar were granted Performance Options to purchase 336,408 and
227,889 shares of Viasystems Group Common Stock, respectively, and Performance
Options to purchase the remaining 520,890 shares of Viasystems Group Common
Stock were granted to certain officers of the Company who are also affiliated
with Mills & Partners. Upon the consummation of the Original Offering,
Viasystems Group granted Performance Options to purchase 8,138,904 shares of
Viasystems Group Common Stock. Messrs. J. Mills and Sindelar were granted
Performance Options to purchase 2,132,392 and 1,318,501 shares of Viasystems
Group Common Stock, respectively, and Performance Options to purchase the
remaining 4,688,011 shares of Viasystems Group Common Stock were granted to
certain officers of the Company who are also affiliated with Mills & Partners.
Pursuant to the terms of the option agreements (the "Performance Option
Agreements") related to the Performance Options, the Performance Options will
become options to purchase an identical number of shares of Viasystems Group
Common Stock.
The Performance Options are exercisable only in the event that HM Fund III
has, as of the exercise date, realized an overall rate of return of at least 35%
per annum, compounded annually, on all equity funds invested by it in Viasystems
Group. Subject to the foregoing, the Performance Options are exercisable (i)
immediately prior to the consummation of a Liquidity Event (as hereinafter
defined), (ii) concurrently with the consummation of a Qualified IPO (as
hereinafter defined), or (iii) on the ten year anniversary of their grant. A
"Liquidity Event" generally means (i) one or more sales or other dispositions of
Viasystems Group Common Stock if, thereafter, the amount of Viasystems Group
Common Stock owned by HM Fund III is reduced by 50%, (ii) any merger,
consolidation or other business combination of Viasystems Group pursuant to
which any person or group acquires a majority of the common stock of the
resulting entity, or (iii) any sale of all or substantially all of the assets of
Viasystems Group. A "Qualified IPO" means a firm commitment underwritten public
offering of Viasystems Group Common Stock for gross proceeds of at least $50
million pursuant to an effective registration statement under the Securities
Act.
The exercise price for the Performance Options is initially equal to $1.00
per share and, effective each anniversary of the grant date, the per share
exercise price for the Performance Options is equal to the per share exercise
price for the prior year multiplied by 1.08. The exercise price of the
Performance Options and the number of shares of Viasystems Group Common Stock
for which the Performance Options are exercisable is subject to adjustment in
the event of certain fundamental changes in the capital structure of Viasystems
Group. All Performance Options terminate on the ten year anniversary of their
grant.
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<PAGE> 62
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
All the issued and outstanding shares of common stock of the Company are
held by Viasystems Group. The following table sets forth certain information
regarding the expected beneficial ownership of the voting securities of
Viasystems Group upon the consummation of the Transactions, by each person who
is expected to beneficially own more than 5% of any class of Viasystems Group
voting securities and by the directors and certain executive officers of
Viasystems Group, individually, and by the directors and executive officers of
Viasystems Group as a group, following the consummation of the Transactions. The
Viasystems Group Class A Common Stock votes together with the Viasystems Group
Common Stock as a single class and is entitled to one vote for each share.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
---------------------------------------------------------------
VIASYSTEMS GROUP
VIASYSTEMS GROUP CLASS A
COMMON STOCK COMMON STOCK(1)
------------------------ -----------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF PERCENT OF
SHARES CLASS SHARES CLASS TOTAL
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDERS:
HM Parties(2)........................... 255,000,004 99.9% -- -- 87.9%
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
OFFICERS AND DIRECTORS:
James N. Mills(3)..................... -- 34,835,832 100.0% 12.0%
Thomas O. Hicks(2).................... 255,000,004 99.9% -- -- 87.9%
Jack D. Furst(2)...................... 255,000,004 99.9% -- -- 87.9%
Richard W. Vieser(4).................. 200,000 * -- -- *
Kenneth F. Yontz...................... 200,000 * -- -- *
Robert N. Mills....................... -- 7,140,000 20.5% 2.5%
David M. Sindelar(5).................. -- 7,333,331 21.1% 2.5%
All executive officers and directors
as a group (11 persons)(6).......... 255,200,004 100.0% 34,835,832 100.0% 100.0%
</TABLE>
- ---------------
* Represents less than 1%.
(1) Viasystems Group Class A Common Stock is convertible into Viasystems Group
Common Stock (i) at the option of any holder thereof at any time, (ii) at
the option of Viasystems Group upon the occurrence of a Triggering Event (as
defined below), and (iii) automatically on September 30, 2006. A "Triggering
Event" means any sale of substantially all of the assets of Viasystems Group
or any merger, consolidation or other business combination of Viasystems
Group in which Hicks Muse and its affiliates cease to beneficially own,
directly or indirectly, at least 50% of the resulting entity. Each share of
Viasystems Group Class A Common Stock is convertible into a fraction of a
share of Viasystems Group Common Stock equal to the quotient of (i) the fair
market value of a share of Viasystems Group Common Stock at the time of
conversion less the sum of $.99 plus imputed interest thereon at a rate of
8% per annum, compounded annually, at the time of conversion, divided by
(ii) the fair market value of a share of Viasystems Group Common Stock at
the time of conversion. Because the fraction of a share of Viasystems Group
Common Stock into which Viasystems Group Class A Common Stock is convertible
is determinable only at the time of a conversion, shares of Viasystems Group
Common Stock that may be issuable upon conversion of Viasystems Group Class
A Common Stock are not included in the shares of Viasystems Group Common
Stock beneficially owned in the foregoing table.
(2) Includes (i) shares owned of record by Hicks, Muse, Tate & Furst Equity Fund
III, L.P. ("Fund III"), a limited partnership, of which the ultimate general
partner of Fund III is Hicks, Muse, Tate & Furst Fund III, Incorporated, an
affiliate of Hicks Muse; and (ii) shares owned of record by HM3 Coinvestors,
L.P., a limited partnership of which the ultimate general partner is
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<PAGE> 63
Fund III. Thomas O. Hicks is a controlling stockholder of Hicks Muse and
serves as Chairman of the Board, President, Chief Executive Officer, Chief
Operating Officer and Secretary of Hicks Muse. Accordingly, Mr. Hicks may be
deemed to be the beneficial owner of Viasystems Group Common Stock held by
Fund III and HM3 Coinvestors, L.P. John R. Muse, Charles W. Tate, Jack D.
Furst, Lawrence D. Stuart Jr., Michael J. Levitt and Alan B. Menkes are
officers, directors and minority stockholders of Hicks Muse and as such may
be deemed to share with Mr. Hicks the power to vote or dispose of Viasystems
Group Common Stock held by Fund III and HM3 Coinvestors, L.P. Each of
Messrs. Hicks, Muse, Tate, Furst, Stuart, Levitt and Menkes disclaims the
existence of a group and disclaims beneficial ownership of Viasystems Group
Common Stock not respectively owned of record by him.
(3) Includes shares of Viasystems Group Common Stock and Viasystems Group Class
A Common Stock held by James N. Mills and shares of Viasystems Group Common
Stock and Viasystems Group Class A Common Stock owned of record by certain
individuals, including Messrs. R. Mills and D. Sindelar, subject to an
irrevocable proxy in favor of Mr. Mills. See "Certain Transactions." Does
not include 2,468,800 shares of Viasystems Group Common Stock issuable to
Mr. Mills upon the exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Stock Option Plan."
(4) Includes 100,000 shares of Viasystems Group Common Stock that may be
acquired by Mr. Vieser upon the exercise of options granted to him pursuant
to a stock option agreement with Viasystems Group.
(5) Does not include 1,546,390 shares of Viasystems Group Common Stock issuable
to Mr. Sindelar upon exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Performance Options."
(6) Does not include 9,224,091 shares of Viasystems Group Common Stock issuable
to executive officers of Viasystems Group upon the exercise of Performance
Options that are not currently exercisable. See "Management -- Benefit
Plans -- Performance Options."
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CERTAIN TRANSACTIONS
In April 1997, an affiliate of Hicks Muse acquired Forward Group, a rigid
PCB manufacturer located in the United Kingdom, for a purchase price of
approximately $236.0 million (including the issuance of the Forward Group Loan
Notes), which was funded with $216.0 million of borrowings under the Tender
Facility and the proceeds from the issuance to Hicks Muse of $40.0 million
initial liquidation preference of preferred stock. Subsequently, Viasystems
Group acquired Forward Group for cost, consisting of the assumption of the
Tender Facility and the issuance to Hicks Muse and certain affiliates of $40.0
million initial liquidation preference of Viasystem Group's preferred stock.
In April 1997, Chips Holdings acquired Chips, a rigid PCB manufacturer
located in the United Kingdom. In connection with such transaction, Hicks Muse
and its affiliates invested $140.0 million in the equity capital of Chips
Holdings. The Chips Merger was consummated concurrently with the consummation of
the Original Offering, in consideration for the issuance to Hicks Muse and
certain affiliates of common stock valued at $140.0 million. In addition, the
Company became the obligor on the Chips Reimbursement Obligation.
Viasystems Group and its subsidiaries have entered into a ten-year
agreement (the "Monitoring and Oversight Agreement") with an affiliate of Hicks
Muse ("Hicks Muse Partners") which was amended upon consummation of the
Transactions and pursuant to which Viasystems Group and its subsidiaries will
pay Hicks Muse Partners an annual fee payable quarterly for oversight and
monitoring services to the Company. The annual fee is adjustable on January 1 of
each calendar year to an amount equal to 0.2% of the budgeted consolidated
annual net sales of Viasystems Group and its subsidiaries for the then-current
fiscal year, but in no event less than $1,750,000 (the "Base Fee"). Upon the
acquisition by Viasystems Group or any of its subsidiaries of another entity or
business, the fee shall be adjusted prospectively in the same manner using the
pro forma combined budgeted consolidated annual net sales of Viasystems Group
and its subsidiaries. Thomas O. Hicks and Jack D. Furst, directors of Viasystems
Group and the Company, are each principals of Hicks Muse Partners. Hicks Muse
Partners is also entitled to reimbursement for any expenses incurred by it in
connection with rendering services allocable to the Company under the Monitoring
and Oversight Agreement. In addition, Viasystems Group and its subsidiaries,
jointly and severally, have agreed to indemnify Hicks Muse Partners, its
affiliates, and their respective directors, officers, controlling persons,
agents and employes from and against all claims, liabilities, losses, damages,
expenses and fees and disbursements of counsel related to or arising out of or
in connection with the services rendered by Hicks Muse Partners under the
Monitoring and Oversight Agreement and not resulting primarily from the bad
faith, gross negligence, or willful misconduct of Hicks Muse Partners. The
Monitoring and Oversight Agreement makes available the resources of Hicks Muse
Partners concerning a variety of financial and operational matters. The Company
does not believe that the services that have been and will continue to be
provided to the Company by Hicks Muse Partners could otherwise be obtained by
the Company without the addition of personnel or the engagement of outside
professional advisors. In the Company's opinion, the fees provided for under the
Monitoring and Oversight Agreement reasonably reflect the benefits received and
to be received by Viasystems Group, the Company and their respective
subsidiaries.
Chips Holdings and its subsidiaries entered into a ten-year agreement (the
"Chips Monitoring and Oversight Agreement") with Hicks Muse Partners pursuant to
which Chips and its subsidiaries agreed to pay Hicks Muse Partners an annual fee
on terms substantially similar to those under the Monitoring and Oversight
Agreement except that the Base Fee thereunder is $530,000. Upon consummation of
the Transactions, the Chips Monitoring and Oversight Agreement was terminated.
Viasystems Group and its subsidiaries entered into a ten-year agreement
(the "Financial Advisory Agreement"), pursuant to which Hicks Muse Partners is
entitled to receive a fee equal to 1.5% of the "transaction value" (as defined)
for each "add-on transaction" (as defined) in which Viasystems Group or any of
its subsidiaries is involved. In respect of the acquisitions to date, Hicks Muse
has received aggregate fees of approximately $4.9 million under the Financial
Advisory
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Agreement. The term "transaction value" means the total value of the add-on
transaction including without limitation, the aggregate amount of the funds
required to complete the add-on transaction (excluding any fees payable pursuant
to the Financial Advisory Agreement), including the amount of any indebtedness,
preferred stock or similar terms assumed (or remaining outstanding). The term
"add-on transaction" means any future proposal for a tender offer, acquisition,
sale, merger, exchange offer, recapitalization, restructuring or other similar
transaction directly involving Viasystems Group or any of its subsidiaries or
any of their respective subsidiaries and any other person or entity. In
addition, Viasystems Group and its subsidiaries, jointly and severally, have
agreed to indemnify Hicks Muse Partners, its affiliates, and their respective
directors, officers, controlling persons, agents and employees from and against
all claims, liabilities, losses, damages, expenses and fees related to or
arising out of or in connection with the services rendered by Hicks Muse
Partners under the Financial Advisory Agreement and not resulting primarily from
the bad faith, gross negligence, or willful misconduct of Hicks Muse Partners.
The Financial Advisory Agreement makes available the resources of Hicks Muse
Partners concerning a variety of financial and operational matters. The Company
does not believe that the services that have been and will continue to be
provided by Hicks Muse Partners could otherwise be obtained by the Company
without the addition of personnel or the engagement of outside professional
advisors. In the Company's opinion, the fees provided for under the Financial
Advisory Agreement reasonably reflect the benefits received and to be received
by Viasystems Group, the Company and their respective subsidiaries. No fee will
be paid under the Financial Advisory Agreement in connection with the Chips
Merger.
Forward Group and its subsidiaries previously entered into a ten-year
agreement (the "Forward Group Financial Advisory Agreement"), pursuant to which
Hicks Muse Partners was entitled to receive certain fees on terms substantially
identical to those described in the Financial Advisory Agreement. In respect of
acquisitions to date, Hicks Muse Partners has received aggregate fees of
approximately $3.5 million under the Forward Group Financial Advisory Agreement.
Upon consummation of the acquisition of Forward Group, the Forward Group
Financial Advisory Agreement was terminated and no fees were paid in connection
with the Company's acquisition of the Forward Group.
Chips Holdings and its subsidiaries entered into a ten-year agreement (the
"Chips Financial Advisory Agreement"), pursuant to which Hicks Muse Partners is
entitled to receive certain fees on terms substantially identical to those fees
described in the Financial Advisory Agreement. In respect of the acquisitions to
date, Hicks Muse Partners has received aggregate fees of approximately $6.9
million under the Chips Financial Advisory Agreement. Upon consummation of the
Chips Merger, the Chips Financial Advisory Agreement was terminated and no fee
was paid in connection with the Chips Merger.
Effective concurrent with the consummation of the Transactions, each
investor in any class of common stock of Viasystems Group entered into an
amended and restated stockholders agreement (the "Stockholders Agreement"). The
Stockholders Agreement, among other things, grants preemptive rights and certain
registration rights to the parties thereto and contains provisions requiring the
parties thereto to sell their shares of common stock in connection with certain
sales of Viasystems Group Common Stock by Fund III ("drag-along rights") and
granting the parties thereto the right to include a portion of their shares of
common stock in certain sales in which Fund III does not exercise its drag-along
rights ("tag-along rights"). All parties to the Stockholders Agreement agreed to
take all action within their respective power (including the voting of
Viasystems Group Common Stock and Viasystems Group Class A Common Stock) to
cause the Board of Directors of the Company to at all times be constituted by
the members designated by Fund III. The Stockholders Agreement contains an
irrevocable proxy pursuant to which all parties to the Stockholders Agreement
(other than the initial holders of Viasystems Group Class A Common Stock and
their transferees) grant to Fund III the power to vote all shares of Viasystems
Group Common Stock held by such parties on all matters submitted to the
Company's stockholders.
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Further, the Stockholders Agreement contains an irrevocable proxy pursuant to
which the initial holders of Viasystems Group Class A Common Stock and their
transferees grant to James N. Mills (or to Fund III if Mr. Mills is no longer an
officer or director of Viasystems Group) the power to vote all shares of
Viasystems Group Class A Common Stock held by such parties on all matters
submitted to the Company's stockholders. The Stockholders Agreement terminates
on its tenth anniversary date, although the preemptive rights, drag-along rights
and tag-along rights contained therein terminate earlier upon the consummation
of a firm commitment underwritten public offering of Viasystems Group Common
Stock.
The Company purchases certain connectors and other products needed to
manufacture PCBs and backpanels from Berg. Prior to the Company's acquisition of
the Lucent Division, the Lucent Division purchased certain electronic
connections from Berg pursuant to a written supply contract (the "Berg Supply
Agreement"). Berg and the Company have agreed to continue to supply and purchase
products on the same terms and condition as set forth in the Berg Supply
Agreement. Berg is controlled by Hicks Muse, through its affiliates, and managed
by Mills and Partners. In addition, certain of the Company's directors and
executive officers have financial interests in Berg. In fiscal year 1996, the
Company and the Lucent Division collectively purchased approximately $38.8
million of product from Berg. In fiscal years 1994 and 1995, the Lucent Division
purchased $30.1 million and $37.1 million, respectively, of product from Berg.
The Company expects to continue to purchase product from Berg on terms and
conditions substantially similar to the terms and conditions of the Berg Supply
Agreement, which the Company believes to be comparable to the terms that would
be reached in an arm's-length transaction.
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DESCRIPTION OF SENIOR CREDIT FACILITIES
In connection with the consummation of the Chips Merger and the Original
Offering, the Senior Credit Facilities were amended and restated (the
"Amendments") as described below. The description set forth below does not
purport to be complete and is qualified in its entirety by reference to certain
agreements setting forth the principal terms and conditions of the Senior Credit
Facilities, which are available upon request from the Company. Capitalized terms
used but not otherwise defined in this "Description of Senior Credit Facilities"
shall have the meaning to be ascribed to them in the Senior Credit Facilities.
The Company, Circo Craft, PCB Investments PLC ("PCB Investments"), which is
the direct parent of Forward Group, Chips Acquisition Limited ("Chips Limited"),
which is the direct parent of Chips, Chips and Forward Group (collectively the
"Borrowers") entered into a Second Amended and Restated Credit Agreement (the
"Senior Credit Facilities") dated as of June 5, 1997 among Viasystems Group, as
Guarantor, the Borrowers, the several lenders party thereto, The Chase Manhattan
Bank of Canada ("Canadian Agent"), Chase Manhattan International Limited, and
The Chase Manhattan Bank, as Administrative Agent. The Senior Credit Facilities
includes (i) a $88.0 million term loan facility in (the "U.S. Term Loan") and a
$150.0 million revolving credit facility (the "U.S. Revolving Loan" and together
with the U.S. Term Loan, the "U.S. Loans"); (ii) a U.S.$25.0 million revolving
credit facility; (iii) a L32.0 million revolving credit facility (the "Forward
Group Revolving Loan") and a L27.6 million revolving credit facility (the "Chips
Revolving Loan", and together with the Forward Group Revolving Loan, the "U.K.
Revolving Loans", and together with the U.S. Revolving Loan and the Canadian
Revolving Loan, the "Revolving Loans") and (iv) US$346.25 million Letter of
Credit Facility in respect of the Chips Loan Notes comprised of (i) a US$319.3
million term loan facility ("the Chips Term Loans" and together with the US Term
Loan, the "Term Loans") in respect of the principal portion of the Chips Loan
Notes (up to US$249.2 of which may be converted to pounds sterling) and (ii) a
US$27.2 million facility in respect of interest on the Chips Loan Notes.
The U.S. Term Loan consists of two tranches: (i) $55.0 million of tranche B
term loans (the "Tranche B Loan") and (ii) $33.0 million of tranche C term loans
(the "Tranche C Loan"). The Tranche B Loan amortizes semi-annually over seven
years and Tranche C Loan amortizes semi-annually over eight years. The Chips
Term Loans amortize semi-annually over six years.
The Borrowers may use the Revolving Loans for letters of credit in an
amount not to exceed $15.0 million, in the case of both the U.S. Revolving Loan
and the Canadian Revolving Loan, and related letters of credit and bankers'
acceptances in an amount not to exceed L5.0 million in the case of the Forward
Group Revolving Loan and L10,000,000 in the case of the Chips Revolving Loan
(collectively, the "Accommodations"). L16.0 million of the Forward Group
Revolving Loan is available solely to finance obligations of PCB Investments in
respect of the Forward Group Loan Notes and $100.0 million of the U.S. Revolving
Loan is available solely to finance future acquisitions. The Revolving Loans and
the Accommodations are available until November 30, 2002.
The Borrowers may optionally prepay the Term Loans from time to time in
whole or in part, without premium or penalty. At the Borrowers' option,
Revolving Loans may be prepaid, and revolving credit commitments may be
permanently reduced, in whole or in part, at any time.
The Borrowers will be required to make mandatory prepayments of Term Loans,
in the amounts, at the times and subject to exceptions to be agreed upon, (a) in
respect of 75% of excess cash flow of the Company and its subsidiaries, and (b)
in respect of 100% of the net cash proceeds of certain dispositions of assets,
issuances of stock or incurrences of indebtedness by Viasystems Group, the
Company or any of their subsidiaries.
The obligations of the Borrowers under the Senior Credit Facilities are
unconditionally and irrevocably guaranteed by Viasystems Group. In addition, the
obligations of Forward Group, PCB Investments, Chips Limited, and Circo Craft
under their respective loans are unconditionally and
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irrevocably guaranteed by the Company. The Domestic Subsidiaries (as defined in
the Credit Agreement) of the Company have also unconditionally and irrevocably
guaranteed the obligations of the Company for the U.S. Loans and its guarantees
of the other loans. In addition, to the extent permitted by applicable
contractual and legal provisions, the Borrowers and the Guarantors have granted
and/or pledged a first priority or equivalent security interests in all of their
respective tangible and intangible assets and the capital stock of, or other
equity interests in, each direct subsidiary (which is limited to 65% of the
voting capital stock of, or other equity interests in, each direct foreign
subsidiary of the Company).
The U.S. Loans bear interest, at the Company's election, at either: (i) the
Eurocurrency Base Rate plus (x) 2.5% in the case of the Chips Term Loan and U.S.
Revolving Loan, (y) 3.0% in the case of Tranche B Loan, or (z) 3.5% in the case
of Tranche C Loan; or (ii) the Alternate Base Rate plus (x) 1.5% in the case of
the Chips Term Loan or U.S. Revolving Loan, (y) 2.0% in the case of Tranche B
Loan, or (z) 2.5% in the case of Tranche C Loan. The Alternate Base Rate is the
highest of The Chase Manhattan Bank's Prime Rate, the Three-Month Secondary CD
Rate (as defined therein) plus 1.0%, and the Federal Funds Effective Rate (as
defined therein) plus 0.5%. The Canadian Revolving Loan denominated in US
dollars bears interest, at Circo Craft's election, at either (i) the
Eurocurrency Base Rate plus 2.5% or (ii) the Canadian Alternate Base Rate plus
1.5%. The Canadian Revolving Loan denominated in Canadian Dollars bears
interest, at Circo Craft's election either (i) the Canadian Bankers Acceptance
Discount Rate plus 2.5% or (ii) the Canadian Prime Rate plus 1.5%. The Canadian
Alternate Base Rate is equal to the higher of Canadian Agent's prime rate or the
Federal Funds Effective Rate (as defined in the Credit Agreement) plus 0.5%. The
U.K. Revolving Loans and any Chips Term Loans converted to pounds sterling bear
interest at the Eurocurrency Base Rate plus 2.5%.
The applicable margin with respect to extensions of credit under the
Canadian Revolving Loan is reduced by the amount of the applicable margin for
the Facility Fee (hereinafter described) thereunder. In addition, the applicable
margin with respect to the Chips Terms Loan and Revolving Loans and the Facility
Fee and Commitment Fee (hereinafter described) are eligible for certain
step-downs after January 1, 1998 based on a ratio of Consolidated Total Debt to
Consolidated EBITDA (each as defined in the Senior Credit Facilities).
The Borrowers pay a per annum fee equal to the applicable margin on their
respective Revolving Loans which bear interest at the Eurocurrency Base Rate, of
the average daily face amount of their respective outstanding Accommodations,
other than with respect to the Chips Letter of Credit, which fee is equal to the
applicable margin on the Chips Term Loan bearing interest at the Eurocurrency
Base Rate. Each of the Company, Chips Limited and Forward Group pay a Commitment
Fee equal to 0.5% on the undrawn portion of the commitments in respect of their
respective Revolving Loans and Circo Craft pays a Facility Fee equal to 0.5% on
the Canadian revolving credit commitment. In addition, US Borrower pays a fee of
0.25% per annum of Bisto's $118.3 million portion of the Chips Letter of Credit
to the extent not paid by Bisto.
The Senior Credit Facilities contain a number of covenants customary for
facilities similar to the Senior Credit Facilities that, among other things,
restrict the ability of the Company and its subsidiaries to incur additional
indebtedness, create liens on assets, incur guarantee obligations, enter into
mergers, consolidations or amalgamations or liquidate, wind up or dissolve,
dispose of assets, pay dividends, make capital expenditures, make advances,
loans, extensions of credit, capital contributions to, or purchases of any
stock, bonds, notes, debentures or other securities, prepay certain indebtedness
(including the New Notes) or amend other debt instruments (including the
Indenture), engage in certain transactions with subsidiaries and affiliates,
enter into sale and leaseback transactions, make changes in their fiscal year,
limit the ability of subsidiaries to incur, assume or suffer to exist liens or
pay dividends or make other distributions or pay indebtedness owed to Viasystems
Group or any of its subsidiaries and otherwise restricts certain corporate
activities. In addition, under the Senior Credit Facilities, the Company is
required to comply with
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specified financial ratios and tests, including minimum interest coverage and
maximum leverage ratios and a trailing four quarter minimum EBITDA test.
The Senior Credit Facilities also contain customary events of default
including failure to pay principal on any Loan or any Accommodation when due or
any interest or other amount that becomes due within five days after the due
date thereof, any representation or warranty made or deemed made is incorrect in
any material respect on or as of the date made or deemed made, the default in
the performance of certain negative covenants or a default in the performance of
certain other covenants or agreements for a period of thirty days, default in
other indebtedness or guarantee obligations with a principal amount in excess of
$5.0 million beyond the period of grace, certain insolvency events, certain
ERISA events, and other customary events of default for facilities similar to
the Senior Credit Facilities.
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on June 2, 1997, in the Original
Offering. In connection with that placement, the Company entered into the
Registration Rights Agreement, which requires that the Company file the
Registration Statement under the Securities Act with respect to the New Notes
and, upon the effectiveness of that Registration Statement, offer to the holders
of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive legend
and which generally may be reoffered and resold by the holder without
registration under the Securities Act. The Registration Rights Agreement further
provides that the Company must use its reasonable best efforts to (i) cause the
Registration Statement with respect to the Exchange Offer to be declared
effective on or before November 13, 1997 and (ii) consummate the Exchange Offer
on or before December 13, 1997. Except as provided below, upon the completion of
the Exchange Offer, the Company's obligations with respect to the registration
of the Old Notes and the New Notes will terminate. A copy of the Registration
Rights Agreement has been filed as an exhibit to the Registration Statement, of
which this Prospectus is a part, and the summary herein of certain provisions
thereof does not purport to be complete and is qualified in its entirety by
reference thereto. As a result of the filing and the effectiveness of the
Registration Statement, certain liquidated damages provided for in the
Registration Rights Agreement will not become payable by the Company. Following
the completion of the Exchange Offer (except as set forth in the paragraph
immediately below), holders of Old Notes not tendered will not have any further
registration rights and those Old Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for the Old
Notes could be adversely affected upon completion of the Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent to
the Company, among other things, that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving the New Notes, (ii) neither the holder nor any such other
person is engaging in or intends to engage in a distribution of the New Notes,
(iii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes, and (iv) neither the holder nor any such other person is an "affiliate,"
as defined under Rule 405 promulgated under the Securities Act, of the Company.
Pursuant to the Registration Rights Agreement, the Company is required to file a
"shelf" registration statement for a continuous offering pursuant to Rule 415
under the Securities Act in respect of the Old Notes if (i) because of any
change in law or applicable interpretations thereof by the staff of the
Commission, the Company determines that it is not permitted to effect the
Exchange Offer as contemplated hereby, (ii) validly tendered Old Notes are not
exchanged for New Notes by December 13, 1997, (iii) any holder of Private
Exchange Securities so requests within 60 days of the Exchange Offer, (iv) any
applicable law or interpretations do not permit any holder of Old Notes to
participate in the Exchange Offer, or (v) any holder of Old Notes that
participates in the
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Exchange Offer does not receive freely transferable New Notes in exchange for
tendered securities. In the event that the Company is obligated to file a
"shelf" registration statement, it will be required to keep such "shelf"
registration statement effective for at least two years. Other than as set forth
in this paragraph, no holder will have the right to participate in the "shelf"
registration statement nor otherwise to require that the Company register such
holder's shares of Old Notes under the Securities Act. See "-- Procedures for
Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third-parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any person receiving such New Notes, whether or not
such person is the registered holder (other than any such holder or such other
person which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the New
Notes are acquired in the ordinary course of business of the holder or such
other person and neither the holder nor such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives New Notes for its
own account in exchange for Old Notes, where such Old 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 New Notes. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "-- Purpose and Effect" above), holders of Old Notes not
tendered will not have any further registration rights and those Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of outstanding Old Notes accepted
in the Exchange Offer. Holders may tender some or all of their Old Notes
pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes except that the New Notes have been registered under
the Securities Act and will not bear legends restricting their transfer. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.
As of June 1, 1997, Old Notes representing $400.0 million aggregate
principal amount were outstanding and there was one registered holder, a nominee
of DTC. This Prospectus, together with the Letter of Transmittal, is being sent
to such registered Holder and to others believed to have beneficial interests in
the Old Notes. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder.
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The Company shall be deemed to have accepted validly tendered Old Notes
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company. If any tendered Old
Notes are not accepted for exchange because of an invalid tender, the occurrence
of certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, the Company will notify the Exchange Agent and each registered
holder of any extension by oral or written notice prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth under "The Exchange Offer -- Conditions to Exchange Offer"
shall not have been satisfied, to terminate the Exchange Offer, by giving oral
or written notice of such delay, extension or termination to the Exchange Agent,
or (ii) to amend the terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange Offer.
Except as set forth under "The Exchange Offer -- Book Entry Transfer," to tender
in the Exchange Offer a holder must complete, sign, and date the Letter of
Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver the Letter
of Transmittal or copy to the Exchange Agent prior to the Expiration Date. In
addition, either (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal prior to the Expiration
Date, or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if that procedure is available, into the
Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to
the procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date, or (iii) the holder must comply
with the guaranteed delivery procedures described below. To be tendered
effectively, the Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth under "The Exchange
Offer -- Exchange Agent" prior to the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
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HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES, OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration Instruction"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent, nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly 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.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "The Exchange Offer -- Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
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<PAGE> 73
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the registered holder, (ii) neither the
holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
the Company.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Old Notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering Holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
nonexchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof, with
any required signature guarantees and any other required documents, must, in any
case other than as set forth in the following paragraph, be transmitted to and
received by the Exchange Agent at the address set forth under "The Exchange
Offer -- Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the Letter of Transmittal.
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GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 pm., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
(for DTC participants) electronic ATOP transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth on the back cover page
of this Prospectus prior to 5:00 pm., New York City time, on the Expiration
Date. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify
the Old Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Old Notes), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee register the
transfer of such Old Notes into the name of the person withdrawing the tender,
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form,
and eligibility (including time of receipt) of such notices will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures under "The Exchange Offer -- Procedures for Tendering" at any
time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
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The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA"). In any such event the Company is required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Questions, requests for assistance and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand:
The Bank of New York The Bank of New York
101 Barclays Street 101 Barclays Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
New York, New York 10286
Attn: Reorganization Section
Attn: Reorganization Section
By Overnight Courier: By Facsimile:
The Bank of New York (212) 571-3080
101 Barclays Street
Corporate Trust Services Window For Information or
Ground Level Confirmation by Telephone:
New York, New York 10286 (212) 815-6333
Attn: Reorganization Section
</TABLE>
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$230,000, which includes fees and expenses of the Exchange Agent, accounting,
legal, printing, and related fees and expenses.
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TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
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DESCRIPTION OF NEW NOTES
GENERAL
The New Notes are to be issued under the Indenture, dated as of June 6,
1997 (the "Indenture"), between the Company and The Bank of New York, as Trustee
(the "Trustee"), a copy of which is available upon request to the Company. The
Old Notes were also issued under the Indenture. Upon the effectiveness of the
Exchange Offer, the Indenture will be subject to and governed by the TIA. The
following summary of certain provisions of the Indenture and the Notes does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture (including the definitions of
certain terms therein and those terms made a part thereof by the Trust Indenture
Act of 1939, as amended) and the Notes.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which initially shall
be the corporate trust office of the Trustee in New York, New York), except
that, at the option of the Company, payment of interest may be made by check
mailed to the address of the holders as such address appears in the Note
Register.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
TERMS OF NOTES
The Notes will be unsecured, senior subordinated obligations of the
Company, limited to $400 million aggregate principal amount, and will mature on
June 1, 2007. Each Note will bear interest at 9.750% per annum from the date of
issuance, or from the most recent date to which interest has been paid or
provided for, payable semiannually on June 1 and December 1 of each year
commencing on December 1, 1997 to holders of record at the close of business on
the May 15 or November 15 immediately preceding the interest payment date.
OPTIONAL REDEMPTION
Except as set forth below, the Notes will not be redeemable at the option
of the Company prior to June 1, 2002. On and after such date, the Notes will be
redeemable, at the Company's option, in whole or in part, at any time upon not
less than 30 nor more than 60 days prior notice mailed by first-class mail to
each holder's registered address, at the following redemption prices (expressed
in percentages of principal amount), plus accrued and unpaid interest to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
If redeemed during the 12-month period commencing on June 1 of the years
set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2002........................................................ 104.875%
2003........................................................ 103.250%
2004........................................................ 101.625%
2005 and thereafter......................................... 100.000%
</TABLE>
In addition, at any time and from time to time prior to June 1, 2000, the
Company may redeem in the aggregate up to $140.0 million of the Notes with the
net cash proceeds of one or more Equity Offerings by the Company or Viasystems
Group (to the extent, in the case of Viasystems Group, that the Net Cash
Proceeds thereof are contributed to the common or non-redeemable preferred
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<PAGE> 78
equity capital of the Company) so long as there is a Public Market at the time
of such redemption, at a redemption price (expressed as a percentage of
principal amount) of 109.75%, plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date in
respect of then outstanding Notes); provided, however, that at least $200.0
million of the Notes must remain outstanding after each such redemption.
At any time on or prior to June 1, 2002, the Notes may also be redeemed as
a whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 90 days after the occurrence of such Change of Control) mailed by
first-class mail to each holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date in
respect of then outstanding Notes).
"Applicable Premium" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at June 1, 2002 (such redemption price being described under "-- Optional
Redemption") plus (2) all required interest payments due on such Note through
June 1, 2002, computed using a discount rate equal to the Treasury Rate plus 100
basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to June 1, 2002; provided, however, that if the
period from the Redemption Date to June 1, 2002 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the period from the Redemption Date to June 1, 2002 is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
Selection. In the case of any partial redemption, selection of the Notes
for redemption will be made by the Trustee on a pro rata basis, by lot or by
such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the notice
of redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note.
RANKING AND SUBORDINATION
The payment of the principal of, premium (if any), and interest on the
Notes is subordinated in right of payment, as set forth in the Indenture, to the
payment when due of all Senior Indebtedness of the Company. However, payment
from the money or the proceeds of U.S. Government Obligations held in any
defeasance trust described under "Defeasance" below is not subordinate to any
Senior Indebtedness or subject to the restrictions described herein. As of March
31, 1997, on a pro forma basis after giving effect to the 1997 Transactions, the
Original Offering and the Exchange Offer, there would have been approximately
$432.4 million of Senior Indebtedness outstanding. In addition, on the same pro
forma basis, there would have been approximately $146.5 million available under
the Senior Credit Facilities as of December 31, 1996 for the general corporate
purposes and
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working capital needs of the Company and an additional $100.0 million available
for future acquisitions, all of which would be Senior Indebtedness if borrowed.
Of the amount available to be borrowed as of March 31, 1997 on a pro forma
basis, approximately $96.5 million would have been available for borrowings by
the Company's Subsidiaries. Although the Indenture contains limitations on the
amount of additional Indebtedness that the Company may incur, under certain
circumstances the amount of such Indebtedness could be substantial and, in any
case, such Indebtedness may be Senior Indebtedness. See "Certain
Covenants -- Limitation on Indebtedness" below.
"Senior Indebtedness" is defined, whether outstanding on the Issue Date or
thereafter issued, as the Bank Indebtedness and all other Indebtedness of the
Company, including interest and fees thereon, unless, in the instrument creating
or evidencing the same or pursuant to which the same is outstanding, it is
provided that the obligations in respect of such Indebtedness are not superior
in right of payment to the Notes; provided, however, that Senior Indebtedness
will not include (1) any obligation of the Company to any Subsidiary, (2) any
liability for Federal, state, foreign, local or other taxes owed or owing by the
Company, (3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), or (4) any Indebtedness, Guarantee or obligation
of the Company that is expressly subordinate or junior in right of payment to
any other Indebtedness, Guarantee or obligation of the Company, including any
Senior Subordinated Indebtedness and any Subordinated Indebtedness.
The Notes are effectively subordinated to the obligations of the Company's
Subsidiaries, including the guarantee by its U.S. Subsidiaries of obligations
under the Senior Credit Facilities, because the Company is a holding company. In
the event of an insolvency, liquidation or other reorganization of any of the
Subsidiaries of the Company, the creditors of the Company (including the holders
of the Notes), as well as shareholders of the Company, will have no right to
proceed against the assets of such Subsidiaries or to cause the liquidation or
bankruptcy of such Subsidiaries under applicable bankruptcy laws. Creditors of
such Subsidiaries, including lenders under the Senior Credit Facilities, would
be entitled to payment in full from such assets before the Company, as a
shareholder, would be entitled to receive any distribution therefrom. Except to
the extent that the Company itself may be a creditor with recognized claims
against such Subsidiaries, claims of creditors of such Subsidiaries will have
priority with respect to the assets and earnings of such Subsidiaries over the
claims of creditors of the Company, including claims under the Notes.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company. The Company has agreed in the Indenture that it
will not incur, directly or indirectly, any Indebtedness that is subordinate or
junior in right of payment to Senior Indebtedness unless such Indebtedness is
Senior Subordinated Indebtedness or is contractually subordinated in right of
payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not
deemed to be subordinate or junior to Secured Indebtedness merely because it is
unsecured nor is any Indebtedness deemed to be subordinate or junior to other
Indebtedness merely because it matures after such other Indebtedness.
The Company may not pay principal of, premium (if any), or interest on, the
Notes or make any deposit pursuant to the provisions described under
"Defeasance" below and may not otherwise purchase, redeem or retire any Notes
(collectively, "pay the Notes") if (i) any Senior Indebtedness is not paid when
due or (ii) any other default on Senior Indebtedness occurs and the maturity of
such Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, the default has been cured or waived and any such acceleration has
been rescinded or such Senior Indebtedness has been paid in full. However, the
Company may pay the Notes without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
the Senior Indebtedness with respect to which either of the events set forth in
clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second
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preceding sentence) with respect to any Designated Senior Indebtedness pursuant
to which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Company may not pay the
Notes (except in (i) Capital Stock (other than Disqualified Stock) issued by the
Company to pay interest on the Notes or issued in exchange for the Notes, (ii)
in securities substantially identical to the Notes issued by the Company in
payment of interest thereon or (iii) in securities issued by the Company which
are subordinated to Senior Indebtedness at least to the same extent as the Notes
and having an Average Life at least equal to the remaining Average Life of the
Notes) for a period (a "Payment Blockage Period") commencing upon the receipt by
the Trustee (with a copy to the Company) of written notice (a "Blockage Notice")
of such default from the Representative of the holders of such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice, (ii) because the default giving rise
to such Blockage Notice is no longer continuing or (iii) because such Designated
Senior Indebtedness has been repaid in full). Notwithstanding the provisions
described in the immediately preceding sentence, unless the holders of such
Designated Senior Indebtedness or the Representative of such holders have
accelerated the maturity of such Designated Senior Indebtedness, the Company may
resume payments on the Notes after the end of such Payment Blockage Period. Not
more than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period; provided, that if a Blockage Notice is given by
holders of Designated Senior Indebtedness other than the Bank Indebtedness, the
Representative of the Bank Indebtedness may deliver a subsequent Blockage Notice
during such 360-day period, but the total duration of all Payment Blockage
Periods during such 360-day period shall not exceed 179 days.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization or bankruptcy of or
similar proceeding relating to the Company or its property, the holders of
Senior Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the holders of the Notes are entitled to receive any
payment, and until the Senior Indebtedness is paid in full, any payment or
distribution to which holders of the Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of the Senior
Indebtedness as their interests may appear.
If a distribution is made to holders of the Notes that, due to the
subordination provisions, should not have been made to them, such holders are
required to hold it in trust for the holders of Senior Indebtedness and pay it
over to them as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company and the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders or
the Representative of the Designated Senior Indebtedness receive notice of such
acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
By reason of the subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder will have the right to require the Company to repurchase
all or any part of such holder's Notes at a purchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
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<PAGE> 81
record date to receive accrued and unpaid interest due on the relevant interest
payment date in respect of then outstanding Notes):
(i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets
of the Company and its Subsidiaries to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act (a "Group")
(whether or not otherwise in compliance with the provisions of the
Indenture), other than to Hicks Muse, Mills & Partners, or any of their
Affiliates, officers and directors (the "Permitted Holders"); or
(ii) a majority of the Board of Directors of the Company shall consist
of Persons who are not Continuing Directors; or
(iii) the acquisition by any Person or Group (other than the Permitted
Holders or any direct or indirect Subsidiary of any Permitted Holder) of
the power, directly or indirectly, to vote or direct the voting of
securities having more than 50% of the ordinary voting power for the
election of directors of the Company.
Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Notes in
connection with such Change of Control, the Company shall mail a notice to each
holder with a copy to the Trustee stating: (1) that a Change of Control has
occurred and that such holder has the right to require the Company to purchase
such holder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on a record date to receive accrued
and unpaid interest on the relevant interest payment date in respect of the then
outstanding Notes); (2) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and (3) the
procedures determined by the Company, consistent with the Indenture, that a
holder must follow in order to have its Notes purchased.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.
The definition of "Change of Control" includes, among other transactions, a
disposition of all or substantially all of the property and assets of the
Company and its Subsidiaries. With respect to the disposition of property or
assets, the phrase "all or substantially all" as used in the Indenture varies
according to the facts and circumstances of the subject transaction, has no
clearly established meaning under New York law (which is the choice of law under
the Indenture) and is subject to judicial interpretation. Accordingly, in
certain circumstances there may be a degree of uncertainty in ascertaining
whether a particular transaction would involve a disposition of "all or
substantially all" of the property or assets of a Person, and therefore it may
be unclear whether a Change of Control has occurred and whether the Company is
required to make an offer to repurchase the Notes as described above.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company and future Indebtedness of its Subsidiaries may also
contain prohibitions of certain events that would constitute a Change of Control
or require such Indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the holders of their right to require the Company to
repurchase the Notes could cause a default under Senior Indebtedness of the
Company, even if the Change of Control itself does not. Finally, the Company's
ability to pay cash to the holders upon a repurchase may be limited by the
Company's then existing financial resources. There can be no assurance that
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sufficient funds will be available when necessary to make any required
repurchases. Even if sufficient funds were otherwise available, the terms of the
Bank Indebtedness will prohibit the Company's prepayment of Notes prior to their
scheduled maturity. Consequently, if the Company is not able to prepay the Bank
Indebtedness and any other Senior Indebtedness containing similar restrictions
or obtain requisite consents, as described above, the Company will be unable to
fulfill its repurchase obligations if holders of Notes exercise their repurchase
rights following a Change of Control, thereby resulting in a default under the
Indenture.
CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness; provided, however, that the Company and
any of its Restricted Subsidiaries may incur Indebtedness if on the date thereof
the Consolidated Coverage Ratio would be greater than 2.00: 1.00, if such
Indebtedness is Incurred on or prior to December 31, 1999, and 2.25:1.00, if
such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may incur the following Indebtedness: (i) Indebtedness
Incurred pursuant to (A) the Credit Agreement (including, without limitation,
any renewal, extension, refunding, restructuring, replacement or refinancing
thereof referred to in clause (ii) of the definition thereof) or (B) any other
agreements or indentures governing Senior Indebtedness; provided, however, that
the aggregate principal amount of all Indebtedness Incurred pursuant to this
clause (i) does not exceed $710.0 million at any time outstanding, less the
aggregate principal amount thereof repaid with the net proceeds of Asset
Dispositions (to the extent, in the case of a repayment of revolving credit
Indebtedness, the commitment to advance the loans repaid has been terminated);
(ii) Indebtedness represented by Capitalized 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 used in a Related Business or Incurred to Refinance any
such purchase price or cost of construction or improvement, in each case
Incurred no later than 365 days after the date of such acquisition or the date
of completion of such construction or improvement; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause (ii) shall
not exceed $25.0 million at any time outstanding; (iii) Permitted Indebtedness;
and (iv) Indebtedness (other than Indebtedness described in clauses (i) - (iii))
in a principal amount which, when taken together with the principal amount of
all other Indebtedness Incurred pursuant to this clause (iv) and then
outstanding, will not exceed $75.0 million (it being understood that any
Indebtedness Incurred under this clause (iv) shall cease to be deemed Incurred
or outstanding for purposes of this clause (iv) (but shall be deemed to be
Incurred for purposes of paragraph (a)) from and after the first date on which
the Company or its Restricted Subsidiaries could have Incurred such Indebtedness
under the foregoing paragraph (a) without reliance upon this clause (iv)).
(c) In addition, the Company shall not Incur any Secured Indebtedness which
is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the Notes equally and ratably with such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.
(d) The Company will not permit any Unrestricted Subsidiary to Incur any
Indebtedness other than Non-Recourse Debt; provided, however, if any such
Indebtedness ceases to be Non-Recourse Debt, such event shall be deemed to
constitute an Incurrence of Indebtedness by the Company or a Restricted
Subsidiary.
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(e) For purposes of determining compliance with any U.S. dollar-denominated
restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in effect on the date
such Indebtedness was Incurred, in the case of term debt, or first committed, in
the case of revolving credit debt; provided that (x) the U.S. dollar-equivalent
principal amount of any such Indebtedness outstanding or committed on the Issue
Date shall be calculated based on the relevant currency exchange rate in effect
on March 31, 1997, and (y) if such Indebtedness is Incurred to refinance other
indebtedness denominated in a foreign currency, and such refinancing would cause
the applicable U.S. dollar-denominated restriction to be exceeded if calculated
at the relevant currency exchange rate in effect on the date of such
refinancing, such U.S. dollar-denominated restriction shall be deemed not to
have been exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced. The principal amount of any Indebtedness incurred to refinance other
Indebtedness, if Incurred in a different currency from the Indebtedness being
refinanced, shall be calculated based on the currency exchange rate applicable
to the currencies in which such respective Indebtedness is denominated that is
in effect on the date of such refinancing.
Limitation on Layering. The Company shall not Incur any Indebtedness if
such Indebtedness is subordinate or junior in right of payment to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
contractually subordinated in right of payment to Senior Subordinated
Indebtedness.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any of its Restricted Subsidiaries, directly or indirectly, to (i)
declare or pay any dividend or make any distribution on or in respect of its
Capital Stock (including any payment in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries)
except (A) dividends or distributions payable in its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase such
Capital Stock (other than Disqualified Stock), and (B) dividends or
distributions payable to the Company or a Restricted Subsidiary of the Company
(and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its
other holders of Capital Stock on a pro rata basis), (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of the Company held by
Persons other than a Restricted Subsidiary of the Company or any Capital Stock
of a Restricted Subsidiary of the Company held by Persons other than the Company
or another Restricted Subsidiary of the Company (in either case, other than in
exchange for its Capital Stock (other than Disqualified Stock) or to the extent
that after giving effect to such purchase, redemption, retirement or
acquisition, such Restricted Subsidiary would become a Wholly Owned Subsidiary),
(iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Subordinated Indebtedness (other than the purchase, repurchase
or other acquisition of Subordinated Indebtedness purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of purchase, repurchase or
acquisition) or (iv) make any Investment (other than a Permitted Investment) in
any Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein referred to
in clauses (i) through (iv) as a "Restricted Payment"), if at the time the
Company or such Restricted Subsidiary makes such Restricted Payment: (1) a
Default shall have occurred and be continuing (or would result therefrom); or
(2) the Company is not able to incur an additional $1.00 of Indebtedness
pursuant to paragraph (a) under "Limitation on Indebtedness"; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
declared or made subsequent to the Issue Date would exceed the sum of: (A) 50%
of the Consolidated Net Income accrued during the period (treated as one
accounting period) from the Issue Date to the end of the most recent fiscal
quarter ending prior to the date of such Restricted Payment as to which
financial results are available (or, in case such Consolidated Net Income shall
be a deficit, minus 100% of such deficit); (B) the aggregate net
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proceeds received by the Company from the issue or sale of its Capital Stock
(other than Disqualified Stock) or other capital contributions subsequent to the
Issue Date (other than net proceeds received from an issuance or sale of such
Capital Stock to a Subsidiary of the Company or an employee stock ownership plan
or similar trust); provided, however, that the value of any non cash net
proceeds (which in each case shall be assets of the type used in a Related
Business or Capital Stock of a Person engaged in a Related Business) shall be as
determined by the Board of Directors in good faith, except that in the event the
value of any non cash net proceeds shall be $25 million or more, the value shall
be as determined in writing by an independent investment banking firm of
nationally recognized standing; (C) the aggregate Net Cash Proceeds received by
the Company from the issue or sale of its Capital Stock (other than Disqualified
Stock) to an employee stock ownership plan or similar trust subsequent to the
Issue Date; provided, however, that if such plan or trust Incurs any
Indebtedness to or Guaranteed by the Company or any of its Restricted
Subsidiaries to finance the acquisition of such Capital Stock, such aggregate
amount shall be limited to such Net Cash Proceeds less such Indebtedness
Incurred to or Guaranteed by the Company or any of its Restricted Subsidiaries
and any increase in the Consolidated Net Worth of the Company resulting from
principal repayments made by such plan or trust with respect to Indebtedness
Incurred by it to finance the purchase of such Capital Stock; (D) the amount by
which Indebtedness of the Company is reduced on the Company's balance sheet upon
the conversion or exchange (other than by a Restricted Subsidiary of the
Company) subsequent to the Issue Date of any Indebtedness of the Company for
Capital Stock (other than Disqualified Stock) of the Company (less the amount of
any cash, or other property, distributed by the Company upon such conversion or
exchange); (E) the amount equal to the net reduction in Investments (other than
Permitted Investments) made by the Company or any of its Restricted Subsidiaries
in any Person resulting from (i) repurchases or redemptions of such Investments
by such Person, proceeds realized upon the sale of such Investment to an
unaffiliated purchaser, and repayments of loans or advances or other transfers
of assets by such Person to the Company or any Restricted Subsidiary of the
Company or (ii) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary, which amount was included in the calculation of the
amount of Restricted Payments; provided, however, that no amount shall be
included under this clause (E) to the extent it is already included in
Consolidated Net Income; (F) the aggregate Net Cash Proceeds received by a
Person in consideration for the issuance of such Person's Capital Stock (other
than Disqualified Stock) which are held by such Person at the time such Person
is merged with and into the Company in accordance with the "Merger and
Consolidation" covenant subsequent to the Issue Date; provided, however, that
concurrently with or immediately following such merger the Company uses an
amount equal to such Net Cash Proceeds to redeem or repurchase the Company's
Capital Stock; and (G) $5 million.
(b) The provisions of paragraph (a) shall not prohibit: (i) any purchase or
redemption of Capital Stock or Subordinated Indebtedness of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan
or similar trust); provided, however, that (A) such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments and (B) the
Net Cash Proceeds from such sale shall be excluded from clause (3) (B) of
paragraph (a); (ii) any purchase or redemption of Subordinated Indebtedness of
the Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Indebtedness of the Company; provided, however,
that such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments; (iii) any purchase or redemption of Subordinated
Indebtedness from Net Available Cash to the extent permitted under "Limitation
on Sales of Assets and Subsidiary Stock" below; provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments; (iv) dividends paid within 60 days after the date
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of declaration if at such date of declaration such dividend would have complied
with the requirements of paragraph (a) above; (v) payments of dividends on the
Company's common stock (or payments to Viasystems Group to pay dividends on its
common stock) after an initial public offering of common stock of the Company or
of Viasystems Group, as the case may be, in an annual amount not to exceed 6% of
the gross proceeds (before deducting underwriting discounts and commissions and
other fees and expenses of the offering) received by the Company from shares of
common stock sold for the account of the Company (and not for the account of any
stockholder) in such initial public offering or, in the case of an initial
public offering by Viasystems Group, 6% per annum of the amount contributed to
the common or non-redeemable preferred equity of the Company by Viasystems Group
from the Net Cash Proceeds of an initial public offering of common stock by
Viasystems Group; (vi) payments by the Company to repurchase (or to enable
Viasystems Group to repurchase) Capital Stock or other securities of the Company
or Viasystems Group from members of management of the Company in an aggregate
amount not to exceed $15 million; (vii) payments to enable the Company to redeem
or repurchase (or to enable Viasystems Group to redeem or repurchase) stock
purchase or similar rights granted by the Company or Viasystems Group with
respect to its Capital Stock in an aggregate amount not to exceed $1 million;
(viii) payments, not to exceed $200,000 in the aggregate, to enable the Company
or Viasystems Group to make cash payments to holders of its Capital Stock in
lieu of the issuance of fractional shares of its Capital Stock; (ix) payments
made pursuant to any merger, consolidation or sale of assets effected in
accordance with the "Merger and Consolidation" covenant; provided, however, that
no such payment may be made pursuant to this clause (ix) unless, after giving
effect to such transaction (and the incurrence of any Indebtedness in connection
therewith and the use of the proceeds thereof), the Company would be able to
Incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Indebtedness" covenant such that, after
Incurring that $1.00 of additional Indebtedness, the Consolidated Coverage Ratio
would be greater than 3.5:1.00; and (x) payments by the Company to fund (A) out
of pocket expenses of Viasystems Group for administrative, legal and accounting
services provided by third parties, or to pay franchise fees and similar costs,
but not to exceed an aggregate amount of $1 million per annum, and (B) taxes of
Viasystems Group; provided, however, that in the case of clauses (v), (vi),
(vii), (viii) and (ix) no Default or Event of Default shall have occurred or be
continuing at the time of such payment or as a result thereof; provided further,
however, that for purposes of determining the aggregate amount expended for
Restricted Payments in accordance with clause (3) of the immediately preceding
paragraph (a), only the amounts expended under clauses (iv) through (ix) shall
be included.
Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company shall not, and shall not permit any of its Restricted Subsidiaries
to, create or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any such Restricted Subsidiary to (i) pay
dividends or make any other distributions on its Capital Stock or pay any
Indebtedness or other obligation owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company; except: (a) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including the Credit Agreement; (b)
any encumbrance or restriction with respect to such a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness or Preferred Stock issued
by such Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company and outstanding on such date (other than
Indebtedness or Preferred Stock issued as consideration in, or to provide all or
any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary of the Company or was acquired by the
Company); (c) any encumbrance or restriction with respect to such a Restricted
Subsidiary pursuant to an agreement evidencing Indebtedness Incurred without
violation of the Indenture or effecting a refinancing of Indebtedness issued
pursuant to an agreement referred to in clauses (a) or (b) or this clause (c) or
contained in any amendment to an agreement referred to in clauses (a) or (b) or
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this clause (c); provided, however, that the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in any of such agreement,
refinancing agreement or amendment, taken as a whole, are not materially less
favorable to the holders, as determined in good faith by the senior management
of the Company or Board of Directors of the Company, than encumbrances and
restrictions with respect to such Restricted Subsidiary contained in agreements
in effect at, or entered into on, the Issue Date; (d) in the case of clause
(iii), any encumbrance or restriction (A) that restricts in a customary manner
the subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) by virtue of
any transfer of, agreement to transfer, option or right with respect to, or Lien
on, any property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by the Indenture, (C) that is included in a licensing
agreement to the extent such restrictions limit the transfer of the property
subject to such licensing agreement or (D) arising or agreed to in the ordinary
course of business and that does not, individually or in the aggregate, detract
from the value of property or assets of the Company or any of its Subsidiaries
in any manner material to the Company or any such Restricted Subsidiary as
determined in good faith by senior management of the Company; (e) in the case of
clause (iii) above, restrictions contained in security agreements, mortgages or
similar documents securing Indebtedness of a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such security
agreements; (f) any restriction with respect to such a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; (g) encumbrances or
restrictions with respect to Indebtedness of Foreign Subsidiaries; provided that
(i) such encumbrances or restrictions do not limit in any manner the ability of
the Restricted Subsidiaries of the Company in existence on the Issue Date from
performing any of the acts referred to in clauses (i) through (iii) of this
covenant and (ii) the aggregate principal amount of the Indebtedness of the
Foreign Subsidiaries of the Company which includes such an encumbrance or
restriction does not exceed $50.0 million; and (h) encumbrances or restrictions
arising or existing by reason of applicable law.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall
not, and shall not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Company's senior management or
the Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition, (ii)
at least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (A)
first, to the extent the Company or any Restricted Subsidiary elects (or is
required by the terms of any Senior Indebtedness), to prepay, repay or purchase
(x) Senior Indebtedness or (y) Indebtedness (other than Preferred Stock) of a
Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company) within 180 days from the later of the date of such Asset Disposition or
the receipt of such Net Available Cash; (B) second, within one year from the
receipt of such Net Available Cash, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A), at the Company's
election either (x) to the investment in or acquisition of Additional Assets or
(y) to prepay, repay or purchase (1) Senior Indebtedness or (2) Indebtedness
(other than Preferred Stock) of a Wholly-Owned Subsidiary (in each case other
than Indebtedness owed to the Company); and (C) third, within 45 days after the
later of the application of Net Available Cash in accordance with clauses (A)
and (B) and the date that is one year from the receipt of such Net Available
Cash, to the extent of the balance of such Net Available Cash after application
in accordance with clauses (A) and (B), to make an offer to purchase Notes and
other Senior Subordinated Indebtedness, to the extent required pursuant to the
terms thereof, pro rata at 100% of the tendered principal amount thereof (or
100% of the accreted value of such other Senior Subordinated Indebtedness so
tendered, if such Senior Subordinated Indebtedness was issued at a
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discount) plus accrued and unpaid interest, if any, thereon to the date of
purchase. The balance of such Net Available Cash after application in accordance
with clauses (A), (B) and (C) may be used by the Company in any manner not
otherwise prohibited under the Indenture. Notwithstanding anything herein to the
contrary, in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A), (B) or (C) above, the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing
provisions, the Company and its Restricted Subsidiaries shall not be required to
apply any Net Available Cash in accordance herewith except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this covenant at any time exceed $15 million. The
Company shall not be required to make an offer for Notes pursuant to this
covenant if the Net Available Cash available therefor (after application of the
proceeds as provided in clauses (A) and (B)) is less than $25 million for any
particular Asset Disposition (which lesser amounts shall be carried forward for
purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption by the transferee of Senior Indebtedness of the Company or
Indebtedness of any Restricted Subsidiary of the Company and the release of the
Company or such Restricted Subsidiary from all liability on such Senior
Indebtedness or Indebtedness in connection with such Asset Disposition (in which
case the Company shall, without further action, be deemed to have applied such
assumed Indebtedness in accordance with clause (A) of the preceding paragraph)
and (y) securities received by the Company or any Restricted Subsidiary of the
Company from the transferee that are promptly converted by the Company or such
Restricted Subsidiary into cash.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
will be permitted to consummate an Asset Swap if (i) immediately after giving
effect to such Asset Swap, no Default or Event of Default shall have occurred or
be continuing, (ii) in the event such Asset Swap involves an aggregate amount in
excess of $10 million, the terms of such Asset Swap have been approved by a
majority of the members of the Board of Directors of the Company, and (iii) in
the event such Asset Swap involves an aggregate amount in excess of $50 million,
the Company has received a written opinion from an independent investment
banking firm of nationally recognized standing that such Asset Swap is fair to
the Company or such Restricted Subsidiary, as the case may be, from a financial
point of view.
(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (a) (iii) (C), the Company will be required to purchase
Notes tendered pursuant to an offer by the Company for the Notes at a purchase
price of 100% of their principal amount plus accrued and unpaid interest, if
any, to the purchase date in accordance with the procedures (including prorating
in the event of oversubscription as well as proration required as a result of
tenders of other Senior Subordinated Indebtedness) set forth in the Indenture.
If the aggregate purchase price of the Notes tendered pursuant to the offer is
less than the Net Available Cash allotted to the purchase of the Notes, the
Company may use the remaining Net Available Cash for any purpose not prohibited
by the Indenture. Upon the consummation of the purchase of Notes properly
tendered in response to such offer to purchase, the amount of Net Available Cash
subject to future offers to purchase shall be deemed to be reset to zero.
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.
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Limitation on Affiliate Transactions. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company other than a Wholly-Owned Subsidiary (an "Affiliate Transaction")
unless: (i) the terms of such Affiliate Transaction are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those that could
be obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate; (ii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $5 million, the terms of
such transaction have been approved by a majority of the members of the Board of
Directors of the Company and by a majority of the disinterested members of such
Board, if any (and such majority or majorities, as the case may be, determines
that such Affiliate Transaction satisfies the criteria in (i) above); and (iii)
in the event such Affiliate Transaction involves an aggregate amount in excess
of $15 million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.
(b) The foregoing paragraph (a) shall not apply to (i) any Restricted
Payment permitted to be made pursuant to the covenant described under
"Limitation on Restricted Payments," (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors of the Company, (iii) loans or advances to
employees in the ordinary course of business of the Company or any of its
Restricted Subsidiaries, (iv) any transaction between Wholly-Owned Subsidiaries,
(v) indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Company and its Restricted
Subsidiaries, in each case in the ordinary course of business, (vi) transactions
pursuant to agreements as in existence on the Issue Date, (vii) any employment,
non-competition or confidentiality agreements entered into by the Company or any
of its Restricted Subsidiaries with its employees in the ordinary course of
business, (viii) payments made in connection with the Transactions as described
herein, including fees to Hicks Muse, (ix) the issuance of Capital Stock of the
Company (other than Disqualified Stock), (x) any obligations of the Company
pursuant to the Monitoring and Oversight Agreement and the Financial Advisory
Agreement, and (xi) transactions pursuant to supply or similar agreements
entered into in the ordinary course of business on customary terms that are not
less favorable to the Company than those that would have been obtained in a
comparable transaction with an unrelated Person, as determined in good faith by
senior management of the Company.
Limitation on Capital Stock of Restricted Subsidiaries. The Company will
not permit any of its Restricted Subsidiaries to issue any Capital Stock (other
than Preferred Stock) to any Person (other than to the Company or a Wholly-Owned
Subsidiary of the Company) or permit any Person (other than the Company or a
Wholly-Owned Subsidiary of the Company) to own any Capital Stock (other than
Preferred Stock) of a Restricted Subsidiary of the Company, if in either case as
a result thereof such Restricted Subsidiary would no longer be a Restricted
Subsidiary of the Company; provided, however, that this provision shall not
prohibit (x) the Company or any of its Restricted Subsidiaries from selling,
leasing or otherwise disposing of all of the Capital Stock of any Restricted
Subsidiary or (y) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary in compliance with the Indenture.
Reports. So long as any of the Notes are outstanding, the Company will
provide to the holders of Notes and file with the Commission, to the extent such
submissions are accepted for filing by the Commission, copies of the annual
reports and of the information, documents and other reports that the Company
would have been required to file with the Commission pursuant to Sections 13 or
15(d) of the Exchange Act regardless of whether the Company is then obligated to
file such reports.
Merger and Consolidation. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting,
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surviving or transferee Person (the "Successor Company") shall be a corporation,
partnership, trust or limited liability company organized and existing under the
laws of the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly assume,
by supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and the Indenture; (ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor Company or
any Subsidiary of the Successor Company as a result of such transaction as
having been incurred by the Successor Company or such Restricted Subsidiary at
the time of such transaction), no Default or Event of Default shall have
occurred and be continuing; (iii) immediately after giving effect to such
transaction, the Successor Company would be able to incur at least an additional
$1.00 of Indebtedness pursuant to paragraph (a) of "Limitation on Indebtedness";
and (iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but, in the
case of a lease of all or substantially all its assets, the Company will not be
released from the obligation to pay the principal of and interest on the Notes.
Notwithstanding the foregoing clauses (ii) and (iii), (1) any Restricted
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (2) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the Indenture:
(i) a default in any payment of interest on any Note when due, continued for 30
days, whether or not such payment is prohibited by the provisions described
under "Ranking and Subordination" above, (ii) a default in the payment of
principal of any Note when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise, whether or not such
payment is prohibited by the provisions described under "Ranking and
Subordination" above, (iii) the failure by the Company to comply with its
obligations under "Certain Covenants -- Merger and Consolidation" above, (iv)
the failure by the Company to comply for 30 days after notice with any of its
obligations under the covenants described under "Change of Control" above or
under covenants described under "Certain Covenants" above (in each case, other
than a failure to purchase Notes which shall constitute an Event of Default
under clause (ii) above), other than "-- Merger and Consolidation," (v) the
failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Restricted Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $20 million and
such default shall not have been cured, including by way of repayment, or such
acceleration rescinded after a 10 day period (the "cross acceleration
provision"), (vii) certain events of bankruptcy, insolvency or reorganization of
the Company or a Significant Subsidiary (the "bankruptcy provisions") or (viii)
any judgment or decree for the payment of money in excess of $20 million (to the
extent not covered by insurance) is rendered against the Company or a
Significant Subsidiary and such judgment or decree shall remain undischarged or
unstayed for a period of 60 days after such judgment becomes final and non-
appealable (the "judgment default provision"). However, a default under clauses
(iv) and (v) will not constitute an Event of Default until the Trustee or the
holders of 25% in principal amount of the outstanding Notes notify the Company
of the Default and the Company does not cure such Default within the time
specified in clauses (iv) and (v) hereof after receipt of such notice.
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If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes by notice to the
Company may declare the principal of and accrued and unpaid interest, if any, on
all the Notes to be due and payable. Upon such a declaration, such principal and
accrued and unpaid interest shall be immediately due and payable. If an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization
of the Company occurs and is continuing, the principal of and accrued and unpaid
interest on all the Notes will become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any holders. Under
certain circumstances, the holders of a majority in principal amount of the
outstanding Notes may rescind any such acceleration with respect to the Notes
and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other holder or that would
involve the Trustee in personal liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. However, except in the case of a Default in the
payment of principal of, premium (if any) or interest on any Note, the Trustee
may withhold notice if and so long as its board of directors, a committee of its
board of directors or a committee of its trust officers in good faith determines
that withholding notice is in the interests of the Noteholders. In addition, the
Company is required to deliver to the Trustee, within 120 days after the end of
each fiscal year, a certificate indicating whether the signers thereof know of
any Default that occurred during the previous year. The Company also is required
to deliver to the Trustee, within 30 days after the occurrence thereof, written
notice of any events which would constitute certain Defaults.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount of the Notes then
outstanding and any past default or compliance with any provisions may be waived
with the consent of the holders of a majority in principal amount of the Notes
then outstanding. However, without the consent of each holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the amount of
Notes whose holders must consent to an amendment, (ii) reduce the stated rate of
or extend the stated time for payment of interest on any Note, (iii) reduce the
principal of or extend the Stated Maturity of any Note, (iv) reduce the premium
payable upon the redemption or repurchase of any Note or change the time at
which any Note may be redeemed as described under "Optional Redemption" above,
(v) make any Note payable in money other than that stated in the Note, (vi)
impair the right of any
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holder to receive payment of principal of and interest on such holder's Notes on
or after the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such holder's Notes or (vii) make any change in
the amendment provisions which require each holder's consent or in the waiver
provisions.
Without the consent of any holder, the Company and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation, partnership, trust or
limited liability company of the obligations of the Company under the Indenture,
to provide for uncertificated Notes in addition to or in place of certificated
Notes (provided that the uncertificated Notes are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Code), to add
Guarantees with respect to the Notes, to secure the Notes, to add to the
covenants of the Company for the benefit of the holders or to surrender any
right or power conferred upon the Company, to make any other change that does
not adversely affect the rights of any holder or to comply with any requirement
of the Commission in connection with the qualification of the Indenture under
the Trust Indenture Act. However, no amendment may be made to the subordination
provisions of the Indenture that adversely affects the rights of any holder of
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all the holders, or any defect
therein, will not impair or affect the validity of the amendment.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under substantially
all its covenants in the Indenture including those covenants described under
"Certain Covenants" (other than "Merger and Consolidation"), the operation of
the cross acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision described under
"Events of Default" above and the limitations contained in clauses (iii) and
(iv) under "Certain Covenants -- Merger and Consolidation" above ("covenant
defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Significant Subsidiaries) or (viii) under "Events of Default" above or because
of the failure of the Company to comply with clause (iii) or (iv) under "Certain
Covenants -- Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to maturity or any redemption date specified by the
Company, as the case may be, and must comply with certain other conditions,
including delivery to the Trustee of an Opinion of Counsel to the effect that
holders of the Notes will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and defeasance and will be subject to
Federal income tax on the same amount and in the same manner
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and at the same times as would have been the case if such deposit and defeasance
had not occurred (and, in the case of legal defeasance only, such Opinion of
Counsel must be based on a ruling of the Internal Revenue Service or other
change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Company or a Restricted Subsidiary of the Company;
(iii) Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary of the Company; or (iv) Permitted Investments of
the type and in the amounts described in clause (viii) of the definition
thereof; provided, however, that, in the case of clauses (ii) and (iii), such
Restricted Subsidiary is primarily engaged in a Related Business.
"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 the purposes of this definition,
"control," when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) a
disposition of inventory in the ordinary course of business, (iii) a disposition
of obsolete or worn out equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Restricted Subsidiaries and that
is disposed of in each case in the ordinary course of business, (iv)
dispositions of property for net proceeds which, when taken collectively with
the net proceeds of any other such dispositions under this clause (iv) that were
consummated since the beginning of the calendar year in which such disposition
is consummated, do not exceed 1.50% of the consolidated book value of the
Company's assets as of the most recent date prior to such disposition for which
a consolidated balance sheet of the Company has been regularly prepared, (v)
transactions permitted under "Certain Covenants -- Merger and Consolidation"
above, (vi) transactions permitted by the "Limitation on Restricted Payments"
covenant, and (vii) any transaction that constitutes a Change of Control.
"Asset Swap" means the execution of a definitive agreement, subject only to
customary closing conditions that the Company in good faith believes will be
satisfied, for a substantially concurrent purchase and sale, or exchange, of
Productive Assets between the Company or any of its Restricted Subsidiaries and
another Person or group of affiliated Persons; provided, however, that any
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amendment to or waiver of any closing condition that individually or in the
aggregate is material to the Asset Swap shall be deemed to be a new Asset Swap.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
indebtedness, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption
multiplied by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable or guaranteed by the Company under or
in respect of the Credit Agreement or any Interest Rate Agreement or Currency
Agreement with a holder of Bank Indebtedness and any related notes, collateral
documents, letters of credit and guarantees, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Consolidated Cash Flow" for any period means the Consolidated Net Income
for such period, plus, without duplication, the following to the extent deducted
in calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve for cash disbursements
for any subsequent period prior to the Stated Maturity of the Notes) and less,
to the extent added in calculating Consolidated Net Income, (x) exchange or
translation gains on foreign currencies and (y) non-cash items (excluding such
non-cash items to the extent they represent an accrual for cash receipts
reasonably expected to be received prior to the Stated Maturity of the Notes),
in each case for such period. Notwithstanding the foregoing, the income tax
expense, depreciation expense and amortization expense of a Subsidiary of the
Company shall be included in Consolidated Cash Flow only to the extent (and in
the same proportion) that the net income of such Subsidiary was included in
calculating Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters: provided, however,
that (1) if the Company or any of its Restricted Subsidiaries has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to
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calculate Consolidated Coverage Ratio is an incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (A) such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(provided that if such Indebtedness is Incurred under a revolving credit
facility (or similar arrangement or under any predecessor revolving credit or
similar arrangement) only that portion of such Indebtedness that constitutes the
one year projected minimum balance of such Indebtedness (as determined in good
faith by senior management of the Company and assuming a constant level of
sales) shall be deemed outstanding for purposes of this calculation) and (B) the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period any Indebtedness of the Company or any of its Restricted Subsidiaries has
been repaid, repurchased, defeased or otherwise discharged (other than
Indebtedness under a revolving credit or similar arrangement unless such
revolving credit Indebtedness has been permanently repaid and has not been
replaced), Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Indebtedness had been repaid,
repurchased, defeased or otherwise discharged on the first day of such period,
(3) if since the beginning of such period the Company or any of its Restricted
Subsidiaries shall have made any Asset Disposition or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be (i) reduced by an amount equal to the Consolidated Interest
Expense attributable to any Indebtedness of the Company or any of its Restricted
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Restricted Subsidiaries in connection with
such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary of the Company is sold, the Consolidated Interest Expense
for such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted Subsidiaries
are no longer liable for such Indebtedness after such sale) and (ii) increased
by interest income attributable to the assets which are the subject of such
Asset Disposition for such period, (4) if since the beginning of such period the
Company or any of its Restricted Subsidiaries (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary of the Company (or any
Person which becomes a Restricted Subsidiary of the Company) or an acquisition
of assets, including any Investment in a Restricted Subsidiary of the Company or
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, or if the transaction giving rise to such
calculation is a transaction subject to the "Mergers and Consolidations"
covenant, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
incurrence of any Indebtedness and the use of the proceeds therefrom) as if such
Investment or acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary of the Company or was merged with or into the Company or
any Restricted Subsidiary of the Company since the beginning of such period)
shall have made any Asset Disposition, Investment or acquisition of assets that
would have required an adjustment pursuant to clause (3) or (4) above if made by
the Company or a Restricted Subsidiary of the Company during such period,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
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forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months). Notwithstanding anything herein to the contrary,
if at the time the calculation of the Consolidated Coverage Ratio is to be made,
the Company does not have available consolidated financial statements reflecting
the ownership by the Company of each of Circo Craft, Viasystems Technologies (or
the assets acquired by it in the Lucent Transaction), Forward Group and Chips
for a period of at least four full fiscal quarters, all calculations required by
the Consolidated Coverage Ratio shall be prepared on a pro forma basis, as
though each such transaction (to the extent not otherwise reflected in the
consolidated financial statements of the Company) had occurred on the first day
of the four fiscal quarter period for which such calculation is being made.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Restricted Subsidiaries, plus, to the extent not
included in such interest expense, (i) interest expense attributable to capital
leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv)
non-cash interest expense, (v) commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Company or any such Restricted Subsidiary under
any Guarantee of Indebtedness or other obligation of any other Person, (vii) net
payments (whether positive or negative) pursuant to Interest Rate Agreements,
(viii) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust and (ix) cash and Disqualified Stock
dividends in respect of all Preferred Stock of Restricted Subsidiaries and
Disqualified Stock of the Company held by Persons other than the Company or a
Wholly Owned Subsidiary and less (a) to the extent included in such interest
expense, the amortization of capitalized debt issuance costs and debt discount
solely to the extent relating to the issuance and sale of Indebtedness together
with any equity security as part of an investment unit and (b) interest income.
Notwithstanding the foregoing, the Consolidated Interest Expense with respect to
any Restricted Subsidiary of the Company, that was not a Wholly-Owned
Subsidiary, shall be included only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its consolidated Restricted Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any person acquired by the Company or any of its Restricted
Subsidiaries in a pooling of interests transaction for any period prior to the
date of such acquisition, (ii) any net income of any Restricted Subsidiary of
the Company if such Restricted Subsidiary is subject to restrictions, directly
or indirectly, on the payment of dividends or the making of distributions by
such Restricted Subsidiary, directly or indirectly, to the Company (other than
restrictions in effect on the Issue Date with respect to a Restricted Subsidiary
of the Company and other than restrictions that are created or exist in
compliance with the "Limitation on Restrictions on Distributions from Restricted
Subsidiaries" covenant (excluding clause (g) thereof from the operation of this
parenthetical)), (iii) any gain or loss realized upon the sale or other
disposition of any assets of the Company or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which are
not sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital Stock of
any Person, (iv) any extraordinary gain or loss, (v) the cumulative effect of a
change in accounting principles, (vi) restructuring charges or writeoffs
recorded within the one year period following the Issue Date in an aggregate
amount not to exceed $50 million, (vii) charges relating to the writeoff of
acquired in-process research and development expenses and other intangibles in
connection with the application of the purchase method of accounting to the net
assets of a Person acquired by the Company and its Restricted Subsidiaries and
charges relating to writeoff of intangible assets, (viii) the net income of any
Person, other than a Restricted Subsidiary, except to the extent of the
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lesser of (A) dividends or distributions paid to the Company or any of its
Restricted Subsidiaries by such Person and (B) the net income of such Person
(but in no event less than zero), and the net loss of such Person (other than an
Unrestricted Subsidiary) shall be included only to the extent of the aggregate
Investment of the Company or any of its Restricted Subsidiaries in such Person
and (ix) any non-cash expenses attributable to grants or exercises of employee
stock options. Notwithstanding the foregoing, for the purpose of the covenant
described under "Certain Covenants -- Limitation on Restricted Payments" only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under such covenant pursuant to clause (a)(3)(E) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending prior to the taking of any
action for the purpose of which the determination is being made and for which
financial statements are available (but in no event ending more than 180 days
prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of the Company plus (ii) paid in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts attributable
to Disqualified Stock.
"Continuing Director" means, as of the date of determination, any Person
who (i) was a member of the Board of Directors of the Company on the date of the
Indenture, (ii) was nominated for election or elected to the Board of Directors
of the Company with the affirmative vote of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election, or (iii) is a representative of a Permitted Holder.
"Credit Agreement" means (i) the Second Amended and Restated Credit
Agreement, dated as of June 5, 1997, among Viasystems Group, as Guarantor, the
Company, as US Borrower, Circo Craft Co. Inc., PCB Investments PLC, Forward
Group PLC, Chips Limited, Chips and the other Foreign Subsidiary Borrowers from
time to time parties thereto, The Chase Manhattan Bank of Canada, Chase
Manhattan International Limited and the other Foreign Agents from time to time
appointed thereunder, The Chase Manhattan Bank, as Administrative Agent, and the
lender parties thereto from time to time, as the same may be amended,
supplemented or otherwise modified from time to time, including amendments,
supplements or modifications relating to the addition or elimination of
Subsidiaries of the Company as borrowers or other credit parties thereunder, and
(ii) any renewal, extension, refunding, restructuring, replacement or
refinancing thereof (whether with the original Administrative Agent, Foreign
Agent(s) and Issuing Lender, and lenders or another administrative agent or
agents or one or more other lenders and whether provided under the original
Credit Agreement or one or more other credit or other agreements or indentures).
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $25
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which by its terms (or by the terms of any security into which it
is convertible or for which it is
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exchangeable) or upon the happening of any event (i) matures (other than as a
result of a Change of Control) or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding capital stock which is convertible
or exchangeable solely at the option of the Company or a Restricted Subsidiary)
or (iii) is redeemable at the option of the holder thereof (other than as a
result of a Change of Control), in whole or in part, in each case on or prior to
the Stated Maturity of the Notes, provided, that only the portion of Capital
Stock which so matures or is mandatorily redeemable, is so convertible or
exchangeable or is so redeemable at the option of the holder thereof prior to
such Stated Maturity shall be deemed to be Disqualified Stock.
"Equity Offering" means an offering for cash by the Company or Viasystems
Group of its common stock, or options, warrants or rights with respect to its
common stock.
"Financial Advisory Agreement" means the Financial Advisory Agreement
between Hicks Muse Partners and the Company as in effect on the Issue Date.
"Foreign Subsidiaries" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or the Commission or
in such other statements by such other entity as approved by a significant
segment of the accounting profession. All ratios and computations based on GAAP
contained in the Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course
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of business), which purchase price is due more than six months after the date of
placing such property in service or taking delivery and title thereto or the
completion of such services, (v) all Capitalized Lease Obligations and all
Attributable Indebtedness of such Person, (vi) all Indebtedness of other Persons
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person, (vii) all Indebtedness of other Persons to the extent
Guaranteed by such Person, (viii) the amount of all obligations of such Person
with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Restricted Subsidiary of the Company,
any Preferred Stock of such Restricted Subsidiary to the extent such obligation
arises on or before the Stated Maturity of the Notes (but excluding, in each
case, any accrued dividends) and (ix) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations as described
above, as such amount would be reflected on a balance sheet prepared in
accordance with GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes of
the "Limitation on Restricted Payments" covenant, (i) "Investment" shall include
the portion (proportionate to the Company's equity interest in a Restricted
Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market
value of the net assets of such Restricted Subsidiary of the Company at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Unrestricted Subsidiary as
a Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so re-designated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors and
evidenced by a resolution of such Board of Directors certified in an Officers'
Certificate to the Trustee.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Monitoring and Oversight and Agreement" means the Monitoring and Oversight
Agreement between Hicks Muse Partners and the Company as in effect on the Issue
Date.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets subject to such Asset Disposition) therefrom, in
each case net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses incurred,
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and all Federal, state, foreign and local taxes required to be paid or accrued
as a liability under GAAP in connection with such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon such assets, or
which must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required to be made to
any Person owning a beneficial interest in assets subject to sale or minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, (iv) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary of the Company after such Asset Disposition
and (v) any portion of the purchase price from an Asset Disposition placed in
escrow (whether as a reserve for adjustment of the purchase price, for
satisfaction of indemnities in respect of such Asset Disposition or otherwise in
connection with such Asset Disposition); provided, however, that upon the
termination of such escrow, Net Available Cash shall be increased by any portion
of funds therein released to the Company or any Restricted Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any Restricted Subsidiary (a) provides any guarantee or credit support of
any kind (including any undertaking, guarantee, indemnity, agreement or
instrument that would constitute Indebtedness) or (b) is directly or indirectly
liable (as a guarantor or otherwise) and (ii) 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
Restricted Subsidiary to declare a default under such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity.
"Permitted Indebtedness" means (i) Indebtedness of the Company owing to and
held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly-Owned Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital Stock or any
other event which results in any such Wholly-Owned Subsidiary ceasing to be a
Wholly-Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or a Wholly-Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness by the issuer thereof;
(ii) Indebtedness represented by (x) the Notes, (y) any Indebtedness (other than
the Indebtedness described in clauses (i), (ii) and (iv) of paragraph (b) of the
covenant described under "Limitation on Indebtedness" and other than
Indebtedness Incurred pursuant to clause (i) above or clauses (iv), (v), (vi) or
(vii) below) outstanding on the Issue Date and (z) any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (ii) or
Incurred pursuant to paragraph (a) of the covenant described under "Limitation
on Indebtedness"; (iii) (A) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on the date on which such Restricted Subsidiary was acquired by the
Company or its Restricted Subsidiaries (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Subsidiary or
was otherwise acquired by the Company); provided, however, that at the time such
Restricted Subsidiary is acquired by the Company, the Company would have been
able to Incur $1.00 of additional Indebtedness pursuant to paragraph (a) of the
covenant described under "Limitation on Indebtedness" above after giving effect
to the Incurrence of such Indebtedness pursuant to this clause (iii) and (B)
Refinancing Indebtedness Incurred by the Company or a
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Restricted Subsidiary in respect of Indebtedness Incurred by such Restricted
Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in respect of
performance bonds, bankers' acceptances and surety or appeal bonds provided by
the Company or any of its Restricted Subsidiaries to their customers in the
ordinary course of their business, (B) in respect of performance bonds or
similar obligations of the Company or any of its Restricted Subsidiaries for or
in connection with pledges, deposits or payments made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
obligations, (C) arising from Guarantees to suppliers, lessors, licensees,
contractors, franchisees or customers of obligations (other than Indebtedness)
incurred in the ordinary course of business and (D) under Currency Agreements
and Interest Rate Agreements; provided, however, that in the case of Currency
Agreements and Interest Rate Agreements, such Currency Agreements and Interest
Rate Agreements are entered into for bona fide hedging purposes of the Company
or its Restricted Subsidiaries (as determined in good faith by the Board of
Directors or senior management of the Company) and correspond in terms of
notional amount, duration, currencies and interest rates, as applicable, to
Indebtedness of the Company or its Restricted Subsidiaries Incurred without
violation of the Indenture or to business transactions of the Company or its
Restricted Subsidiaries on customary terms entered into in the ordinary course
of business; (v) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in each case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary of the Company (other than Guarantees
of Indebtedness or other obligations Incurred by any Person acquiring all or any
portion of such business assets or Restricted Subsidiary of the Company for the
purpose of financing such acquisition) in a principal amount not to exceed the
gross proceeds actually received by the Company or any of its Restricted
Subsidiaries in connection with such disposition, provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause (v), when
taken together with all Indebtedness Incurred pursuant to this clause (v) and
then outstanding, shall not exceed $20.0 million; (vi) Indebtedness consisting
of (A) Guarantees by the Company or a Restricted Subsidiary of Indebtedness
Incurred by a Wholly-Owned Subsidiary without violation of the Indenture and (B)
Guarantees by a Restricted Subsidiary of Senior Indebtedness Incurred by the
Company without violation of the Indenture (so long as such Restricted
Subsidiary could have Incurred such Indebtedness directly without violation of
the Indenture); (vii) Indebtedness arising from agreements with governmental
agencies of any foreign country, or political subdivision or agency thereof,
relating to the construction of plants and the purchase and installation
(including related training costs) of equipment to be used in a Related
Business; provided that such Indebtedness (i) has a maturity in excess of ten
years and 91 days and (ii) in the aggregate does not exceed $50.0 million; and
(viii) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness is
extinguished promptly in accordance with customary practices.
"Permitted Investment" means an Investment by the Company or any of its
Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the Company;
provided, however, that the primary business of such Wholly-Owned Subsidiary is
a Related Business; (ii) another Person if as a result of such Investment such
other Person becomes a Wholly-Owned Subsidiary of the Company or is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Company or a Wholly-Owned Subsidiary of the Company; provided,
however, that in each case such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Restricted Subsidiaries, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
(v) payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees for purposes of purchasing the
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Company's common stock in an aggregate amount outstanding at any one time not to
exceed $10 million and other loans and advances to employees made in the
ordinary course of business consistent with past practices of the Company or
such Restricted Subsidiary; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any of its Restricted Subsidiaries or in satisfaction of judgments or
claims; (viii) a Person engaged in a Related Business or a loan or advance to
the Company the proceeds of which are used solely to make an investment in a
Person engaged in a Related Business or a Guarantee by the Company of
Indebtedness of any Person in which such Investment has been made; provided,
however, that no Permitted Investments may be made pursuant to this clause
(viii) to the extent the amount thereof would, when taken together with all
other Permitted Investments made pursuant to this clause (viii), exceed $50
million in the aggregate (plus, to the extent not previously reinvested, any
return of capital realized on Permitted Investments made pursuant to this clause
(viii), or any release or other cancellation of any Guarantee constituting such
Permitted Investment); (ix) Persons to the extent such Investment is received by
the Company or any Restricted Subsidiary as consideration for Asset Dispositions
effected in compliance with the covenant described under "Limitations on Sales
of Assets and Subsidiary Stock"; (x) prepayments and other credits to suppliers
made in the ordinary course of business consistent with the past practices of
the Company and its Restricted Subsidiaries; (xi) payments in respect of the
Chips Reimbursement Obligation as in effect on the Issue Date; and (xii)
Investments in connection with pledges, deposits, payments or performance bonds
made or given in the ordinary course of business in connection with or to secure
statutory, regulatory or similar obligations, including obligations under
health, safety or environmental obligations.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision hereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Productive Assets" means assets of a kind used or usable by the Company
and its Restricted Subsidiaries in the Company's business or any Related
Business.
A "Public Market" exists at any time with respect to the common stock of
the Company or Viasystems Group if (a) the common stock of the Company or
Viasystems Group, as the case may be, is then registered with the Securities and
Exchange Commission pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, and traded either on a national securities
exchange or in the National Association of Securities Dealers Automated
Quotation System and (b) at least 15% of the total issued and outstanding common
stock of the Company or Viasystems Group, as the case may be, has been
distributed prior to such time by means of an effective registration statement
under the Securities Act of 1933, as amended.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinance") any Indebtedness existing on
the date of the Indenture or Incurred in compliance with the Indenture
(including Indebtedness of the Company that refinances Indebtedness of any
Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary) including Indebtedness
that refinances Refinancing Indebtedness, provided, however, that (i) the
Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of
(A) the ninety-first day after the Stated Maturity of the Notes and (B) the
Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the lesser of (A) the Average Life of
the Notes and (B) the Average Life of the Indebtedness being
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refinanced, and (iii) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to (or 101% of, in the case of a refinancing of the Notes
in connection with a Change of Control) or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accredited value) then outstanding of the Indebtedness being refinanced, plus
applicable premium and reasonable costs paid in connection with such
refinancing.
"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of the Company and its
Restricted Subsidiaries on the date of the Indenture, as reasonably determined
by the Company's Board of Directors.
"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Indebtedness" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
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 (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Company.
"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital, surplus and undivided profits
aggregating in excess of $250 million (or the foreign currency equivalent
thereof) and whose long-term debt, or whose parent holding company's long-term
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities
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Act), (iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered into
with a bank meeting the qualifications described in clause (ii) above, (iv)
Investments in commercial paper, maturing not more than 180 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Ratings Group, (v) Investments in securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc. and
(vi) Investments in mutual funds whose investment guidelines restrict
substantially all of such funds' investments to those satisfying the provisions
of clauses (i) through (v) above.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; provided,
however, that either (A) the Subsidiary to be so designated has total
consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under "Limitation on Restricted Payments." The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could Incur $1.00 of additional Indebtedness under clause (a) of
"Limitation on Indebtedness" and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the Company, at
least 99% of the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly-Owned Subsidiary; provided,
however, the Forward Group shall be deemed to be a Wholly-Owned Subsidiary of
the Company for all purposes of the Indenture unless the sale or issuance of
more than 1% of the Capital Stock thereof to a person other than another Wholly
Owned Subsidiary of the Company occurs.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will initially be issued in the
form of one or more registered notes in global form without coupons (each a
"Global Note"). Each Global Note will be deposited on the date of the closing of
the sale of the Notes (the "Closing Date") with, or on behalf of, the Depository
Trust Company (the "Depository") and registered in the name of Cede & Co., as
nominee of the Depository, or will remain in the custody of the Trustee pursuant
to the FAST Balance Certificate Agreement between DTC and the Trustee.
97
<PAGE> 104
The Depository has advised the Company that it is (i) a limited purpose
trust company organized under the laws of the State of New York, (ii) a member
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"
registered pursuant to Section 17A of the Exchange Act. The Depository was
created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. The Depository's Participants include securities
brokers and dealers, banks and trust companies, clearing corporations and
certain other organizations. Access to the Depository's system is also available
to other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants") that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Notes, the Depository will credit, on
its internal system, the principal amount of New Notes to the respective
accounts of Participants with an interest in such Global Notes and (ii)
ownership of the New Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depository
(with respect to the interest of Participants), the Participants and the
Indirect Participants. The laws of some states require that certain persons take
physical delivery in definitive form of securities that they own and that
security interests in negotiable instruments can only be perfected by delivery
of certificates representing the instruments. Consequently, the ability to
transfer New Notes or to pledge the New Notes as collateral will be limited to
such extent.
So long as the Depository or its nominee is the registered owner of the
Global Notes, the Depository or such nominee, as the case may be, will be
considered the sole owner or Holder of the New Notes represented by such Global
Notes for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in a Global Note will not be entitled to have New Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Securities (as defined
below), and will not be considered the owners or holders thereof under the
Indenture for any purpose, including with respect to giving of any directions,
instruction or approval to the Trustee thereunder. As a result, the ability of a
person having a beneficial interest in New Notes represented by a Global Note to
pledge such interest to persons or entities that do not participate in the
Depository's system or to otherwise take action with respect to such interest,
may be affected by the lack of a physical certificate evidencing such interest.
Accordingly, each Holder of a beneficial interest in a Global Note must
rely on the procedures of the Depository and, if such Holder is not a
Participant or an Indirect Participant, on the procedures of the Participant
through which such Holder owns its interest, to exercise any rights of a Holder
under the Indenture or such Global Note. The Company understands that under
existing industry practice, in the event the Company requests any action of
Holders or an owner of a beneficial interest in a Global Note desires to take
any action that the Depository, as the Holder of such Global Note, is entitled
to take, the Depository would authorize the Participants to take such action and
the Participant would authorize such Holders owning through such Participants to
take such action or would otherwise act upon the instruction of such Holders.
Neither the Company nor the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of New
Notes by the Depository, or for maintaining, supervising or reviewing any
records of the Depository relating to such Notes.
Payments with respect to the principal of, premium, if any, and interest on
any New Notes represented by a Global Note registered in the name of the
Depository or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of the Depository or its nominee in its capacity
as the registered Holder of the Global Notes representing such New Notes under
the Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the
98
<PAGE> 105
persons in whose names the New Notes, including the Global Notes, are registered
as the owners thereof for the purpose of receiving such payment and for any and
all other purposes whatsoever. Consequently, neither the Company nor the Trustee
has or will have any responsibility or liability for the payment of such amounts
to beneficial owners of New Notes (including principal, premium, if any, and
interest), or to immediately credit the accounts of the relevant Participants
with such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interest in the Global Notes as shown on the
records of the Depository. Payments by the Participants and the Indirect
Participants to the beneficial owners of New Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
CERTIFICATED SECURITIES
If (i) the Company notifies the Trustee in writing that the Depository is
no longer willing or able to act as a depository and the Company is unable to
locate a qualified successor within 90 days, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, or (iii) upon the occurrence of certain
other events, then, upon surrender by the Depository of its Global Notes,
securities in registered definitive form without coupons ("Certificated
Securities") will be issued to each person that the Depository identifies as the
beneficial owner of the Notes represented by the Global Notes. In addition,
subject to certain conditions, any person having a beneficial interest in a
Global Note may, upon request to the Trustee, exchange such beneficial interest
for Certificated Securities. Upon any such issuance, the Trustee is required to
register such Certificated Securities in the name of such person or persons (or
the nominee of any thereof) and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related Notes and each such person may conclusively
rely on, and shall be protected in relying on, instructions from the Depository
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the New Notes to be issued).
99
<PAGE> 106
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does not
purport to be a complete analysis of all potential tax effects. The discussion
is based upon the Internal Revenue Code of 1986, as amended, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the New Notes.
The description does not consider the effect of any applicable foreign, state,
local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a significant modification of the terms of the Old Notes
and, therefore, such exchange should not constitute an exchange for federal
income tax purposes. Accordingly, such exchange should have no federal income
tax consequences to holders of Old Notes.
100
<PAGE> 107
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes pursuant to the Exchange Offer, where such Old 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 New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 90 days after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1997, all dealers effecting transactions in the New
Notes may be required to deliver a Prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes) other than commissions or concessions of any
broker-dealers and will indemnify holders of the Old Notes (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the
Company by Weil, Gotshal & Manges LLP, Dallas, Texas and New York, New York.
101
<PAGE> 108
EXPERTS
The balance sheet of Viasystems, Inc. as of April 3, 1997, has been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent certified public accountants, St. Louis, Missouri, given on the
authority of that firm as experts in accounting and auditing. The consolidated
financial statements of Viasystems Group as of December 31, 1996, and for the
period from inception (August 28, 1996) to December 31, 1996, have been included
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
certified public accountants, St. Louis, Missouri, given on the authority of
that firm as experts in accounting and auditing. The consolidated financial
statements of Circo Craft as of September 30, 1996, and for the nine month
period ended September 30, 1996, have been included herein in reliance on the
report of Coopers & Lybrand, chartered accountants, Montreal, Quebec, given on
the authority of that firm as experts in accounting and auditing. The
consolidated financial statements of Circo Craft as of December 31, 1995, and
for the years ended December 31, 1994 and 1995, have been included herein in
reliance on the report of Deloitte & Touche, chartered accountants, Montreal,
Quebec, given on the authority of that firm as experts in accounting and
auditing. The statements of net assets sold of Viasystems Technologies (formerly
the Microelectronics Group, Interconnection Technologies Unit of Lucent
Technologies Inc.) as of December 31, 1995 and November 30, 1996, and the
statements of operations for the periods ended December 31, 1994 and 1995 and
the 11-month period ended November 30, 1996 have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent certified public
accountants, St. Louis, Missouri, given on the authority of that firm as experts
in accounting and auditing. The consolidated financial statements of Forward
Group as of January 31, 1996 and 1997, and for the three years in the period
ended January 31, 1997, have been included herein in reliance on the report of
KPMG Audit Plc, chartered accountants and registered auditor, Birmingham,
England, given on the authority of that firm as experts in accounting and
auditing. The consolidated financial statements of Chips as of March 29, 1996
and April 4, 1997, and for the years ended March 31, 1995, March 29, 1996, and
April 4, 1997, have been included herein in reliance on the report of Ernst &
Young, chartered accountants, independent auditors, Newcastle upon Tyne,
England, given on the authority of that firm as experts in accounting and
auditing.
102
<PAGE> 109
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
VIASYSTEMS, INC.
Report of Independent Auditors.............................. F-2
Balance Sheet at April 3, 1997.............................. F-3
Notes to Financial Statement................................ F-4
VIASYSTEMS GROUP, INC.
Report of Independent Auditors.............................. F-6
Consolidated Balance Sheet at December 31, 1996 and March
31, 1997 (unaudited)...................................... F-7
Consolidated Statement of Operations from inception (August
28, 1996) to December 31, 1996 and for the three months
ended March 31, 1997 (unaudited).......................... F-8
Consolidated Statement of Stockholders' Equity from
inception (August 28, 1996) to December 31, 1996 and for
the three months ended March 31, 1997 (unaudited)......... F-9
Consolidated Statement of Cash Flows from inception (August
28, 1996) to December 31, 1996 and for the three months
ended March 31, 1997 (unaudited).......................... F-10
Notes to Consolidated Financial Statements.................. F-11
CIRCO CRAFT CO. INC.
Auditors' Report............................................ F-23
Auditors' Report............................................ F-24
Consolidated Balance Sheets at December 31, 1995 and
September 30, 1996........................................ F-25
Consolidated Statements of Retained Earnings for the years
ended December 31, 1994 and 1995 and the nine month period
ended September 30, 1996 and for the three month period
ended March 31, 1996 (unaudited).......................... F-26
Consolidated Statements of Earnings for the years ended
December 31, 1994 and 1995 and the nine month period ended
September 30, 1996 and for the three month period ended
March 31, 1996 (unaudited)................................ F-27
Consolidated Statements of Changes in Financial Position for
the years ended December 31, 1994 and 1995 and the nine
month period ended September 30, 1996 and for the three
month period ended March 31, 1996 (unaudited)............. F-28
Notes to Consolidated Financial Statements.................. F-29
VIASYSTEMS TECHNOLOGIES CORP. (FORMERLY MICROELECTRONICS
GROUP, INTERCONNECTION TECHNOLOGIES UNIT OF LUCENT
TECHNOLOGIES INC.)
Report of Independent Auditors.............................. F-40
Statements of Net Assets sold at December 31, 1995 and
November 30, 1996......................................... F-41
Statements of Operations for the years ended December 31,
1994 and 1995, the eleven month period ended November 30,
1996 and for the period from January 1, 1996 through March
31, 1996 (unaudited)...................................... F-42
Notes to Financial Statements............................... F-43
FORWARD GROUP PLC
Report of Independent Auditors.............................. F-48
Consolidated Profit and Loss Accounts for the years ended
January 31, 1995, 1996 and 1997 and the three months ended
March 31, 1996 and 1997 (unaudited)....................... F-49
Consolidated Statements of Total Recognized Gains and Losses
for the years ended January 31, 1995, 1996, and 1997 and
the three months ended March 31, 1996 and 1997
(unaudited)............................................... F-50
Consolidated Balance Sheets at January 31, 1996 and 1997 and
at March 31, 1997 (unaudited)............................. F-51
Consolidated Statements of Cash Flows for the years ended
January 31, 1995, 1996, and 1997 and the three months
ended March 31, 1996 and 1997 (unaudited)................. F-52
Notes to the Consolidated Financial Statements.............. F-53
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
Report of Independent Auditors.............................. F-77
Consolidated Profit and Loss Accounts for the years ended
March 31, 1995, March 29, 1996 and April 4, 1997, and the
three months ended March 29, 1996 and April 4, 1997
(unaudited)............................................... F-78
Consolidated Statements of Total Recognized Gains and Losses
for the years ended March 31, 1995, March 29, 1996 and
April 4, 1997, and the three months ended March 29, 1996
and April 4, 1997 (unaudited)............................. F-79
Consolidated Balance Sheets at March 29, 1996 and April 4,
1997...................................................... F-80
Consolidated Statements of Cash Flows for the years ended
March 31, 1995, March 29, 1996 and April 4, 1997, and the
three months ended March 29, 1996 and April 4, 1997
(unaudited)............................................... F-81
Notes to the Consolidated Financial Statements.............. F-82
</TABLE>
F-1
<PAGE> 110
REPORT OF INDEPENDENT AUDITORS
The Board of Directors of Viasystems, Inc.:
We have audited the accompanying balance sheet of Viasystems, Inc. (a
Delaware corporation) as of April 3, 1997. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion of this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Viasystems, Inc. as of April 3,
1997, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
St. Louis, Missouri
June 18, 1997
F-2
<PAGE> 111
VIASYSTEMS, INC.
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
APRIL 3,
1997
--------
<S> <C>
Total assets................................................ $ --
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Total liabilities........................................... $ --
Stockholder's equity:
Common Stock, par value $.01 per share, 1,000 shares
authorized, issued and outstanding..................... 10
Paid in capital........................................... 990
Subscriptions receivable.................................. (1,000)
-------
Total stockholder's equity........................ --
-------
Total liabilities and stockholder's equity........ $ --
========
</TABLE>
The accompanying notes are an integral part of the balance sheet.
F-3
<PAGE> 112
VIASYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY
Viasystems, Inc. a Delaware corporation ("Viasystems"), was formed on April
2, 1997, as a subsidiary of Viasystems Group, Inc. On April 10, 1997, Viasystems
Group, Inc. contributed to Viasystems all of the capital of its then existing
subsidiaries -- Circo Craft Co. Inc., Viasystems Technologies Corp., and PCB
Acquisition Limited. Viasystems has no operations of its own. The balance sheet
sets forth the financial position of Viasystems before the contribution of the
capital of the subsidiaries of Viasystems Group, Inc. The fiscal year end of
Viasystems is December 31.
2. SUBSEQUENT EVENTS
On April 11, 1997, Viasystems acquired Forward Group PLC ("Forward
Acquisition"), a manufacturer of rigid printed circuit boards located in the
U.K. The purchase price of approximately $236,300 consisted of cash, notes
payable to certain of the Forward Group PLC stockholders, and assumed debt. The
Forward Acquisition and the related transaction fees and expenses were funded
with (i) $40,000 from the issuance of 1,600,000 shares of Series C Preferred
Stock of Viasystems Group, Inc. and (ii) $216,000 from a Subordinated Credit
Facility. The Subordinated Credit Facility was paid off with a subsequent debt
offering (see below).
In connection with the Forward Acquisition, Viasystems entered into an
Amended and Restated Credit Agreement with terms substantially similar to the
Credit Agreements of Viasystems Group, Inc. The Amended and Restated Credit
Agreement provided for a U.K.L.32,000 (approximately US$51,500) Revolving
Facility to Forward Group PLC.
On April 11, 1997, Viasystems made an optional prepayment of $20,000 under
the Term A Loan outstanding under the Amended and Restated Credit Agreement.
In April 1997, Viasystems Group, Inc.'s stockholders and certain of its
affiliates formed Chips Holdings, Inc., to acquire Interconnection Systems
(Holdings) Limited ("ISL"), a manufacturer of rigid printed circuit boards
located in the U.K. In connection with the transaction, these stockholders
invested $140,000 of equity capital in Chips Holdings, Inc. On June 6, 1997,
Chips Holdings, Inc. merged with Viasystems Group, Inc. and the subsidiaries of
Chips Holdings, Inc., including ISL, became subsidiaries of Viasystems and
certain of its subsidiaries in consideration for the issuance of $140,000 of
Viasystems Group, Inc. common stock to its stockholders and certain of its
affiliates. Viasystems Group, Inc. assumed approximately $437,500 of notes
payable which were incurred by Chips Holdings, Inc. (the "Chips Loan Notes") to
finance the ISL acquisition.
The Chips Loan Notes mature on March 31, 2003 and bear interest, payable
quarterly, at approximately 6.22% per annum through April 1, 1998, with variable
rates thereafter discounted from the U.S. prime rate. The Chips Loan Notes may
be called by the holders on or after any interest payment date commencing April
1, 1998. The Chips Loan Notes are collateralized by letters of credit issued by
a bank. Such letters of credit are in turn collateralized in part by a fully
cash collateralized $118,300 reimbursement obligation of Bisto Funding, Inc., a
special purpose entity and sister Company of Viasystems, established as a
subsidiary of the Viasystems Group, Inc. in connection with the acquisition of
ISL, with the remainder, including interest on the Chips Loan Notes for one
year, collateralized by a reimbursement obligation of Viasystems.
On June 5, 1997 Viasystems Group, Inc. as guarantor, and Viasystems and
certain of its subsidiaries, as borrowers, entered into a Second Amended and
Restated Credit Agreement with terms substantially similar to the Credit
Agreements of Viasystems Group, Inc. The Second Amended and Restated Credit
Agreement provided for a U.K.L27,600 (approximately U.S.$44,400) Revolving
Facility and a $319,250 term loan facility to be drawn upon in the event the
Chips Loan Notes are called. On June 6, 1997, Viasystems completed an offering
of $400,000 of 9 3/4% Senior
F-4
<PAGE> 113
Subordinated Notes due 2007 (the "Offering"). Viasystems used the net proceeds
of the Offering to repay amounts totaling approximately $171,600 principal
amount outstanding under the Second Amended and Restated Credit Agreement, plus
interest, and to repay the $216,000 principal amount outstanding under the
Subordinated Credit Facility, plus interest.
F-5
<PAGE> 114
REPORT OF INDEPENDENT AUDITORS
The Board of Directors of Viasystems Group, Inc.:
We have audited the accompanying consolidated balance sheet of Viasystems
Group, Inc. (a Delaware corporation) and subsidiaries as of December 31, 1996,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for the period from inception (August 28, 1996) to December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Viasystems
Group, Inc. and subsidiaries as of December 31, 1996 and the consolidated
results of their operations and their cash flows for period from inception
(August 28, 1996) to December 31, 1996, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
St. Louis, Missouri
February 28, 1997, except
for Note 18, for
which the date
is June 6, 1997
F-6
<PAGE> 115
VIASYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents............. $ 16,117 $ 3,556
Accounts receivable, less allowance
for doubtful accounts of $409 and
$448, respectively................. 37,149 60,131
Inventories........................... 43,123 39,789
Prepaid expenses and other............ 7,333 6,709
-------- --------
Total current assets.......... 103,722 110,185
Property, plant and equipment, net...... 208,748 211,596
Deferred financing costs, net........... 27,351 26,616
Intangible assets, net.................. 47,920 46,247
-------- --------
Total assets.................. $387,741 $394,644
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
obligations........................ $ 10,804 $ 10,691
Accounts payable...................... 5,185 18,871
Accrued and other liabilities......... 42,112 34,214
Income taxes payable.................. 683 1,246
-------- --------
Total current liabilities..... 58,784 65,022
Deferred taxes.......................... 3,785 4,035
Long-term obligations, less current
maturities............................ 254,816 252,885
Other noncurrent liabilities............ 15,383 15,055
-------- --------
Total liabilities............. 332,768 336,997
-------- --------
Stockholders' Equity:
Series A preferred stock, $.01 par
value, 1,800,000 shares issued and
outstanding, including liquidation
preference of $45,000.............. 18 18
Series B preferred stock, $.01 par
value, 1,200,000 shares issued and
outstanding, including liquidation
preference of $30,000.............. 12 12
Common Stock, par value $.01 per
share, 90,000,000 shares
authorized, 30,000,004 shares
issued and outstanding............. 300 300
Class A common stock, par value $.01
per share, 10,000,000 shares
authorized 4,098,333 shares issued
and outstanding.................... 41 41
Paid in capital....................... 103,423 103,423
Accumulated deficit................... (48,742) (46,071)
Cumulative translation adjustment..... (79) (76)
-------- --------
Total stockholders' equity....... 54,973 57,647
-------- --------
Total liabilities and
stockholders' equity........ $387,741 $394,644
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated balance sheet.
F-7
<PAGE> 116
VIASYSTEMS GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INCEPTION THREE MONTHS
(AUGUST 28, 1996) TO ENDED
DECEMBER 31, 1996 MARCH 31, 1997
-------------------- --------------
(UNAUDITED)
<S> <C> <C>
Net sales.................................................. $ 50,400 $119,884
Operating expenses:
Cost of goods sold....................................... 42,052 90,069
Selling, general and administrative...................... 3,844 11,155
Depreciation and amortization............................ 4,635 8,475
Write-off of acquired in-process research and
development........................................... 50,800 --
-------- --------
Operating income (loss).................................... (50,931) 10,185
Other expenses:
Interest expense......................................... 2,503 5,055
Amortization of deferred financing costs................. 470 937
Other expense (income)................................... 262 (52)
-------- --------
Income (loss) before income taxes.......................... (54,166) 4,245
Provision (benefit) for income taxes....................... (5,424) 1,574
-------- --------
Net income (loss).......................................... $(48,742) $ 2,671
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
<PAGE> 117
VIASYSTEMS GROUP, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE
PREFERRED COMMON PAID IN ACCUMULATED TRANSLATION
STOCK STOCK CAPITAL DEFICIT ADJUSTMENT TOTAL
--------- ------ -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at Inception (August 28,
1996)............................... $-- $ -- $ -- $ -- $ -- $ --
Issuance of 30,000,004 shares of
Common Stock...................... -- 300 29,700 -- -- 30,000
Issuance of 4,098,333 shares of
Class A Common Stock.............. -- 41 -- -- -- 41
Issuance of 1,800,000 shares of
Series A Preferred Stock.......... 18 -- 44,982 -- -- 45,000
Issuance of 1,200,000 shares of
Series B Preferred Stock.......... 12 -- 29,988 -- -- 30,000
Stock issuance costs................ -- -- (1,247) -- -- (1,247)
Net loss............................ -- -- -- (48,742) -- (48,742)
Cumulative translation adjustment... -- -- -- -- (79) (79)
--- ---- -------- -------- ---- --------
Balance at December 31, 1996.......... 30 341 103,423 (48,742) (79) 54,973
Net Income.......................... -- -- -- 2,671 3 2,674
--- ---- -------- -------- ---- --------
Balance at March 31, 1997
(unaudited)......................... $30 $341 $103,423 $(46,071) $(76) $ 57,647
=== ==== ======== ======== ==== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
<PAGE> 118
VIASYSTEMS GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INCEPTION THREE MONTHS
(AUGUST 28, 1996) TO ENDED
DECEMBER 31, 1996 MARCH 31, 1997
-------------------- --------------
(UNAUDITED)
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss)......................................... $ (48,742) $ 2,671
Adjustments to reconcile net loss to net cash provided by
operating activities:
Write-off of acquired in-process research and
development.......................................... 50,800 --
Depreciation and amortization.......................... 4,635 8,475
Amortization of deferred financing costs............... 470 937
Deferred taxes......................................... (5,874) 228
Change in assets and liabilities, net of acquisitions:
Accounts receivable.................................. (15,469) (24,640)
Inventories.......................................... 2,655 3,397
Prepaid expenses and other........................... (927) 633
Accounts payable..................................... 976 13,673
Accrued and other liabilities........................ 13,899 (7,436)
Income taxes payable................................. (761) (341)
--------- --------
Net cash from operating activities.......................... 1,662 (2,403)
--------- --------
Cash flows provided by (used in) investing activities:
Acquisitions, net of cash acquired of $20,890............. (282,723) --
Capital expenditures...................................... (3,563) (8,712)
--------- --------
Net cash used in investing activities....................... (286,286) (8,712)
--------- --------
Cash flows provided by (used in) financing activities:
Proceeds from issuance of long-term obligations........... 238,283 --
Repayment of long-term obligations........................ -- (2,463)
Equity proceeds........................................... 73,794 --
Financing fees and other.................................. (11,364) --
--------- --------
Net cash from financing activities.......................... 300,713 (2,463)
--------- --------
Effect of exchange rate changes on cash..................... 28 1,017
--------- --------
Net change in cash and cash equivalents..................... 16,117 (12,561)
Cash and cash equivalents at inception...................... -- 16,117
--------- --------
Cash and cash equivalents at end of period.................. $ 16,117 $ 3,556
========= ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for
Interest............................................... $ 323 $ 4,721
========= ========
Income taxes........................................... $ 1,184 $ 520
========= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-10
<PAGE> 119
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. THE COMPANY
Viasystems Group, Inc. a Delaware corporation ("Viasystems Group"), was
formed on August 28, 1996. Viasystems Group, together with its subsidiaries, is
herein referred to as the Company. The Company was formed to make strategic
acquisitions of printed circuit board manufacturers and backpanel assemblers and
integrate those acquisitions as a global enterprise that is the preferred
manufacturer and marketer of complex printed circuit boards ("PCBs") and
backpanels. In connection therewith, as of December 31, 1996, the Company had
acquired Circo Craft Co. Inc. and the Microelectronics Group, Interconnection
Technologies Unit of Lucent Technologies Inc. (together, the "Acquisitions") as
described below. Prior to the Acquisitions, Viasystems Group had no operations
of its own other than those incident to the Acquisitions.
On October 1, 1996, the Company acquired all of the outstanding stock of
Circo Craft Co. Inc., a Quebec corporation and a rigid printed circuit board
manufacturer, for aggregate cash consideration of $129,850 plus acquisition fees
and expenses of $885 (the "Circo Craft Acquisition"). The operating results of
Circo Craft Co. Inc. are included in the consolidated financial statements of
Viasystems Group since the date of the Circo Craft Acquisition.
The Circo Craft Acquisition has been accounted for using the purchase
method of accounting whereby the total purchase price has been preliminarily
allocated to the assets and liabilities based on their estimated respective fair
values. A significant portion of the purchase price, as described below, has
been identified in an independent appraisal as intangible assets using proven
valuation procedures and techniques, including approximately $39,200 of
in-process research and development ("in-process R&D"). The portion of the
purchase price allocated to in-process R&D projects that did not have a future
alternative use totaled $39,200 and was charged to expense as of the acquisition
date. The other acquired intangibles include developed technology, assembled
workforce, and customer list. These intangibles are being amortized over their
estimated useful lives of 12 to 25 years.
The total purchase price including fees and expenses has been preliminarily
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.......................... $ 52,846
Property, plant and equipment........... 50,710
Acquired intangibles.................... 22,000
In-process R&D.......................... 39,200
Goodwill................................ 7,857
Non-current assets...................... 2,500
Current liabilities..................... (28,951)
Non-current liabilities................. (15,427)
--------
Total......................... $130,735
========
</TABLE>
On December 1, 1996, the Company, through its newly formed subsidiary,
Viasystems Technologies Corp., acquired certain assets and assumed certain
liabilities of the Microelectronics Group, Interconnection Technologies Unit of
Lucent Technologies Inc., a rigid printed circuit board manufacturer and
backpanel assembler, (the "Lucent Division Acquisition") for an aggregate cash
consideration of $170,000 and $30,000 of preferred stock plus acquisition fees
and expenses of $1,969. The operating results of Viasystems Technologies Corp.
are included in the consolidated financial statements since the date of the
Lucent Division Acquisition.
F-11
<PAGE> 120
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The Lucent Division Acquisition was accounted for using the purchase method
of accounting whereby the total purchase price has been preliminarily allocated
to the assets and liabilities based on their estimated respective fair values. A
significant portion of the purchase price, as described below, has been
identified in an independent appraisal as intangible assets using proven
valuation procedures and techniques, including approximately $11,600 in-process
R&D. The portion of the purchase price allocated to in-process R&D projects that
did not have a future alternative use totaled $11,600 and was charged to expense
as of the acquisition date. The other acquired intangibles include developed
technology, assembled workforce, and customer list. These intangibles are being
amortized over their estimated useful lives of 12 to 25 years.
The total purchase price including fees and expenses has been preliminarily
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.......................... $ 39,204
Property, plant and equipment........... 155,674
Acquired intangibles.................... 18,775
In-process R&D.......................... 11,600
Non-current assets...................... 13,080
Current liabilities..................... (8,849)
Non-current liabilities................. (27,515)
--------
Total......................... $201,969
========
</TABLE>
The Company will evaluate the capacities and production capabilities of all
acquired entities, including those acquired subsequent to yearend (see Note 17),
to assess potential cost savings from consolidating its facilities and optimize
its global plant utilization by shifting production between facilities to most
efficiently satisfy particular customer orders.
Included below is unaudited pro forma financial data setting forth
condensed results of operations of the Company for the year ended December 31,
1996, as though the Acquisitions and related financing had occurred at the
beginning of the year. In preparing this data, the financial data of Circo Craft
Co. Inc. for the period from January 1, 1996 to the date of the Circo Craft
Acquisition has been translated at an exchange rate of Cdn$1.36 = U.S.$1.00, the
exchange rate at September 30, 1996.
<TABLE>
<S> <C>
Net sales............................... $470,820
Net income.............................. (29,595)
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business
The Company is primarily involved in manufacturing and distributing
advanced PCBs and assembling backpanels at various facilities located in the
United States, Canada and Puerto Rico. The Company's customers include a
diversified base of manufacturers in the telecommunications, computer and
automotive industries throughout North America.
Principles of Consolidation
The consolidated financial statements include the accounts of Viasystems
Group and its wholly-owned subsidiaries, Circo Craft Co. Inc. ("Circo Craft")
and Viasystems Technologies Corp.
F-12
<PAGE> 121
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
("Viasystems Technologies"). All material intercompany balances and transactions
have been eliminated in consolidation.
Foreign Currency Translation
Local currencies have been designated as the functional currency for all
subsidiaries. Accordingly, assets and liabilities of foreign subsidiaries are
translated at the rates of exchange at the balance sheet date. Income and
expense items of these subsidiaries are translated at average monthly rates of
exchange. The resultant translation gains and losses are included as a component
of stockholders' equity on the consolidated balance sheet.
Inventories
Inventories are stated at the lower of cost (valued using the first-in,
first-out (FIFO) method) or market. Cost includes raw materials, labor and
manufacturing overhead.
Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost. Repairs and
maintenance which do not extend the useful life of an asset are charged to
expense as incurred. The useful lives of leasehold improvements are the lesser
of the remaining lease term or the useful life of the improvement. Depreciation,
which amounted to $4,102 for the period from inception (August 28, 1996) to
December 31, 1996, is computed using the straight-line method over the estimated
useful lives of the related assets as follows:
<TABLE>
<S> <C>
Building.................................................... 40 years
Leasehold improvements...................................... 10-12 years
Machinery and equipment..................................... 3-8 years
</TABLE>
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses associated
with debt financings are amortized over the term of the related debt using the
effective interest method.
Intangible Assets
Intangible assets consist primarily of identifiable intangibles acquired in
the Acquisitions and goodwill arising from the excess of cost over the fair
value of net assets acquired. The Company assesses the recoverability of its
intangible assets based on its current and anticipated future undiscounted cash
flows. At December 31, 1996 the Company does not believe there has been any
impairment of its intangible assets. Amortization of intangible assets is
computed using the straight-line method over the estimated useful lives of the
related assets as follows:
<TABLE>
<S> <C>
Developed technologies...................................... 15 years
Assembled workforce......................................... 12 years
Customer list............................................... 25 years
Goodwill.................................................... 40 years
</TABLE>
Research and Development
Expenditures for research and development activities relating to new
products and processes are charged to expense as incurred.
F-13
<PAGE> 122
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue Recognition
Sales and related costs of goods sold are included in income when goods are
delivered to the customer in accordance with the delivery terms.
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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The fair market values of the financial instruments included in the
consolidated financial statements approximate the carrying values of those
instruments.
Statement of Cash Flows
For purposes of the Consolidated Statement of Cash Flows, the Company
considers investments purchased with an original maturity of three months or
less to be cash equivalents. In connection with the Viasystems Technologies
Acquisition, the Company issued $30,000 of Series B Preferred Stock as non-cash
consideration and received $2,802 of property, plant, and equipment paid for by
Lucent Technologies Inc.
Unaudited Interim Financial Statements Presentation
The unaudited interim financial statements reflect all adjustments
consisting only of normal recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of financial position and results
of operations. The results for the three months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for a full fiscal
year.
3. INVENTORIES
Inventories are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Raw materials........................... $12,829 $11,405
Work in progress........................ 16,796 20,088
Finished goods.......................... 13,498 8,296
------- -------
Total......................... $43,123 $39,789
======= =======
</TABLE>
4. DEFERRED FINANCING COSTS
In connection with the debt and equity financing used to fund the
Acquisitions, the Company incurred aggregate fees and expenses related to the
Term Notes and Revolver (see Note 9). Such costs are included in deferred
financing costs and are being amortized over the terms of the related
borrowings. Costs related to the issuance of common and preferred stock have
been deducted from the proceeds to reduce the carrying value of the common
stock.
F-14
<PAGE> 123
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
5. INTANGIBLE ASSETS
Intangible assets are amortized on a straight-line basis over various
estimated useful lives. The composition of intangible assets at December 31,
1996 is as follows:
<TABLE>
<S> <C>
Developed technologies...................................... $21,185
Assembled workforce......................................... 10,980
Customer list............................................... 8,479
Goodwill.................................................... 7,809
-------
48,453
Less: Accumulated amortization.............................. (533)
-------
Total............................................. $47,920
=======
</TABLE>
Goodwill represents the purchase price in excess of net tangible and
identified intangible assets acquired in acquisitions.
6. PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment at December 31, 1996 is as
follows:
<TABLE>
<S> <C>
Land and buildings.......................................... $ 52,480
Machinery and equipment..................................... 144,455
Construction in progress.................................... 12,533
Leasehold improvements...................................... 3,368
--------
212,836
Less: Accumulated depreciation.............................. (4,088)
--------
Total............................................. $208,748
========
</TABLE>
7. ACCRUED AND OTHER LIABILITIES
The composition of accrued and other liabilities at December 31, 1996, is
as follows:
<TABLE>
<S> <C>
Accrued payroll and related costs........................... $12,069
Accrued consulting fees..................................... 3,777
Accrued lease termination costs............................. 2,848
Accrued and other liabilities............................... 23,418
-------
Total............................................. $42,112
=======
</TABLE>
F-15
<PAGE> 124
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
8. COMMITMENTS
The Company leases certain building and transportation and other equipment
under capital and operating leases. Included in property, plant, and equipment
as of December 31, 1996, is $17,083 of cost basis and $380 of accumulated
depreciation related to equipment held under capital leases. Total rental
expense under operating leases was $255 for the period from inception (August
28, 1996) to December 31, 1996. Future minimum lease payments under capital
leases and operating leases that have initial or remaining noncancelable lease
terms in excess of one year are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, CAPITAL OPERATING
- ------------ ------- ---------
<S> <C> <C> <C>
1997........................................................... $ 6,384 $ 609
1998........................................................... 5,714 558
1999........................................................... 5,196 508
2000........................................................... 2,018 508
2001........................................................... -- 508
Thereafter..................................................... -- --
------- ------
Total................................................ 19,312 $2,691
======
Less: Amounts representing interest............................ 2,047
-------
Capital lease obligation (see Note 9)................ $17,265
=======
</TABLE>
In connection with the Lucent Division Acquisition, the Company entered
into a supply agreement with Lucent Technologies Inc. ("Lucent Technologies")
under which Lucent Technologies agreed to purchase certain increasing minimum
annual volumes from the Company at defined prices (see Note 12). Such agreement
also provides the Company with specified remedies against Lucent Technologies in
the event Lucent Technologies does not purchase the minimum annual volumes set
forth in the agreement.
9. INCOME TAXES
The Company accounts for income taxes in accordance with the provisions of
SFAS No. 109. The benefit for income taxes for the period from inception (August
28, 1996) to December 31, 1996 consisted of the following:
<TABLE>
<S> <C>
Current:
Federal............................... $ --
State................................. --
Foreign............................... 170
Deferred:
Federal............................... (5,698)
Foreign............................... 104
--------
$ (5,424)
========
</TABLE>
Reconciliation between the statutory income tax rate and effective tax rate
is summarized below:
<TABLE>
<S> <C>
U.S. Federal statutory rate............. $(18,416)
Permanent items......................... 15,680
State taxes............................. (3,250)
Foreign................................. 213
Other................................... 349
--------
$ (5,424)
========
</TABLE>
F-16
<PAGE> 125
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The tax effects of significant temporary differences representing deferred
tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
DATES OF DECEMBER 31,
ACQUISITION 1996
----------- ------------
<S> <C> <C>
Deferred tax assets:
Accrued liabilities not yet deductible.................... $ 10,112 $ 10,112
Net operating loss carryforwards.......................... 237 1,037
Other..................................................... 278 186
-------- --------
10,627 11,335
Valuation Allowance.................................... (237) (260)
-------- --------
10,390 11,075
-------- --------
Deferred tax liabilities:
Intangibles............................................... (10,112) (5,418)
Fixed Assets.............................................. (3,673) (3,505)
Other..................................................... (287) (239)
-------- --------
(14,072) (9,162)
-------- --------
Net deferred tax asset (liability).......................... $ (3,682) $ 1,913
======== ========
</TABLE>
Approximate domestic and foreign income before income tax provision for the
period from inception (August 28, 1996) to December 31, 1996, are as follows:
<TABLE>
<S> <C>
Domestic................................ $(14,426)
Foreign................................. (39,740)
</TABLE>
As of December 31, 1996, the Company has $1,942 of U.S. net operating loss
carryforwards which will expire in 2011, if not previously utilized, and $5,794
of Puerto Rican net operating loss carryforwards which will expire in 2001-2003,
if not previously utilized. At December 31, 1996, the Company has included a net
current deferred tax asset of $5,698 in prepaid expenses and other assets.
10. LONG-TERM OBLIGATIONS
In connection with the Circo Craft Acquisition, the Company entered into a
credit agreement with a financial institution. This agreement was replaced when
Circo Craft and Viasystems Technologies entered into two credit agreements with
certain financial institutions dated as of November 26, 1996 (the "Circo Credit
Agreement" and the "Viasystems Technologies Credit Agreement", respectively, and
together, the "Credit Agreements"). Borrowings under the Credit Agreements are
collateralized by first priority mortgages and liens on substantially all of the
material assets of the Company and its subsidiaries.
The Circo Credit Agreement consists of a Cdn$86,750 (approximately
US$65,000) Canadian term loan (the "Canadian Term Loan") and a US$25,000 (or the
Canadian dollar equivalent) revolving credit facility (the "Circo Revolver").
The Viasystems Technologies Credit Agreement consists of a $65,000 term loan
(the "Term A Loan"), a $55,000 term loan (the "Term B Loan"), a $55,000 term
loan (the "Term C Loan"), and a $50,000 revolving credit facility (the
"Viasystems Technologies Revolver"). The Canadian Term Loan, the Term A Loan,
the Term B Loan, and the Term C Loan are together herein referred to as the Term
Facilities. The Circo Revolver and the Viasystems Technologies Revolver are
together herein referred to as the "Revolvers". The Revolvers provide that up to
$15,000 of such facilities may be used for the issuance of letters of credit. At
December 31, 1996, the Company had no outstanding letters of credit. At December
31, 1996, there was $73,765 of unused borrowing capacity under the Revolvers.
The Credit Agreements
F-17
<PAGE> 126
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
contain several financial covenants which, among other things, require the
Company to maintain certain financial ratios, restrict the Company's ability to
incur additional indebtedness, and limit the amount of capital expenditures. A
commitment fee of .5% on the unused portion of the Revolvers is payable
quarterly.
Mandatory principal payments of the Term Facilities are due in semi-annual
installments. The final installments on the Term A Loan and Canadian Term Loan
are due on December 31, 2002 at which time the Revolvers are also due. The final
installment on the Term B Loan is due on June 30, 2004. The final installment on
the Term C Loan is due on June 30, 2005. Beginning in fiscal year 1997, the
Credit Agreements require annual prepayments of the Term Facilities based on
"Excess Cash Flow" (as defined).
Borrowings under the Term A Loan, the Canadian Term Loan, and United States
dollar borrowings under the Revolvers bear interest, at the option of the
Company, at a rate per annum equal to (a) the Alternate Base Rate (as defined in
the Credit Agreements) plus 1.5% or (b) the Eurodollar Rate (as defined in the
Credit Agreements) plus 2.5%. Canadian dollar borrowings under the Revolver bear
interest, at the option of the Company, at a rate per annum equal to (a) the
Alternate Base Rate plus 1.0% or (b) the Eurodollar Rate plus 2.0%. Borrowings
under the Term B Loan bear interest, at the option of the Company, at a rate per
annum equal to (a) the Alternate Base Rate plus 2.0% or (b) the Eurodollar Rate
plus 3.0%. Borrowings under the Term C Loan bear interest , at the option of the
Company, at a rate per annum equal to (a) the Alternate Base Rate plus 2.5% or
(b) the Eurodollar Rate plus 3.5%. The Alternate Base Rate and Eurodollar Rate
margins are established quarterly based on formulas as defined in the Credit
Agreements. Interest payment dates vary depending on the interest rate option to
which the Term Facilities and the Revolvers are tied, but generally interest is
payable quarterly. At December 31, 1996 the weighted average interest rate on
outstanding borrowings is 7.68%.
The composition of long-term obligations at December 31, 1996 is as
follows:
<TABLE>
<S> <C>
Credit Agreements:
Term Facilities........................................... $238,345
Revolvers................................................. 1,235
Capital lease obligations (see Note 7)...................... 17,265
Other....................................................... 8,775
--------
265,620
Less current maturities........................... (10,804)
--------
$254,816
========
</TABLE>
The schedule of principal payments for long-term obligations at December
31, 1996 is as follows:
<TABLE>
<S> <C>
1997........................................................ $ 10,804
1998........................................................ 16,568
1999........................................................ 24,182
2000........................................................ 25,866
2001........................................................ 33,187
Thereafter.................................................. 155,013
--------
$265,620
========
</TABLE>
F-18
<PAGE> 127
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. CONTINGENCIES
The Company is subject to various lawsuits and claims with respect to such
matters as patents, product development and other actions arising in the normal
course of business. In the opinion of the Company's management, the ultimate
liabilities resulting from such lawsuits and claims will not have a material
adverse effect on the Company's financial condition and results of operations.
The Company believes it is in material compliance with applicable
environmental laws and regulations and that its environmental controls are
adequate to address existing regulatory requirements.
12. STOCKHOLDERS' EQUITY
The authorized capital stock of Viasystems Group consists of 90 million
shares of common stock, 10 million shares of Class A common stock and 30 million
shares of preferred stock, of which 8,000,000 shares are designated as Series A
Preferred Stock and 6,000,000 shares are designated as Series B Preferred Stock.
All authorized capital stock has a par value of $.01.
On October 1 and November 26, 1996, Viasystems Group issued an aggregate of
67,949,754 shares of common stock for total proceeds of $67,950 and issued an
aggregate of 4,098,333 shares of Class A common stock for total proceeds of $41.
On November 26, 1996, holders of 37,949,750 shares of common stock exchanged
such shares for 1,517,990 shares of Series A Preferred Stock ("Series A
Preferred"), and Viasystems Group issued an additional 282,010 shares of Series
A Preferred for total proceeds of $7,050. On December 1, 1996, and in connection
with the Lucent Division Acquisition, Viasystems Group issued 1,200,000 shares
of Series B Preferred Stock ("Series B Preferred") to Lucent for total
consideration of $30,000 (see Note 1).
The Class A common stock may be converted into shares of common stock at
the option of the holder at any time. In addition, the Class A common stock may
be converted into common stock at the option of the Company upon the occurrence
of a Triggering Event (as defined) or automatically on September 30, 2006. Such
conversion is based on a formula set forth in Viasystems Group's Certificate of
Incorporation.
Dividends are payable to holders of the common stock and the Class A common
stock in amounts as and when declared by Viasystems Group's board of directors,
subject to legally available funds and certain agreements. The common stock and
Class A common stock are entitled to one vote per share on all matters submitted
to a vote of stockholders.
Dividends on the Series A Preferred are cumulative and are payable at an
annual rate of $2.00 per share per annum prior to November 30, 2004, $2.50 per
share per annum from November 30, 2004 to November 30, 2005, $3.00 per share per
annum from November 30, 2005 to November 30, 2006, and $3.50 per share per annum
on and after November 30, 2006. Dividends are payable quarterly on February 28,
May 31, August 31 and November 30 in each year, commencing on February 28, 1997.
The Company may, at its option, pay quarterly dividends on the Series A
Preferred, if the Credit Agreement prohibits the payment of cash dividends,
until but excluding November 30, 2001, by issuing additional shares of Series A
Preferred. Series A Preferred has no provision for mandatory redemption. At the
Company's option, the Series A Preferred is redeemable on or any time after
November 30, 2001, at specified redemption values which reduce over time
together with accrued and unpaid dividends to the date of redemption.
Dividends on the Series B Preferred are cumulative and are payable at an
annual rate of $2.00 per share per annum prior to November 30, 2004, $2.50 per
share per annum from November 30,
F-19
<PAGE> 128
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2004 to November 30, 2005, $3.00 per share per annum from November 30, 2005 to
November 30, 2006, and $3.50 per share per annum on and after November 30, 2006.
Dividends are payable quarterly on February 28, May 31, August 31 and November
30 in each year, commencing on February 28, 1997. The Company may, at its
option, pay quarterly dividends on the Series B Preferred, if the Credit
Agreement prohibits the payment of cash dividends, by issuing additional shares
of Series B Preferred. Except in the case of a Change in Control (as defined),
the Series B Preferred have no provisions for mandatory redemption. At the
Company's option, the Series B Preferred is redeemable at any time, at $25 per
share, together with accrued and unpaid dividends to the date of redemption.
13. CONCENTRATION OF BUSINESS
During the period from inception (August 28, 1996) to December 31, 1996,
three customers accounted for 27%, 18%, and 11% of the Company's revenues,
respectively.
14. RELATED PARTY TRANSACTIONS
In connection with the Acquisitions and the related financing, the Company
entered into a Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse
& Co. Partners L.P. ("Hicks, Muse") (a shareholder and affiliate of the Company)
pursuant to which the Company paid Hicks, Muse a cash fee of $5,013 as
compensation for financial advisory services. The fees have been allocated to
acquisition costs and the debt and equity securities issued in connection with
the Acquisition as deferred financing costs. The Agreement further provides that
the Company shall pay Hicks, Muse an annual fee of $750 for ten years of
monitoring and oversight services adjusted annually at the end of each fiscal
year to an amount equal to .2% of the budgeted consolidated net sales of the
Company, but in no event less than $750 annually. The obligation under the
Agreement and the related deferred financing costs have been recorded in the
consolidated balance sheet and will be amortized over the life of the agreement.
The Company purchased $1,307 of connectors from Berg Electronics Corp. (an
affiliate of the Company).
15. STOCK OPTION PLANS
On February 4, 1997, the Company adopted the Viasystems Group, Inc. 1997
Stock Option Plan (the "Plan"), pursuant to which incentive and non-qualified
stock options, stock appreciation rights, stock awards, performance awards, and
stock units (vesting stock awards) may be issued. The aggregate number of shares
of common stock that may be subject to options grants or other awards under the
Plan is 989,386. As of December 31, 1996, no shares of common stock are reserved
for issuance and no options or other awards have been granted.
The Company has also granted performance options ("the Performance
Options") to certain key executives. The Performance Options are exercisable
only on the occurrence of certain events. The exercise price for the Performance
Options is initially equal to $1.00 per share and, effective each anniversary of
the grant date, the per share exercise price for the Performance Options is
equal to the per share exercise price for the prior year multiplied by 1.08. The
Performance Options terminate on the tenth anniversary date of the date of
grant. In accordance with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," the Company calculated the amount of
compensation cost of the Performance Options and found such amount to be
immaterial.
F-20
<PAGE> 129
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
16. RETIREMENT PLAN
The Company has a defined contribution retirement savings plan (the "Plan")
covering substantially all domestic employees who meet certain eligibility
requirements as to age and length of service. The Plan incorporates the salary
deferral provision of Section 401 (k) of the Internal Revenue Code and employees
may defer up to 15% of compensation or the annual maximum limit prescribed by
the Internal Revenue Code. The Company contributes 1% of employees salaries to
the Plan and matches a percentage of the employees' deferrals. The Company may
also elect to contribute an additional profit-sharing contribution to the Plan
at the end of each year. The Company's contributions to the Plan were $0 for the
period from inception (August 28, 1996) to December 31, 1996.
17. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS
The Company does not offer any postemployment or postretirement benefits.
18. SUBSEQUENT EVENTS
On April 2, 1997, Viasystems Group formed a new wholly-owned subsidiary,
Viasystems, Inc., to which it contributed all assets and liabilities.
On April 11, 1997, the Company, through Viasystems, Inc., acquired Forward
Group PLC ("Forward Acquisition"), a manufacturer of rigid printed circuit
boards located in the U.K. The purchase price of approximately $236,300
consisted of cash, notes payable to certain of the Forward Group PLC
stockholders, and assumed debt. The Forward Acquisition and the related
transaction fees and expenses were funded with (i) $40,000 from the issuance of
1,600,000 shares of Series C Preferred Stock of the Company and (ii) $216,000
from a Subordinated Credit Facility. The Subordinated Credit Facility was repaid
with a subsequent debt offering (see below).
In connection with the Forward Acquisition, Viasystems, Inc. entered into
an Amended and Restated Credit Agreement with terms substantially similar to the
Credit Agreements. The Amended and Restated Credit Agreement provided for a
U.K.L.32,000 (approximately US$51,500) Revolving Facility to Forward Group PLC.
On April 11, 1997, the Company made an optional prepayment of $20,000 under
its Term A Loan.
In April 1997, the Company's stockholders and certain of its affiliates
formed Chips Holdings, Inc., to acquire Interconnection Systems (Holdings)
Limited ("ISL"), a manufacturer of rigid printed circuit boards located in the
U.K. In connection with the transaction, the Company's stockholders invested
$140,000 of equity capital in Chips Holdings, Inc. On June 6, 1997, Chips
Holdings, Inc. became subsidiaries of Viasystems Group and the subsidiaries of
Chips Holdings, Inc., including ISL, merged into Viasystems, Inc. and certain of
its subsidiaries in consideration for the issuance of $140,000 of Company common
stock to the Company's stockholders and certain of its affiliates. Concurrently,
the Company's Series A and Series C preferred stockholders received 85 million
shares of the Company's common stock in exchange for preferred stock owned by
them. The Company assumed approximately $437,500 of notes payable which were
incurred by Chips Holdings, Inc. (the "Chips Loan Notes") to finance the ISL
acquisition.
The Chips Loan Notes mature on March 31, 2003 and bear interest, payable
quarterly, at approximately 6.22% per annum through April 1, 1998, with variable
rates thereafter discounted from the U.S. prime rate. The Chips Loan Notes may
be called by the holders on or after any interest payment date commencing April
1, 1998. The Chips Loan Notes are collateralized by letters of credit issued by
a bank. Such letters of credit are in turn collateralized in part by a fully
cash collateralized
F-21
<PAGE> 130
VIASYSTEMS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
$118,300 reimbursement obligation of Bisto Funding, Inc., a special purpose
entity established as a subsidiary of the Viasystems Group in connection with
the acquisition of ISL, with the remainder, including interest on the Chips Loan
Notes for one year, collateralized by a reimbursement obligation of Viasystems,
Inc.
On June 5, 1997, Viasystems Group, as guarantor, and Viasystems, Inc. and
certain of its subsidiaries, as borrowers, entered into a Second Amended and
Restated Credit Agreement with terms substantially similar to the Credit
Agreements. The Second Amended and Restated Credit Agreement provided for a
U.K.L27,600 (approximately U.S.$44,400) Revolving Facility and a $319,250 term
loan facility to be drawn upon in the event the Chips Loan Notes are called. On
June 6, 1997, Viasystems, Inc. completed an offering of $400,000 of 9 3/4%
Senior Subordinated Notes due 2007 (the "Offering"). Viasystems, Inc. used the
net proceeds of the Offering to repay amounts totaling approximately $171,600
principal amount outstanding under the Second Amended and Restated Credit
Agreement, plus interest, and to repay the $216,000 principal amount outstanding
under the Subordinated Credit Facility, plus interest.
In June 1997, the authorized common stock of the Company increased to 423
million shares of common stock and 47 million shares of Class A common stock.
Additionally, 8 million shares of preferred stock were designated as Series C
Preferred Stock.
F-22
<PAGE> 131
AUDITORS' REPORT
To The Directors of Circo Craft Co. Inc.
We have audited the consolidated balance sheet of Circo Craft Co. Inc. as
at September 30, 1996 and the consolidated statements of earnings, retained
earnings and changes in financial position for the nine-month period then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the company as at September 30,
1996 and the results of its operations and the changes in its financial position
for the nine-month period then ended in accordance with generally accepted
accounting principles in Canada.
Coopers & Lybrand
General Partnership
Chartered Accountants
Montreal, Quebec
December 20, 1996
F-23
<PAGE> 132
AUDITORS' REPORT
To the Directors of Circo Craft Co. Inc.
We have audited the consolidated balance sheet of Circo Craft Co. Inc. as at
December 31, 1995, and the consolidated statements of earnings, retained
earnings and changes in financial position for each of the years in the two-year
period ended December 31, 1995. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 1995
and the results of its operations and the changes in its financial position for
each of the years in the two-year period ended December 31, 1995, in accordance
with generally accepted accounting principles in Canada.
Deloitte & Touche
Chartered Accountants
Montreal, Quebec
February 1, 1996
F-24
<PAGE> 133
CIRCO CRAFT CO. INC.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN CANADIAN DOLLARS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Current assets
Cash and short-term deposits.............................. 19,231 28,438
Accounts receivable....................................... 33,992 26,406
Inventories (note 2)...................................... 16,202 15,802
Prepaid expenses.......................................... 665 973
------- -------
Total current assets.............................. 70,090 71,619
Fixed assets (note 3)....................................... 58,874 63,106
------- -------
Total assets...................................... 128,964 134,725
======= =======
LIABILITIES
Current liabilities
Bank indebtedness (note 4(d) and (e))..................... 1,501 2,173
Accounts payable and accrued liabilities.................. 21,540 22,343
Income taxes.............................................. 3,369 1,977
Current portion of long-term debt (note 4)................ 3,623 3,217
------- -------
Total current liabilities......................... 30,033 29,710
Long-term debt (note 4)..................................... 10,874 12,173
Deferred income taxes....................................... 4,086 5,136
Non-controlling interest (notes 5 and 6(d))................. 2,286 --
------- -------
Total liabilities................................. 47,279 47,019
------- -------
SHAREHOLDERS' EQUITY
Capital stock (note 6)...................................... 37,776 41,823
Retained earnings........................................... 43,909 45,883
------- -------
Total shareholders' equity........................ 81,685 87,706
------- -------
Total liabilities and shareholders' equity........ 128,964 134,725
======= =======
</TABLE>
F-25
<PAGE> 134
CIRCO CRAFT CO. INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTH THREE MONTH
DECEMBER 31, PERIOD ENDED PERIOD ENDED
--------------- SEPTEMBER 30, MARCH 31,
1994 1995 1996 1996
------ ------ ------------- ------------
(THOUSANDS OF DOLLARS) (UNAUDITED)
<S> <C> <C> <C> <C>
Balance -- Beginning of period.................. 25,832 32,216 43,909 43,909
Net earnings for the period................... 6,384 11,693 1,974 1,409
------ ------ ------ ------
Balance -- End of period........................ 32,216 43,909 45,883 45,318
====== ====== ====== ======
</TABLE>
F-26
<PAGE> 135
CIRCO CRAFT CO. INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTH THREE MONTH
DECEMBER 31, PERIOD ENDED PERIOD ENDED
----------------- SEPTEMBER 30, MARCH 31,
1994 1995 1996 1996
------- ------- ------------- ------------
(THOUSANDS OF DOLLARS) (UNAUDITED)
<S> <C> <C> <C> <C>
Sales......................................... 151,825 185,156 129,633 41,357
Cost of sales including amortization of
deferred
start-up costs (1994 -- $2,416; 1995 and
1996 -- nil)............................. 124,929 148,788 101,532 33,611
------- ------- ------- ------
Operating margin.............................. 26,896 36,368 28,101 7,746
------- ------- ------- ------
Selling, general and administrative
expenses.................................... 10,079 11,087 7,969 2,445
------- ------- ------- ------
Other expenses (income)
Depreciation of fixed assets................ 7,160 7,931 8,456 2,509
Interest on long-term debt.................. 515 852 646 228
Interest income............................. (195) (915) (880) (284)
Expenses related to sale (note 14).......... -- -- 5,907 --
------- ------- ------- ------
7,480 7,868 14,129 2,453
------- ------- ------- ------
Earnings before income taxes and non-
controlling interest........................ 9,337 17,413 6,003 2,848
Provision for income taxes (note 8)........... 2,719 5,564 3,847 1,362
------- ------- ------- ------
Earnings before non-controlling interest...... 6,618 11,849 2,156 1,486
Non-controlling interest...................... 234 156 182 77
------- ------- ------- ------
Net earnings for the period................... 6,384 11,693 1,974 1,409
======= ======= ======= ======
</TABLE>
F-27
<PAGE> 136
CIRCO CRAFT CO. INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTH THREE MONTH
DECEMBER 31, PERIOD ENDED PERIOD ENDED
----------------- SEPTEMBER 30, MARCH 31,
1994 1995 1996 1996
------- ------- ------------- ------------
(THOUSANDS OF DOLLARS) (UNAUDITED)
<S> <C> <C> <C> <C>
Operating activities
Net earnings for the period................. 6,384 11,693 1,974 1,409
Non-cash items --
Depreciation of fixed assets........... 7,160 7,931 8,456 2,509
Amortization of deferred start-up
costs............................... 2,416 -- -- --
Deferred income taxes.................. (450) 800 1,050 --
Gain on sale of fixed assets........... (87) (397) (716) (554)
Non-controlling interest............... 234 156 182 77
------- ------- ------- ------
15,657 20,183 10,946 3,441
Cash provided by (used for) non-
cash operating working capital items..... (9,866) 3,964 7,191 2,463
------- ------- ------- ------
5,791 24,147 18,137 5,904
------- ------- ------- ------
Financing activities
Increase in long-term debt.................. 11,126 3,537 4,186 133
Repayment of long-term debt................. (2,523) (2,624) (3,187) (1,432)
Decrease in non-controlling interest........ (81) -- (2,608) --
Issue of common shares...................... 1 8,827 4,047 --
------- ------- ------- ------
8,523 9,740 2,438 (1,299)
------- ------- ------- ------
Investing activities
Acquisition of fixed assets................. (6,679) (23,764) (13,058) (4,461)
Proceeds from sale of fixed assets.......... 573 922 1,018 753
------- ------- ------- ------
(6,106) (22,842) (12,040) (3,708)
------- ------- ------- ------
Increase in cash.............................. 8,208 11,045 8,535 897
Cash -- beginning of period................... (1,523) 6,685 17,730 17,730
------- ------- ------- ------
Cash -- end of period......................... 6,685 17,730 26,265 18,627
======= ======= ======= ======
Represented by --
Cash and short-term deposits........... 7,202 19,231 28,438 19,586
Bank indebtedness...................... (517) (1,501) (2,173) (959)
------- ------- ------- ------
6,685 17,730 26,265 18,627
======= ======= ======= ======
</TABLE>
F-28
<PAGE> 137
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
1. ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada and include the following
significant accounting policies:
Principles of Consolidation
The consolidated financial statements include the accounts of the company
and its wholly-owned subsidiary, Circo Caribe Corporation ("Circo Caribe"). All
significant intercompany balances and transactions have been eliminated on
consolidation.
Inventories
Inventories are valued at the lower of cost and market. Cost is determined
using the first-in, first-out method for raw materials. The cost of work in
process inventories and finished goods includes the cost of raw materials,
direct labour and applicable manufacturing overhead, excluding depreciation.
Market is defined as replacement cost for raw materials, and as net realizable
value for work in process and finished goods.
Fixed Assets and Depreciation
Fixed assets are recorded at cost less applicable investment tax credits,
government grants and accumulated depreciation. Assets acquired under capital
leases are included in fixed assets. Depreciation is computed using the
straight-line method at the following annual rates:
<TABLE>
<S> <C>
Buildings................................................... 2 1/2%
Machinery and equipment..................................... 15% -- 33 1/3%
Leasehold improvements...................................... 10%
</TABLE>
Deferred Start-Up Costs
In conjunction with the out-of-court settlement described in note 7,
deferred start-up costs were fully amortized in 1994.
Foreign Currency
Foreign currency transactions and balances including those of Circo Caribe,
an integrated foreign subsidiary, are translated using the temporal method.
Under this method, monetary assets and liabilities are translated into Canadian
dollars at exchange rates in effect as at the balance sheet date and
non-monetary assets and liabilities at the exchange rates prevailing when the
assets were acquired and liabilities incurred. Sales and expenses, with the
exception of depreciation and amortization, are translated at average monthly
rates. Depreciation and amortization are translated at the rates used in the
translation of the relevant asset accounts. Translation gains and losses are
included in determining net earnings in the period in which the exchange rate
changes except for gains and losses on long-term debt, which are deferred and
amortized over the remaining life of the debt.
Income Taxes
The company follows the tax allocation method in providing for income
taxes. Deferred income taxes result primarily from the difference between
capital cost allowance claimed for income tax purposes and depreciation recorded
for accounting purposes.
F-29
<PAGE> 138
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
Interim Financial Presentation
The unaudited condensed consolidated statements of earnings, retained
earnings, and changes in financial position for the three months ended March 31,
1996, do not include all of the information required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included.
2. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Raw materials............................................... 7,467 7,164
Work in process............................................. 6,830 5,681
Finished goods.............................................. 1,905 2,957
------ ------
16,202 15,802
====== ======
</TABLE>
3. FIXED ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------
ACCUMULATED
COST DEPRECIATION NET
------- ------------ ------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Land........................................................ 1,127 -- 1,127
Buildings................................................... 24,562 6,534 18,028
Machinery and equipment..................................... 91,265 52,630 38,635
Leasehold improvements...................................... 637 120 517
Deposits on machinery and equipment......................... 567 -- 567
------- ------ ------
118,158 59,284 58,874
======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------------
ACCUMULATED
COST DEPRECIATION NET
------- ------------ ------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Land........................................................ 1,127 -- 1,127
Buildings................................................... 26,685 7,513 19,172
Machinery and equipment..................................... 99,408 57,884 41,524
Leasehold improvements...................................... 853 179 674
Deposits on machinery and equipment......................... 609 -- 609
------- ------ ------
128,682 65,576 63,106
======= ====== ======
</TABLE>
Machinery and equipment under capital leases had a cost of $8,664,000 and
accumulated depreciation of $1,532,000 as at September 30, 1996 (December 31,
1995 -- $8,000,000 and $1,762,000 respectively).
F-30
<PAGE> 139
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
4. LONG-TERM DEBT
(a) Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
CANADA
Term loan under the Canada-Quebec
Subsidiary Agreement on Industrial
Development, non-interest bearing,
repayable in five annual
installments beginning in December
2000............................... 2,962 4,068
Obligations under capital leases
bearing interest at rates varying
from 7.4% to 8.5% repayable in
monthly installments to November
2000............................... 1,789 2,674
Other................................. 675 1,307
PUERTO RICO
Term loan of U.S. $2,400,000 payable
in remaining quarterly installments
of U.S. $200,000, bearing interest
at 1 1/4% over the bank's cost of
"936" funds (8.25% as at September
30, 1996), as defined, through July
1999, collateralized by specific
fixed assets for an amount of Cdn.
$5,400,000......................... 4,095 3,272
Term loan of U.S. $1,646,000 payable
in fifty-nine monthly installments
of U.S. $21,000 plus interest at a
variable rate tied to LIBOR, as
defined (7.75% as at September 30,
1996), plus a balloon payment of
U.S. $771,000, due on April 2000,
collateralized by machinery and
equipment of the subsidiary........ 2,503 2,244
Obligations under capital leases of
U.S. $1,339,000, bearing interest
at rates varying from 7.70% to
7.98%, repayable in monthly
installments to September 1999..... 2,197 1,825
Other................................. 276 --
------ ------
14,497 15,390
Less: Current portion......... 3,623 3,217
------ ------
10,874 12,173
====== ======
</TABLE>
(b) The estimated fair value of the long-term debt, including the
obligations under capital leases, approximates $13,600,000 as at September 30,
1996, based on discounted cash flows using interest rates available to the
company for debts with similar terms and maturities.
F-31
<PAGE> 140
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
(c) Principal repayments over the next five twelve-month periods ending
September 30 are as follows:
<TABLE>
<CAPTION>
OBLIGATIONS
UNDER TERM LOAN
CAPITAL LEASES AND OTHER
-------------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
1997....................................................... 2,002 1,721
1998....................................................... 1,086 1,892
1999....................................................... 1,213 1,813
2000....................................................... 538 1,396
2001....................................................... 357 814
-----
Minimum lease payments..................................... 5,196
Less: Amount representing interest....................... 697
-----
4,499
Less: Current portion.................................... 1,496
-----
3,003
=====
</TABLE>
(d) Pursuant to an agreement with a chartered bank, the company has credit
facilities available up to $22,500,000. Under this agreement, the $7,500,000
operating loan which forms part of the credit facilities bears interest at the
prime rate. Also, a revolving term loan of $15,000,000 is for a two-year period
extendible annually for up to two additional one-year periods to be followed by
a reducing loan with a term of up to three years. The interest rate on the
revolving term loan is prime plus 1/4%. As at September 30, 1996, the company
has drawn $307,000 on the operating loan facility. Accounts receivable and
inventories have been pledged as collateral for these borrowings.
(e) Circo Caribe entered into a line of credit agreement with a financial
institution which provides borrowings up to a maximum of U.S. $2,000,000. The
interest rate is prime plus 1%. As at September 30, 1996, Circo Caribe has used
$1,369,000 of the line of credit. Accounts receivable and inventories of Circo
Caribe have been pledged as collateral for these borrowings.
5. NON-CONTROLLING INTEREST
The Economic Development Bank for Puerto Rico (EDB) subscribed to 150,000
Class A Preferred shares of Circo Caribe (EDB shares) for a total amount of U.S.
$1,500,000. The EDB shares have a par value of U.S. $10 per share and carry a
cumulative preferential annual dividend of 7.5% on the par value thereof,
payable on a semi-annual basis. EDB shares carry no voting rights.
6. CAPITAL STOCK
(a) As at September 30, 1996 and December 31, 1995, the authorized capital
stock consists of the following in an unlimited number:
First Preferred shares, without nominal or par value, issuable in
series
Second Preferred shares, without nominal or par value, issuable in
series
Common shares, without nominal or par value
The directors are responsible for defining the rights, privileges,
restrictions and conditions attached to each series of the First and Second
Preferred shares upon their issuance.
F-32
<PAGE> 141
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
(b) The issued and paid capital stock consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
16,069,300 (December 31, 1995 -- 15,435,200) common
shares................................................ 37,776 41,823
1,200,000 Second Preferred shares, Series A (note
6(c))................................................. -- --
156,000 Second Preferred shares, Series B (note 6(c))... -- --
2,556,000 Second Preferred shares, Series C (note
6(c))................................................. -- --
------ ------
37,776 41,823
====== ======
</TABLE>
(c) The company issued Second Preferred shares, Series A, B and C in
connection with the financial assistance amounting to $1,200,000 in 1986,
$78,000 in 1988, $78,000 in 1990, $852,000 in 1991, $852,000 in 1992 and
$852,000 in 1993, received from the Government of Quebec for costs incurred in
the installation of facilities. Such shares are non-voting and are entitled to
receive, as and when declared, an aggregate non-cumulative preferential dividend
of $1 and upon liquidation, to receive an aggregate amount of $1. The company
issued such shares for the purposes of such financial assistance and will
repurchase such shares at their issue price of $1 per share upon request of the
holder thereof if the majority of the common shares or more than half of the
assets of the company are transferred, within five years following the granting
of such financial assistance, to an enterprise whose head office is not located
in the Province of Quebec or to an individual who does not reside therein unless
prior approval is obtained from the holder of such Preferred shares. The
proceeds from these issues were deducted from the cost of certain fixed assets.
Subsequent to September 30, 1996, pursuant to an agreement with the
Government of Quebec, the company repurchased and cancelled all of the issued
Second Preferred shares, Series A, B and C for a total cash consideration of
$752,400. As at September 30, 1996, the company recorded a provision for the
share repurchase as an increase to the cost of certain fixed assets, which had
been previously reduced upon receiving the Government of Quebec grant.
(d) On September 28, 1996, the company issued 317,100 common shares to the
Economic Development Bank for Puerto Rico in exchange for the 150,000 Class A
Preferred shares it previously held in Circo Caribe. The value attributed to the
common shares issued corresponds to the redemption price of the shares of Circo
Caribe received, which was $2,044,950 (U.S. $1,500,000).
(e) In 1995, the company established a Key Employee Stock Option Plan (the
"Plan"). The maximum number of common shares that may be issued under the Plan
shall not exceed 1,250,000 common shares. In 1996, the company issued 317,000
common shares for a total cash consideration of $2,002,225 upon exercise of
options granted in 1995 and 1996 under this Plan. There were no outstanding
options as at September 30, 1996.
(f) In 1995, the company issued 1,349,799 common shares (201 in 1994) at a
price of $6.50 per share for the exercise of warrants.
(g) In 1994, under the terms of specific employment contracts, the company
granted options to two officers to purchase from treasury a maximum of 150,000
common shares. During 1995, 12,500
F-33
<PAGE> 142
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
options were exercised at a price of $4.24 per share. Following the resignation
of these officers in 1995, the balance of unvested options expired.
7. SALES
In January 1995, the company reached an out-of-court settlement with a
competitor for an amount of $10,528,000. This amount was received in January
1995 and was presented as other receivable as at December 31, 1994. Sales of
Circo Caribe in 1994 include an amount of $5,614,000 net of related expenses of
$4,914,000 in connection with the settlement.
8. INCOME TAXES
(a) The company's provision for income taxes includes the following:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTH
DECEMBER 31, PERIOD ENDED
-------------- SEPTEMBER 30,
1994 1995 1996
----- ----- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Current..................................................... 3,169 4,764 2,797
Deferred.................................................... (450) 800 1,050
----- ----- -----
2,719 5,564 3,847
===== ===== =====
</TABLE>
(b) The company's effective income tax rate is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
% % %
----- ----- -----
<S> <C> <C> <C>
Combined basic federal and provincial income tax rate....... 45.09 45.09 45.09
Increase (decrease) in income tax rate resulting from:
Active business income deduction.......................... (7.35) (7.35) (7.35)
Manufacturing and processing deduction.................... (7.00) (7.00) (7.00)
Non-deductible expenses................................... -- -- 12.82
Surtax.................................................... 0.84 1.07 1.12
Other..................................................... (1.58) 1.19 2.07
----- ----- -----
Combined Canadian rates..................................... 30.00 33.00 46.75
Unrecognized (recognized) income tax benefits of Circo
Caribe.................................................... (0.90) (1.05) 17.33
----- ----- -----
29.10 31.95 64.08
===== ===== =====
</TABLE>
(c) Circo Caribe obtained a fifteen-year tax exemption grant under the 1987
Puerto Rico Tax Incentives Act. The grant expires in December 2011 and provides
a 90% exemption on industrial development income and property taxes.
9. MAJOR CUSTOMERS
Approximately 26%, 19%, and 10%, respectively (1995 -- 19%, 15%, 14%, and
11%; 1994 -- 25%, 21%, and 13%) of the company's sales were to three unrelated
multinational corporations (four in 1995) which have multiple divisions
responsible for their own purchasing decisions.
F-34
<PAGE> 143
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
10. COMMITMENTS
Capital expenditures committed as at September 30, 1996 amount to
approximately $1,135,000 (December 31, 1995 -- $3,602,000; December 31,
1994 -- $2,012,000).
Circo Caribe leases its manufacturing facilities in Puerto Rico under an
operating lease with the Puerto Rico Industrial Development Corporation which
expires on December 31, 2002. Future lease payments will aggregate U.S.
$3,048,000, including the following amounts, over the next five years:
<TABLE>
<CAPTION>
(THOUSANDS OF
U.S. DOLLARS)
-------------
<S> <C>
1997.................................... 508
1998.................................... 508
1999.................................... 508
2000.................................... 508
2001.................................... 508
</TABLE>
11. BUSINESS AND GEOGRAPHIC SEGMENT
The company's operations are concentrated in the manufacturing of printed
circuits, with facilities located in Canada and Puerto Rico selling to a
diversified base of manufacturers in the telecommunications, computer,
automotive, and industrial electronics markets throughout North America.
Information concerning the company's business by geographic segment is as
follows:
<TABLE>
<CAPTION>
CANADA PUERTO RICO CONSOLIDATED
--------------------------------- ---------------------------------- ---------------------------------
YEAR ENDED NINE MONTH YEAR ENDED NINE MONTH YEAR ENDED NINE MONTH
DECEMBER 31, PERIOD ENDED DECEMBER 31, PERIOD ENDED DECEMBER 31, PERIOD ENDED
----------------- SEPTEMBER 30, ------------------ SEPTEMBER 30, ----------------- SEPTEMBER 30,
1994 1995 1996 1994 1995 1996 1994 1995 1996
------- ------- ------------- ------- ------- ------------- ------- ------- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales to external
customers........... 127,497 155,326 109,756 24,328(1) 29,830 19,877 151,825 185,156 129,633
======= ======= ======= ====== ====== ======= ======= ======= =======
Inter-segment sales.. -- -- 678 2,619 7,211 775 -- -- --
======= ======= ======= ====== ====== ======= ======= ======= =======
Earnings (loss)
before income taxes
and non-controlling
interest............ 9,032 16,859 8,228 305(2) 554 (2,225) 9,337 17,413 6,003
======= ======= ======= ====== ====== ======= ======= ======= =======
Identifiable
assets............ 74,613 109,623 116,735 26,700 19,341 17,990 101,313 128,964 134,725
======= ======= ======= ====== ====== ======= ======= ======= =======
</TABLE>
- ---------------
(1) Sales of 1994 include a net amount of $5,614,000 in connection with an
out-of-court settlement.
(2) In conjunction with the out-of-court settlement described in note 7,
deferred start-up costs were fully amortized in 1994. Amortization in 1994
amounted to $2,416,000.
Export sales amounted to approximately 66% (1995 and 1994 -- 73%) of the
company's total sales to external customers.
12. UNITED STATES ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP"). In certain
respects, Canadian GAAP differs from accounting principles generally accepted in
the United States ("U.S. GAAP").
F-35
<PAGE> 144
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
Net Earnings and Shareholders' Equity
(a) The following summary sets out the material adjustments to the
company's reported net earnings and shareholders' equity which would be made in
order to conform to U.S. GAAP:
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- -------------
1994 1995 1996
------- ------- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Net earnings for the period under Canadian GAAP..... 6,384 11,693 1,974
U.S. GAAP adjustments:
Contingent gain (note 12(b))...................... (8,984) 8,984 --
Start-up costs (note 12(c))....................... 2,416 -- --
Translation gains and losses (note 12(d))......... (138) 241 (103)
Income taxes (note 12(e))......................... (104) (515) 167
------- ------- ------
Net earnings (loss) for the period under U.S.
GAAP.............................................. (426) 20,403 2,038
======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
--------------- --------------- ---------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Shareholders' equity under Canadian
GAAP................................. 61,165 81,685 87,706
U.S. GAAP adjustments:
Contingent gain (note 12(b))......... (8,984) -- --
Translation gains and losses (note
12(d))............................ (138) 103 --
Income taxes (note 12(e))............ 61 (454) (287)
------- ------- ------
Shareholders' equity under U.S. GAAP... 52,104 81,334 87,419
======= ======= ======
</TABLE>
(b) Under Canadian GAAP in effect before April 1, 1996, contingent gains,
when confirmed, were treated as prior period adjustments and the effect of the
change was applied retroactively to the years to which they relate. Under U.S.
GAAP, contingent gains are recorded in the year the uncertainty as to the
likelihood or amount is resolved. Accordingly, the out-of-court settlement of
$10,528,000 described in note 7 would have been recorded in earnings in 1995
under U.S. GAAP net of related expenses of $1,544,000.
(c) Under Canadian GAAP, start-up costs can be deferred and amortized over
a reasonable period of time. Under U.S. GAAP, no start-up costs would have been
deferred and the $2,416,000 amortized in 1994 would have been expensed when
incurred, in 1993.
(d) Under Canadian GAAP, translation gains and losses arising on the
translation, at exchange rates prevailing at the balance sheet date, of
long-term debt denominated in foreign currency are deferred and amortized over
the remaining life of the related debt. Under U.S. GAAP, such gains and losses
are included in the statement of earnings in the period in which the exchange
rate changes.
(e) Under Canadian GAAP, the company follows the tax allocation method in
providing for income taxes while under U.S. GAAP the liability method would be
used. Under this method, deferred income taxes are calculated on the difference
between accounting and tax values of the assets and liabilities. The current tax
rate is used to calculate deferred income taxes at the balance sheet date.
Deferred tax assets arising from losses and temporary differences are subject to
a valuation allowance whenever it is more likely that the assets will not be
realized.
F-36
<PAGE> 145
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
(f) Under Canadian GAAP, share issue costs can be shown as a reduction of
retained earnings. Under U.S. GAAP, these costs must be shown as a reduction of
the capital stock. Accordingly, issue costs amounting to $772,000 incurred in
prior years would have been shown as a reduction of the capital stock under U.S.
GAAP.
(g) Under Canadian GAAP, costs of providing life insurance and health care
benefits to employees after retirement are recognized as incurred while under
U.S. GAAP these costs are accrued during the employees' years of active service.
This difference in GAAP would not result in a material change to the company's
consolidated financial statements.
Cash flows
(h) Under U.S. GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTH
DECEMBER 31, PERIOD ENDED
----------------- SEPTEMBER 30,
1994 1995 1996
------ ------- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Net cash provided by operating activities....... 5,653 24,388 18,034
Net cash provided by financing activities....... 5,737 9,300 1,222
Net cash used in investing activities........... (7,392) (21,790) (14,444)
------ ------- -------------
Net increase in cash............................ 3,998 11,898 4,812
------ ------- -------------
Cash at the end of the period................... 4,702 16,600 21,412
====== ======= =============
</TABLE>
(i) Canadian GAAP allows the disclosure of a subtotal of the amount of cash
provided by operating activities before cash provided by non-cash operating
working capital items. U.S. GAAP requires a statement of cash flows without
subtotal.
(j) Under U.S. GAAP, the definition of cash in the statement of cash flows
would exclude short-term deposits with original maturities of three months or
more and bank indebtedness which amounted to $8,000,000 and $3,147,000,
respectively as at September 30, 1996 (December 31, 1995 $3,500,000 and
$2,370,000, respectively; December 31, 1994 $2,500,000 and $517,000,
respectively). Under U.S. GAAP, changes in short-term deposits with original
maturities of three months or more would be disclosed as an investing activity
and changes in bank indebtedness would be disclosed as a financing activity.
(k) Machinery and equipment financed through capital leases are included as
financing and investing activities in the consolidated statement of changes in
financial position under Canadian GAAP but would be excluded from a statement of
cash flows under U.S. GAAP. New capital leases amounted to $2,096,000,
$2,052,000 and $1,214,000 for the nine-month period ended September 30, 1996 and
for the years ended December 31, 1995 and 1994 respectively.
F-37
<PAGE> 146
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
Other disclosure
(l) The disclosure of the following amounts is required under U.S. GAAP:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTH
DECEMBER 31, PERIOD ENDED
-------------- SEPTEMBER 30,
1994 1995 1996
----- ----- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Research and development expenses.................... 3,325 4,159 3,495
Payments under operating leases...................... 717 795 799
Payments under capital leases........................ 636 975 1,713
Interest paid........................................ 730 1,025 631
Income taxes paid.................................... 3,614 4,115 3,931
</TABLE>
(m) The company maintains defined contribution pension plans for certain
key employees. The plan allows for employee contributions for a maximum of
$11,500, subject to certain legal limitations, of which the company contributes
100%. Under both U.S. GAAP and Canadian GAAP, company contributions are expensed
when incurred. The company's contributions for the nine-month period ended
September 30, 1996 were $105,000 (years ended December 31, 1995 and 1994 $88,000
and $44,000 respectively).
(n) As at September 30, 1996, accounts receivable included short-term loans
to certain key employees of the company for the exercise of stock options
amounting to $1,987,000 which were entirely repaid in the following days.
(o) The company does not maintain a significant allowance for doubtful
accounts receivable because most of its accounts receivable are covered by an
insurance policy.
(p) As at September 30, 1996, Circo Caribe had net operating loss
carryforwards of approximately U.S. $5,400,000 which expire from 2000 to 2003.
Deferred income tax assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Tax benefit of net operating loss carryforwards......... 137 331
Less: Valuation allowance............................... (137) (331)
---- ----
-- --
==== ====
</TABLE>
13. CONVERSION OF CANADIAN GAAP AMOUNTS TO U.S. GAAP AMOUNTS IN U.S. DOLLARS
(UNAUDITED)
The following table sets forth in Canadian dollars the historical statement
of earnings of the company for the nine-month period ended September 30, 1996,
on a historical basis and adjusts the amounts to U.S. GAAP in Canadian dollars.
The Canadian dollar amounts are then translated to U.S. dollars based on a
translation rate of Canadian $1.36 = U.S.$1.00. Such amounts are shown
translated to U.S. dollars for convenience purposes only.
F-38
<PAGE> 147
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
Consolidated Statement of Earnings (unaudited)
<TABLE>
<CAPTION>
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996
---------------------------------------------------------------------------
CANADIAN U.S. GAAP TRANSLATION U.S. GAAP
GAAP ADJUSTMENTS U.S. GAAP RATE U.S. $
---------- ---------------- ------------ ----------- ---------
(EXPRESSED IN THOUSANDS OF CANADIAN DOLLARS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales................................... 129,633 -- 129,633 1.36 95,318
Cost of sales........................... 101,532 -- 101,532 1.36 74,656
------- ------- ------- -------
Operating margin........................ 28,101 -- 28,101 1.36 20,662
------- ------- ------- -------
Selling, general and administrative
expenses.............................. 7,969 103 8,072 1.36 5,935
------- ------- ------- -------
Other expenses (income)
Depreciation of fixed assets.......... 8,456 -- 8,456 1.36 6,218
Interest on long-term debt............ 646 -- 646 1.36 475
Interest income....................... (880) -- (880) 1.36 (647)
Expenses related to sale.............. 5,907 -- 5,907 1.36 4,343
------- ------- ------- -------
14,129 -- 14,129 1.36 10,389
------- ------- ------- -------
Earnings before income taxes and
non-controlling interest.............. 6,003 (103) 5,900 1.36 4,338
Provision for income taxes.............. 3,847 (167) 3,680 1.36 2,706
------- ------- ------- -------
Earnings before non-controlling
interest.............................. 2,156 64 2,220 1.36 1,632
Non-controlling interest................ 182 -- 182 1.36 134
------- ------- ------- -------
Net earnings for the period............. 1,974 64 2,038 1.36 1,498
======= ======= ======= =======
</TABLE>
14. SUBSEQUENT EVENT
On October 1, 1996, the company was acquired and, effective November 8,
1996, was amalgamated with its new parent company, HMTF Canada Acquisition Inc.
under the provisions of Part IA of the Companies Act (Quebec). Combined
operations have continued under the name of Circo Craft Co. Inc.
F-39
<PAGE> 148
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Lucent Technologies, Inc.
Berkeley Heights, New Jersey
and
The Board of Directors
Viasystems Group, Inc.
St. Louis, Missouri:
We have audited the accompanying statements of net assets sold to
Viasystems Technologies Corp. ("Viasystems Technologies") of the Interconnection
Business (the "Business") of the Microelectronics Group, Interconnection
Technologies Unit of Lucent Technologies Inc. ("Lucent") as of December 31, 1995
and November 30, 1996 and the statements of operations for each of the two years
ended December 31, 1995 and for the period January 1, 1996 through November 30,
1996. These statements are the responsibility of Lucent's management. Our
responsibility is to express an opinion on these 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 statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial statements. We
believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements were prepared to present the net
assets of the Business sold to Viasystems Technologies and the results of
operations of the Business pursuant to the acquisition agreement described in
Note 1, and are not intended to be a complete presentation of the Business'
financial position or cash flows.
In our opinion, the accompanying financial statements referred to above
present fairly, in all material respects, the net assets of the Business sold to
Viasystems Technologies as of December 31, 1995 and November 30, 1996 and the
statements of operations of the Business for each of the two years ended
December 31, 1995, and for the period January 1, 1996 through November 30, 1996,
sold pursuant to the acquisition agreement referred to in Note 1, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
St. Louis, Missouri
February 21, 1997
F-40
<PAGE> 149
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
STATEMENTS OF NET ASSETS SOLD
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, NOVEMBER 30,
1995 1996
------------ ------------
<S> <C> <C>
Inventories................................................. $ 37,172 $ 42,039
Property and equipment, net of accumulated depreciation and
amortization.............................................. 86,403 97,684
-------- --------
Total assets sold................................. 123,575 139,723
-------- --------
LIABILITIES
Current portion of capital lease obligations................ 3,523 4,200
Capital lease obligations................................... 8,075 10,235
-------- --------
Total liabilities assumed............................ 11,598 14,435
-------- --------
Net assets sold................................... $111,977 $125,288
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-41
<PAGE> 150
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
YEAR ENDED JANUARY 1, 1996 JANUARY 1, 1996
DECEMBER 31, THROUGH THROUGH
------------------- NOVEMBER 30, MARCH 31,
1994 1995 1996 1996
-------- -------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales................................ $310,559 $325,047 $325,102 $92,551
Operating expenses:
Cost of goods sold..................... 238,623 274,824 244,313 71,430
Selling, general and administrative.... 30,399 35,246 27,567 8,441
Research and development............... 12,531 7,199 7,225 2,038
Depreciation and amortization.......... 16,111 16,378 18,317 5,547
-------- -------- -------- -------
Operating income (loss)........ 12,895 (8,600) 27,680 5,095
-------- -------- -------- -------
Other income (expenses):
Other income........................... 75 94 228 114
Interest expense....................... (5) (204) (917) (28)
-------- -------- -------- -------
Income (loss) before income
taxes........................ 12,965 (8,710) 26,991 5,181
Provision (benefit) for income taxes..... 4,927 (3,310) 10,257 2,072
-------- -------- -------- -------
Net income (loss).............. $ 8,038 $ (5,400) $ 16,734 $ 3,109
======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-42
<PAGE> 151
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. BACKGROUND AND BASIS OF PRESENTATION:
Pursuant to an Acquisition Agreement (the "Agreement") dated November 26,
1996, between Viasystems Technologies Corp. ("Viasystems Technologies"), a
wholly owned subsidiary of Viasystems Group, Inc., and Lucent Technologies, Inc.
("Lucent"), Viasystems Technologies agreed to acquire certain assets and assume
certain liabilities from the Microelectronics Group, Interconnection
Technologies Unit (the "Business") of Lucent in exchange for consideration
totaling $200,000. The Business designs, manufactures and markets printed
circuit boards, backpanels and related products and components for the
telecommunications and computer-related markets. The effective date of the
Agreement is December 1, 1996.
The Business' financial statements are derived from the historical books
and records of the Microelectronics Group, Interconnection Technologies Unit of
Lucent and present assets sold and liabilities assumed and the results of
operations of the Business related to the acquisition by Viasystems
Technologies. The historical operating results may not be indicative of the
results after the acquisition by Viasystems Technologies.
The Business' financial statements include allocations of certain expenses
that have historically been accounted for by Lucent based on allocation methods
that depend on the nature of the account. For those costs that are labor
intensive, such as research and development, allocations are made based on
forecasted head count percentages. Most other costs are allocated based on
forecasted sales. Many of the marketing and sales costs are negotiated each year
between the department providing the service and the individual business unit.
The percentage of the negotiated cost of the business unit to the total
negotiated cost for that service is applied to the actual cost each month and
allocated to the individual business units. A portion of the operating expenses
are incurred at the Richmond Works location, particularly product management,
transportation and local research and development. These expenses are allocated
to the Business using estimates calculated by the department's manager. Some
transportation expense is based on specific service contracts when they can be
identified.
Allocated expenses include certain direct and indirect selling, marketing,
and research and development costs from the Microelectronics Group and services
from Lucent. Services from Lucent represent the allocated costs for services
such as employee benefits, human resources, labor relations, corporate tax and
business planning and overhead expenses, public relations, legal services,
environmental management, data processing and training.
Lucent's management believes that these allocations are based on
assumptions that are reasonable under the circumstances. However, these
allocations are not necessarily indicative of the costs and expenses that would
have resulted if the Business had been operated as a separate entity.
F-43
<PAGE> 152
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
The allocations and other components of cost of sales and selling, general
and administrative expenses are as follows:
<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM JANUARY 1,
YEAR ENDED JANUARY 1, 1996 1996
DECEMBER 31, THROUGH THROUGH
------------------- NOVEMBER 30, MARCH 31,
1994 1995 1996 1996
-------- -------- --------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Allocated cost of sales...................... $ 8,019 $ 8,878 $ 6,004 $ 2,189
Other cost of sales.......................... 230,604 265,946 238,309 69,241
-------- -------- -------- -------
$238,623 $274,824 $244,313 71,430
======== ======== ======== =======
Allocated selling expense.................... $ 4,477 $ 6,226 $ 3,494 $ 1,077
Other selling expense........................ 3,312 3,823 2,472 844
Allocated general and administrative......... 12,373 14,187 8,706 2,759
Other general and administrative............. 10,237 11,010 12,895 3,761
-------- -------- -------- -------
$ 30,399 $ 35,246 $ 27,567 8,441
======== ======== ======== =======
Allocated research and development........... $ 2,176 $ -- $ -- $ --
Other research and development............... 10,355 7,199 7,225 2,038
-------- -------- -------- -------
$ 12,531 $ 7,199 $ 7,225 $ 2,038
======== ======== ======== =======
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the report period. Actual results could differ from those estimates.
B. REVENUE RECOGNITION: Sales and related costs of goods sold are included
in income when goods are shipped to the customer.
C. INVENTORIES: Inventories are stated at the lower of cost or market. Cost
is determined on a first-in, first-out method (FIFO).
D. PROPERTY AND EQUIPMENT: The Business' investment in property and
equipment is stated at cost. Depreciation is calculated on a double-declining
method over the estimated useful lives of the assets. Property and equipment are
written off of the books and records when fully depreciated. Maintenance and
repair expenditures are charged to operations and cost of major renewals and
improvements are capitalized. Gains or losses on sales and retirements are
reflected in income.
E. INCOME TAXES: The Business is not a separate taxable entity for federal,
state, or local income tax purposes. The Business' operations are included in
the consolidated Lucent tax returns. Lucent has historically allocated income
taxes to the Business using an assumed statutory tax rate in effect without
consideration to segregating current and deferred income taxes. In addition, the
statutory tax rate has not been reduced for research and development or other
tax credits, if any, as these amounts cannot be separately determined for the
Business. Accordingly, the provision for income taxes is based on an assumed
combined federal and state statutory rate of 38% for each year presented, but
current and deferred portions of the provision have not been determined.
F-44
<PAGE> 153
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
F. RESEARCH AND DEVELOPMENT COSTS: Research and development costs are
charged to expense when incurred.
G. INTERIM FINANCIAL PRESENTATION: The unaudited condensed statements of
net assets sold and operations as of and for the three months ended March 31,
1996, do not include all of the information required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included.
3. INVENTORIES:
The components of inventories are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, NOVEMBER 30,
1995 1996
------------ ------------
<S> <C> <C>
Finished goods.............................................. $14,890 $19,020
Work-in-process and raw materials........................... 22,282 23,019
------- -------
$37,172 $42,039
======= =======
</TABLE>
4. PROPERTY AND EQUIPMENT:
The major classes of property and equipment are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, NOVEMBER 30,
1995 1996
------------ ------------
<S> <C> <C>
Land and improvements....................................... $ 4,219 $ 4,219
Buildings and improvements.................................. 40,247 40,429
Equipment................................................... 155,960 159,776
Tools, furniture and fixtures............................... 9,248 9,308
Leased equipment............................................ 12,366 18,390
-------- --------
222,040 232,122
Less accumulated depreciation and amortization.............. 147,331 147,408
-------- --------
74,709 84,714
Construction in progress.................................... 11,694 12,970
-------- --------
$ 86,403 $ 97,684
======== ========
</TABLE>
F-45
<PAGE> 154
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
5. CAPITAL LEASE OBLIGATION:
The Business entered into various equipment leases under an arrangement
which is accounted for as a capital lease. At December 31, 1995 and November 30
1996, the Business recorded equipment totaling $12,366 and $18,390,
respectively, acquired under capital leases. Accumulated amortization on such
equipment at December 31, 1995 and November 30, 1996 totaled $882 and $3,660,
respectively. Minimum future rental payments under all capital leases as of
December 1, 1996, are as follows:
<TABLE>
<S> <C>
1996 (one month)............................................ $ 423
1997........................................................ 5,077
1998........................................................ 4,917
1999........................................................ 4,314
2000........................................................ 1,479
-------
Total minimum lease payments...................... 16,210
Less -- Imputed interest.................................... (1,775)
-------
Present value of minimum lease payments............ 14,435
Current portion of obligations under capital leases......... 4,200
-------
$10,235
=======
</TABLE>
6. TRANSACTIONS WITH AFFILIATES:
The Business through the normal course of business, conducts transactions
with Lucent and its affiliates. In addition to the various allocated costs and
expenses described in Note 1, the majority of the Business' net sales is with
Lucent affiliated entities.
The Business' sales to Lucent and its affiliates were $277,288, $282,971
and $295,189 for the years ended December 31, 1994 and 1995, and for the period
January 1, 1996 through November 30, 1996, respectively.
The cost of sales related to the sales to Lucent and its affiliates were
$213,397, $239,624 and $232,276 for the years ended 1994 and 1995, and for the
period January 1, 1996 through November 30, 1996, respectively.
The Business purchases electric and electronic converters from Lucent's
affiliated entity, which was sold to Berg Electronics Corp. on May 22, 1994. The
Business's purchases were $9,713 for the period January 1, 1994 through May 22,
1994.
Receipts, disbursements and the net cash position of the Business have been
managed by the Microelectronics Group through a centralized treasury system.
Accordingly, both cash generated by and cash requirements of the Business flow
through the Microelectronics Group. There is no direct interest cost allocation
to the Business with respect to borrowings, if any, and, accordingly, the
Statements of Operations do not include any financing costs.
7. EMPLOYEE BENEFIT PLANS:
A. PENSION PLANS: The Business participates in noncontributory defined
benefit plans sponsored by Lucent covering substantially all employees. Benefits
for management employees are principally based on career average pay. Benefits
for occupational employees are not directly pay-
F-46
<PAGE> 155
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
related. Information required pursuant to SFAS No. 87, Employer's Accounting for
Pensions, including the funded status of the plans is not available for the
Business as a separate entity.
Pension contributions are principally determined using the aggregate cost
method and are primarily made to trust funds held for the sole benefit of plan
participants. Pension cost is computed using the projected unit credit method
and an assumed long-term rate of return on plan assets of 9% in 1994, 1995 and
1996, respectively.
Based on the latest actuarial valuations of the Lucent plans, the fair
value of the net assets available for plan benefits exceeds the projected
benefit obligation at December 31, 1995. The projected benefit obligation was
determined using weighted average discount rates of 7% for December 31, 1995,
and an assumed rate of increase in future compensation levels of 5%. Plan assets
consist primarily of listed stocks (including Lucent common stock), corporate
and governmental debt, real estate investments, and cash and cash equivalents.
B. SAVINGS PLANS: The Business participates in savings plans sponsored by
Lucent covering the majority of employees. The plans allow employees to
contribute a portion of their pre-tax and/or after-tax income in accordance with
specified guidelines. Lucent matches a percentage of the employee contributions
up to certain limits.
C. POSTRETIREMENT BENEFIT PLANS: The Business participates in benefit plans
for retirees, which include health care benefits, life insurance coverage and
telephone concessions sponsored by Lucent. Lucent adopted SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other than Pensions, effective
January 1, 1993. This Standard requires that estimated future retiree benefits
be accrued for during the years the employees are working and accumulating these
benefits. Information required pursuant to SFAS No. 106, including the net
periodic postretirement benefit cost and information on the funded status of the
plan, is not available for the Business as a separate entity.
At December 31, 1995 the accumulated postretirement benefit obligation,
exceeded the plan assets at fair value. The postretirement benefit obligation
was determined using a weighted average discount rate of 7.0%, an expected
long-term rate of return on plan assets of 9.0% and assumed a rate of increase
in the per capita cost of covered healthcare benefits of 6.1%.
Plan assets consist primarily of listed stocks, corporate and governmental
debt, cash and cash equivalents and life insurance contracts.
The costs of these plans were allocated to the Business on the basis of
salaries, the majority of which are included in cost of sales. Benefit costs
included in cost of sales were approximately $6,600, $7,300 and $6,200 for the
years ended December 31, 1994 and 1995, and for the period January 1, 1996
through November 30, 1996, respectively.
8. COMMITMENTS:
In conjunction with the Agreement, Lucent and Viasystems Technologies have
entered into certain contractual arrangements whereby Lucent has agreed to
provide to Viasystems Technologies manufacturing, labor and support services.
Lucent and Viasystems Technologies have also entered into a supply agreement
effective through December 31, 2001, which shall extend through December 31,
2003 in the event Viasystems Technologies has in all material respects satisfied
the Performance Metrics (as defined) of the supply agreement. Such agreement
shall continue thereafter until terminated by either party upon eighteen months
prior written notice.
F-47
<PAGE> 156
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of Forward Group PLC
We have audited the accompanying consolidated balance sheets of Forward
Group PLC and its subsidiaries at 31 January 1996 and 1997 and the related
consolidated profit and loss accounts and cash flow statements for each of the
years in the three-year period ended 31 January 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom and the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes assessing the 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 aforementioned consolidated financial statements
present fairly, in all material respects, the financial position of Forward
Group PLC and its subsidiaries at 31 January 1996 and 1997 and the results of
their operations and their cash flows for each of the years in the three-year
period ended 31 January 1997 in conformity with generally accepted accounting
principles in the United Kingdom.
Generally accepted accounting principles in the United Kingdom vary in
certain significant respects from generally accepted accounting principles in
the United States of America. Application of generally accepted accounting
principles in the United States of America would have affected the profit for
the financial year for each of the years in the three-year period ended 31
January 1997 and equity shareholders' funds at 31 January 1996 and 1997 to the
extent summarised in Note 25 to the consolidated financial statements.
KPMG Audit Plc
Chartered Accountants
Birmingham, England
7 April 1997
F-48
<PAGE> 157
FORWARD GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED 31 JANUARY ENDED 31 MARCH
------------------------- ---------------
1995 1996 1997 1996 1997
NOTE (L000) (L000) (L000) (L000) (L000)
---- ------ ------ ------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Turnover
Continuing operations................................. 2 21,471 66,839 97,001 25,907 25,287
Acquisitions.......................................... 2 -- -- 8,028 -- --
Discontinued operations............................... 2 2,348 -- -- -- --
------ ------ ------- ------ ------
23,819 66,839 105,029 25,907 25,287
------ ------ ------- ------ ------
Operating profit
Continuing operations................................. 3 2,154 7,976 8,079 4,027 2,853
Acquisitions.......................................... 3 -- -- 1,022 -- --
Discontinued operations............................... 3 291 -- -- -- --
------ ------ ------- ------ ------
2,445 7,976 9,101 4,027 2,853
Profit on disposal of discontinued operations......... 11 1,503 -- -- -- --
Expenses related to sale.............................. -- -- -- -- (1,318)
Net interest payable.................................. 5 (228) (412) (996) (159) (381)
------ ------ ------- ------ ------
Profit on ordinary activities before taxation........... 6 3,720 7,564 8,105 3,868 1,154
Tax on profit on ordinary activities.................... 8 (744) (2,641) (2,707) (1,276) (833)
------ ------ ------- ------ ------
Profit for the financial period......................... 2,976 4,923 5,398 2,592 321
Dividends............................................... 9 (494) (1,089) (552) -- --
------ ------ ------- ------ ------
Retained profit for the financial period................ 18 2,482 3,834 4,846 2,592 321
====== ====== ======= ====== ======
</TABLE>
The results on a historical cost basis are not materially different to
those reported above.
A reconciliation of the movement in shareholders' funds is shown in note
19.
F-49
<PAGE> 158
FORWARD GROUP PLC
CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED 31 JANUARY ENDED 31 MARCH
------------------------ ---------------
1995 1996 1997 1996 1997
(L000) (L000) (L000) (L000) (L000)
------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Profit for the financial year....................... 2,976 4,923 5,398 2,592 321
Currency translation adjustment..................... -- -- (22) -- 5
----- ----- ----- ----- ---
2,976 4,923 5,376 2,592 326
===== ===== ===== ===== ===
</TABLE>
F-50
<PAGE> 159
FORWARD GROUP PLC
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
31 JANUARY
------------------ 31 MARCH
1996 1997 1997
NOTE (L000) (L000) (L000)
---- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Fixed assets
Tangible assets................................. 10 27,028 36,407 36,707
Current assets
Stocks.......................................... 12 5,476 6,586 7,285
Debtors......................................... 13 17,831 17,289 19,729
Cash at bank and in hand........................ 789 -- --
------- ------- -------
24,096 23,875 27,014
Creditors: amounts falling due within one year.... 14 (22,198) (26,949) (30,624)
------- ------- -------
Net current assets/(liabilities).................. 1,898 (3,074) (3,610)
------- ------- -------
Total assets less current liabilities............. 28,926 33,333 33,097
Creditors: amounts falling due after more than one
year............................................ 15 (5,698) (6,574) (6,417)
Provisions for liabilities and charges............ 16 (2,723) (2,616) (2,616)
------- ------- -------
Net assets........................................ 20,505 24,143 24,064
======= ======= =======
Capital and reserves
Called up share capital......................... 17 679 2,754 2,762
Shares to be issued............................. 17 3 -- --
Share premium account........................... 18 8,840 6,837 6,908
Merger reserve.................................. 18 65 -- --
Revaluation reserve............................. 18 578 566 564
Profit and loss account......................... 18 10,340 13,986 13,830
------- ------- -------
Equity shareholders' funds........................ 20,505 24,143 24,064
======= ======= =======
</TABLE>
F-51
<PAGE> 160
FORWARD GROUP PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED 31 JANUARY 31 MARCH
---------------------------- ------------------
1995 1996 1997 1996 1997
NOTE (L000) (L000) (L000) (L000) (L000)
---- ------ ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net cash inflow from operating
activities..................... 20a 2,722 10,667 18,561 3,402 3,173
Returns on investments and
servicing of finance
Interest received.............. 4 61 85 20 8
Interest paid.................. (257) (464) (1,018) (167) (332)
Dividends paid................. (453) (722) (1,207) (435) (552)
------ ------- ------- ------- -------
Net cash outflow from returns on
investments and servicing of
finance........................ (706) (1,125) (2,140) (582) (876)
UK tax paid...................... (568) (1,670) (3,633) -- (162)
Investing activities
Purchase of tangible fixed
assets...................... 20f (2,120) (4,153) (7,624) (2,280) (488)
Acquisition of businesses (net
of cash and cash equivalents
acquired)................... 20d -- (8,191) (9,184) (2,757) --
Sale of tangible fixed
assets...................... 151 299 435 -- --
Disposal of business (net of
cash and cash equivalents
disposed of)................ 20e 2,490 -- -- -- --
------ ------- ------- ------- -------
Net cash inflow/(outflow) from
investing activities........... 521 (12,045) (16,373) (5,037) (488)
------ ------- ------- ------- -------
Net cash inflow/(outflow) before
financing...................... 1,969 (4,173) (3,585) (2,217) 1,647
Financing
Issue of Ordinary share
capital..................... 10 7,550 92 -- 78
Capitalisation issue
expenses.................... -- -- (24) -- --
Repayment of bank loan......... -- (790) (720) (180) (180)
Capital element of hire
purchase and finance lease
payments.................... (669) (1,170) (2,393) (431) (734)
Payment of contingent
consideration............... (220) -- -- -- --
------ ------- ------- ------- -------
Net cash (outflow)/inflow from
financing...................... 20b (879) 5,590 (3,045) (611) (836)
------ ------- ------- ------- -------
Net increase/(decrease) in cash
and cash equivalents........... 20c 1,090 1,417 (6,630) (2,828) 811
====== ======= ======= ======= =======
</TABLE>
F-52
<PAGE> 161
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN BRITISH POUNDS STERLING)
1. GENERAL
As used in the consolidated financial statements and related notes, the
term "Company" refers to Forward Group PLC and the term "Group" refers to
Forward Group PLC and its subsidiary undertakings as set out in note 24.
PRINCIPAL ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the consolidated
financial statements of Forward Group PLC:
Basis of preparation
The consolidated financial statements have been prepared under the
historical cost convention, modified to include the revaluation of certain
freehold property, and in accordance with applicable Accounting Standards.
Basis of consolidation
The consolidated financial statements incorporate the financial statements
of Forward Group PLC and all of its subsidiary undertakings made up to 31
January 1997. The results of companies or businesses acquired or disposed of
during the year are included from the date of acquisition or up to the date of
disposal. Internal sales and profits are eliminated on consolidation. Goodwill
arising on acquisitions is written off directly against reserves on acquisition.
Goodwill previously written off to reserves in respect of businesses disposed of
during the year is included in the calculation of any profit or loss on sale.
Government revenue grants
Government revenue grants are recognised in the profit and loss account in
the period during which the expenditure to which they relate is incurred.
Stocks and work in progress
Stocks and work in progress are valued on a first in, first out basis at
the lower of cost and net realisable value. Cost comprises materials, labour and
an appropriate proportion of production overheads.
Depreciation
Depreciation is provided so as to write off the cost or valuation,
including commissioning costs, of tangible fixed assets to their estimated
residual value on a straight line basis, at the following annual rates:
<TABLE>
<S> <C>
Freehold buildings.......................................... 2.5%
Plant and machinery......................................... 10% -- 20%
Fixtures, fittings, tools and equipment..................... 10% -- 25%
Motor vehicles.............................................. 25%
</TABLE>
Freehold land is not depreciated.
F-53
<PAGE> 162
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Research and development
Expenditure on research and development is expensed in the year in which it
is incurred.
Deferred taxation
Deferred taxation is provided using the liability method in respect of the
taxation effect of all timing differences to the extent that it is probable that
liabilities will crystallise or assets be realised in the foreseeable future.
Hire purchase and leased assets
Assets held under hire purchase or finance lease contracts are capitalised
and included in tangible fixed assets at their fair value. Each asset is
depreciated over the shorter of the contract term or its estimated useful life.
Obligations relating to such contracts, net of finance charges in respect of
future periods, are included as appropriate under creditors. Finance charges are
allocated to accounting periods over the period of the lease to produce a
constant rate of return on the outstanding balance. Rentals under operating
leases are charged to the profit and loss account on a straight-line basis over
the life of the lease.
Pensions
The Group operates both a defined contribution pension scheme and a defined
benefit pension scheme. The Group's contributions to the defined contribution
scheme are charged against profits on an accruals basis in the year to which
they relate. Contributions to the defined benefit scheme are charged against
profits so as to spread the cost of pensions over employees' working lives. The
funds of both schemes are administered by trustees and are independent of the
Group's finances.
Foreign exchange
Transactions denominated in foreign currencies are translated at the rate
of exchange ruling on the day the transaction occurs or at the contracted rate
if the transaction is covered by a forward exchange contract.
Foreign currency monetary assets and liabilities in the balance sheet are
translated into sterling at the rates of exchange ruling at the end of the year
or, if appropriate, at the forward contract rate. Any resulting exchange gains
or losses are taken to the profit and loss account.
The assets and liabilities of overseas subsidiary undertakings are
translated at the closing exchange rate. The profit and loss accounts of those
undertakings are translated using the average rate of exchange during the year.
Net exchange differences arising on translation are taken to reserves.
F-54
<PAGE> 163
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
2. SEGMENTAL ANALYSIS
Turnover is analysed by geographical destination as follows:
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ -------
<S> <C> <C> <C>
United Kingdom........................................ 22,569 40,263 55,848
Rest of Europe........................................ 1,250 25,200 42,364
Rest of the world..................................... -- 1,376 6,817
------ ------ -------
23,819 66,839 105,029
====== ====== =======
</TABLE>
The Group's turnover, profit before taxation and net assets now relate to
only one business segment. In 1995 the amounts shown in the consolidated profit
and loss account as discontinued operations for turnover and operating profit
related to a former specialist chemicals division.
In the opinion of the Directors an analysis of turnover, profit before
taxation and net assets by geographical area of operation would be seriously
prejudicial to the interests of the Group and therefore as permitted under
SSAP25 no disclosure is made.
3. OPERATING PROFIT
<TABLE>
<CAPTION>
CONTINUING DISCONTINUED
OPERATIONS OPERATIONS TOTAL
1995 (L000) (L000) (L000)
---- ---------- ------------ -------
<S> <C> <C> <C>
Turnover.......................................... 21,471 2,348 23,819
Cost of sales..................................... (16,907) (1,112) (18,019)
------- ------ -------
Gross profit...................................... 4,564 1,236 5,800
Selling, general and administrative expenses...... (2,462) (945) (3,407)
Other income...................................... 52 -- 52
------- ------ -------
Operating profit.................................. 2,154 291 2,445
======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
CONTINUING
OPERATIONS
1996 (L000)
---- ----------
<S> <C>
Turnover.................................................... 66,839
Cost of sales............................................... (52,251)
-------
Gross profit................................................ 14,588
Selling, general and administrative expenses................ (6,725)
Other income................................................ 113
-------
Operating profit............................................ 7,976
=======
</TABLE>
<TABLE>
<CAPTION>
CONTINUING
OPERATIONS ACQUISITIONS TOTAL
1997 (L000) (L000) (L000)
---- ---------- ------------ -------
<S> <C> <C> <C>
Turnover......................................... 97,001 8,028 105,029
Cost of sales.................................... (78,339) (5,916) (84,255)
------- ------ -------
Gross profit..................................... 18,662 2,112 20,774
Selling, general and administrative expenses..... (10,780) (1,122) (11,902)
Other income..................................... 197 32 229
------- ------ -------
Operating profit................................. 8,079 1,022 9,101
======= ====== =======
</TABLE>
F-55
<PAGE> 164
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Included in the above for 1997 are the following exceptional charges
relating to the restructuring of continuing operations and acquired businesses:
<TABLE>
<CAPTION>
CONTINUING
OPERATIONS ACQUISITIONS TOTAL
(L000) (L000) (L000)
---------- ------------ ------
<S> <C> <C> <C>
Cost of sales........................................ 546 433 979
Selling, general and administrative expenses......... 168 97 265
--- --- -----
714 530 1,244
=== === =====
</TABLE>
Acquisitions in 1997 comprise the former GEC-Marconi hybrid business,
Manchester Circuits Limited and TI Technologies (Pty) Limited.
Discontinued operations comprise the specialist chemicals business disposed
of on 16 December 1994.
4. STAFF NUMBERS AND COSTS
The average number of persons employed by the Group (including executive
Directors) during the year, analysed by category, was as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ----- -----
<S> <C> <C> <C>
Sales....................................................... 22 32 51
Administration.............................................. 38 49 80
Production.................................................. 398 933 1,642
--- ----- -----
458 1,014 1,773
=== ===== =====
Employees at end of year.................................... 435 1,454 1,874
--- ----- -----
</TABLE>
The aggregate payroll costs of these persons were as follows:
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ ------
<S> <C> <C> <C>
Wages and salaries....................................... 6,647 18,215 30,503
Social security costs.................................... 662 1,755 2,916
Other pension costs...................................... 212 745 1,239
----- ------ ------
7,521 20,715 34,658
===== ====== ======
</TABLE>
5. NET INTEREST PAYABLE
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ ------
<S> <C> <C> <C>
Bank loan and overdrafts................................... 152 216 609
Hire purchase and finance lease contracts.................. 80 257 472
--- --- -----
Interest payable and similar charges....................... 232 473 1,081
Interest receivable and similar income..................... (4) (61) (85)
--- --- -----
228 412 996
=== === =====
</TABLE>
F-56
<PAGE> 165
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
6. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit on ordinary activities before taxation is stated after
charging/(crediting):
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ ------
<S> <C> <C> <C>
Directors' emoluments (see note 7):
As Directors............................................. 35 33 86
Remuneration as executives............................... 222 333 333
--- --- ---
257 366 419
Compensation for loss of office.......................... -- 81 --
Grants receivable.......................................... (15) (21) (19)
Property rental income..................................... (37) (88) (87)
Auditors' remuneration..................................... 40 75 84
Research and development expenditure....................... 245 507 764
Payments under operating leases:
Plant and equipment...................................... 22 113 245
Other assets............................................. 210 187 324
=== === ===
</TABLE>
In addition, KPMG Audit Plc and its associates received L97,000 (1996:
L91,000; 1995: L22,000) in respect of other services provided during the year.
7. DIRECTORS' EMOLUMENTS
(a) Remuneration
The emoluments of the Chairman, excluding pension contributions, were
L97,000 (1996: L95,000; 1995: L74,000). The emoluments of the highest paid
Director, excluding pension contributions, were L136,000. In 1995 and 1996 the
Chairman was also the highest paid director.
The emoluments of the Directors, excluding pension contributions, were
within the following ranges:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
L5,001 - L10,000.................................. -- 1 --
L10,001 - L15,000.................................. -- 2 --
L15,001 - L20,000.................................. 2 -- 1
L20,001 - L25,000.................................. -- -- 1
L25,001 - L30,000.................................. -- 2 --
L40,001 - L45,000.................................. -- -- 1
L55,001 - L60,000.................................. 1 -- --
L60,001 - L65,000.................................. 1 -- --
L70,001 - L75,000.................................. 1 1 --
L75,001 - L80,000.................................. -- 1 --
L95,001 - L100,000................................. -- 1 1
L100,001 - L105,000................................. -- -- 1
L135,001 - L140,000................................. -- -- 1
== == ==
</TABLE>
F-57
<PAGE> 166
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
(b) Share options over Ordinary shares
<TABLE>
<CAPTION>
AT NUMBER OF OPTIONS AT
1 FEBRUARY -------------------- 31 JANUARY EXERCISE NORMAL
1996 GRANTED EXERCISED 1997 PRICE EXERCISE PERIOD
----------- ------- --------- ----------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C>
DA Bumpsteed......... 100,000 -- -- 100,000 88.75p 06.07.98 - 05.07.05
=======
MJ Glanfield......... 80,000 -- (80,000) -- 56.25p 31.05.96 - 30.05.03
20,000 -- -- 20,000 61.75p 24.02.98 - 23.02.05
-- 20,000 -- 20,000 180p 13.02.99 - 12.02.06
-------
40,000
=======
</TABLE>
The figures shown as at 1 February 1996 have been restated to reflect the 3
for 1 capitalisation issue.
The closing price of the Company's Ordinary shares on the London Stock
Exchange on 31 January 1997 was 171.5p. The range during the period was 103.5p
to 289.5p.
8. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ ------
<S> <C> <C> <C>
The charge for taxation all arises in
the UK and comprises:
Corporation tax on profit for the year
at 33% (1996: 33%; 1995: 33%)......... 603 2,486 2,556
Deferred taxation....................... 141 202 439
Prior year adjustments in respect of:
Corporation tax....................... -- (111) (281)
Deferred taxation..................... -- 64 (7)
--- ------ ------
744 2,641 2,707
=== ====== ======
</TABLE>
The 1997 current year charge includes the effect of tax losses which have
not been relieved.
In 1995 no tax charge arose on the sale of the specialist chemicals
business.
9. DIVIDENDS
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ ------
<S> <C> <C> <C>
Interim dividend paid................... 206 434 552
Proposed final dividend................. 288 655 --
--- ------ ---
494 1,089 552
=== ====== ===
</TABLE>
F-58
<PAGE> 167
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
10. TANGIBLE ASSETS
<TABLE>
<CAPTION>
FREEHOLD LAND AND
BUILDINGS FIXTURES,
------------------ PLANT FITTINGS,
AT AT AND TOOLS AND MOTOR
VALUATION COST MACHINERY EQUIPMENT VEHICLES TOTAL
(L000) (L000) (L000) (L000) (L000) (L000)
--------- ------ --------- --------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Cost or valuation
At beginning of year.................. 1,400 5,277 26,594 1,347 717 35,335
Additions............................. -- 890 9,430 1,130 391 11,841
Transfers............................. -- -- 295 (315) 20 --
Acquisitions of businesses............ -- 710 1,644 84 85 2,523
Disposals............................. -- (4) (279) (108) (322) (713)
Translation adjustment................ -- -- (18) (1) -- (19)
----- ------ ------ ----- ---- ------
At end of year........................ 1,400 6,873 37,666 2,137 891 48,967
===== ====== ====== ===== ==== ======
Depreciation
At beginning of year.................. 195 247 7,073 540 252 8,307
Charged in year....................... 32 128 4,086 237 211 4,694
Transfers............................. -- -- 68 (68) -- --
Disposals............................. -- (1) (238) (25) (183) (447)
Translation adjustment................ -- -- 5 1 -- 6
----- ------ ------ ----- ---- ------
At end of year........................ 227 374 10,994 685 280 12,560
----- ------ ------ ----- ---- ------
Net book value
At end of year........................ 1,173 6,499 26,672 1,452 611 36,407
===== ====== ====== ===== ==== ======
At beginning of year.................. 1,205 5,030 19,521 807 465 27,028
===== ====== ====== ===== ==== ======
</TABLE>
On 25 January 1990 the freehold property then owned at Tamworth was valued
at open market value on the basis of existing use at L1,400,000. The historical
cost of tangible fixed assets included at a valuation at the end of the year was
L874,000 (1996: L874,000). Accumulated historical cost depreciation was L258,000
(1996: L246,000).
The net book value of Group tangible fixed assets includes L10,412,000
(1996: L7,302,000) in respect of assets held under hire purchase or finance
lease contracts, after charging depreciation for the year of L1,286,000 (1996:
L538,000) and L1,439,000 (1996: L1,439,000) of freehold land which is not
depreciated.
Plant and machinery includes L1,143,000 (1996: L992,000) of assets which
are under the course of construction.
11. INVESTMENTS
(a) Sale of business -- year ended 31 January 1995
On 16 December 1994 the Group sold the business, assets and certain
liabilities of Chemical Express Limited and its subsidiary undertakings for a
wholly cash consideration of L2,962,000.
F-59
<PAGE> 168
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
The following table sets out the effect of the sale on the Group's
consolidated balance sheet:
<TABLE>
<CAPTION>
1995
(L000)
------
<S> <C>
Tangible fixed assets................... (100)
Stocks.................................. (230)
Debtors................................. (567)
Cash.................................... (214)
Creditors............................... 482
------
Net assets sold......................... (629)
Goodwill reinstated on sale of business
previously written off to reserves.... (572)
Associated costs of sale................ (258)
Cash consideration...................... 2,962
------
Profit on sale.......................... 1,503
======
</TABLE>
(b) Acquisition of businesses -- year ended 31 January 1996
On 13 March 1995, Technograph Microcircuits Limited purchased the former
Ferranti International plc Hybrids Manufacturing and Test Division for a cash
consideration of L10,000. Goodwill arising on this acquisition of L67,000 has
been written off against merger reserve.
On 21 June 1995 the Group acquired the entire issued share capital of
Exacta Circuits Limited for a total consideration of up to L16,000,000, together
with acquisition costs of L766,000.
<TABLE>
<CAPTION>
BOOK ACQUISITION FAIR
VALUE ADJUSTMENTS VALUE
(L000) (L000) (L000)
------- ----------- -------
<S> <C> <C> <C>
Assets
Tangible fixed assets........................... 16,673 -- 16,673
Stocks.......................................... 2,211 -- 2,211
Debtors......................................... 11,867 (92) 11,775
Cash............................................ 8 -- 8
------- ------ -------
30,759 (92) 30,667
======= ====== =======
Liabilities
Bank overdraft.................................. (285) -- (285)
Bank loan....................................... (4,030) -- (4,030)
Taxation........................................ (2,665) -- (2,665)
Finance lease contracts......................... (4,016) -- (4,016)
Other creditors................................. (6,590) -- (6,590)
Provisions...................................... (655) (1,445) (2,100)
------- ------ -------
(18,241) (1,445) (19,686)
======= ====== =======
Net assets acquired............................. 12,518 (1,537) 10,981
======= ======
Goodwill written off against merger reserve..... 5,785
-------
16,766
=======
</TABLE>
F-60
<PAGE> 169
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
The acquisition adjustments reflect an assessment of the fair value of
debtors compared to book value together with recognition of the proceeds
receivable in respect of Exacta Circuits Limited's unexercised share options
(see below) and an adjustment to align Exacta Circuits Limited's accounting
policy on deferred taxation with that of the Group.
<TABLE>
<CAPTION>
(L000)
------
<S> <C>
The consideration was satisfied by:
Shares issued and to be issued for
non-cash consideration:
Nominal value......................... 122
Fair value in excess of nominal
value.............................. 5,917
------
6,039
Cash element of consideration including
costs of acquisition.................. 7,904
Deferred consideration:
Share options......................... 323
Contingent............................ 2,500
------
16,766
======
</TABLE>
On 27 February 1996, 30,966 Ordinary shares in Exacta Circuits Limited were
issued under that company's share option scheme, which was then wound up. These
shares were immediately acquired by the Company under the terms of the June 1995
Sale and Purchase Agreement. Included in the above consideration are 63,593
Ordinary shares in the Company issued for a non-cash consideration of L157,000
together with cash of L323,000.
The payment of L2,500,000 deferred consideration was made on 21 June 1996
to the vendors of Exacta Circuits Limited. It was contingent on a target profit
before taxation of L5,500,000 being achieved for the calendar year 1995. This
target was achieved.
(c) Acquisition of businesses -- year ended 31 January 1997
On 26 March 1996 Technograph Microcircuits Limited acquired GEC-Marconi's
hybrid business for a total cash consideration of L2,726,000.
On 7 May 1996 the Company acquired the entire issued share capital of
Manchester Circuits Limited for a total consideration of L830,000.
On 27 June 1996 the Company acquired the entire issued share capital of TI
Technologies (Pty) Limited (based in South Africa) for an initial consideration
of L510,000. Further consideration, which has not been provided for, of up to
L501,000 may become payable upon certain profit targets being achieved in the 22
months ending on 31 January 1998.
F-61
<PAGE> 170
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
The fair values of the assets and liabilities acquired as a result of the
above are as follows:
<TABLE>
<CAPTION>
GEC- TI
MARCONI MANCHESTER TECHNOLOGIES
HYBRID CIRCUITS (PTY)
BUSINESS LIMITED LIMITED TOTAL
(L000) (L000) (L000) (L000)
----------- ---------- ------------ ------
<S> <C> <C> <C> <C>
Fixed assets............................ 123 2,098 302 2,523
Stocks.................................. 1,525 387 652 2,564
Debtors................................. 463 955 873 2,291
Cash in hand............................ -- -- 15 15
Creditors............................... (431) (960) (1,190) (2,581)
Bank loans and overdrafts............... -- (1,645) (698) (2,343)
Taxation................................ 113 (11) -- 102
Hire purchase obligations............... -- (424) -- (424)
Deferred tax............................ 83 (35) -- 48
----- ------ ------ ------
Fair value of net assets acquired....... 1,876 365 (46) 2,195
===== ====== ====== ======
</TABLE>
Fair values are after taking account of adjustments of L755,000 to reflect
an assessment of the differences between the book values and fair values of
assets acquired, L97,000 of alignments to accord with group accounting policies
and the recognition of unprovided liabilities of L265,000 at the relevant dates
of acquisition.
Following the triennial valuation of the Exacta Circuits Pension Plan on 5
April 1996 the provision at 31 January 1996 has been released resulting in an
adjustment to the provisional assessment of fair values made at the date of
acquisition.
Goodwill written off in the year comprises:
<TABLE>
<CAPTION>
(L000)
------
<S> <C>
Fair value of net assets acquired........................... 2,195
Consideration............................................... 4,225
-----
Goodwill arising on current year acquisitions............... 2,030
Revision to provisional fair value assessment made in
respect of the acquisition of Exacta Circuits Limited..... (584)
-----
1,446
=====
The consideration was satisfied by:
Shares issued for non-cash consideration:
Nominal value............................................. 1
Fair value in excess of nominal value..................... 191
-----
192
Cash consideration.......................................... 3,874
Costs of acquisition........................................ 159
-----
4,225
=====
</TABLE>
F-62
<PAGE> 171
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
12. STOCKS
<TABLE>
<CAPTION>
31 MARCH
1996 1997 1997
(L000) (L000) (L000)
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials and consumables........... 1,689 3,233 3,120
Work in progress........................ 2,611 2,465 3,519
Finished goods and goods for resale..... 1,176 888 646
----- ----- -----
5,476 6,586 7,285
===== ===== =====
</TABLE>
13. DEBTORS
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Trade debtors........................... 16,267 16,368
Other debtors........................... 1,144 454
Prepayments and accrued income.......... 420 467
------ ------
17,831 17,289
====== ======
</TABLE>
14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Bank overdrafts......................... -- 5,841
Bank loan............................... 720 720
Obligations under hire purchase and
finance lease contracts............... 1,461 2,400
Payments on account..................... 112 --
Trade creditors......................... 8,832 10,884
Deferred consideration.................. 2,823 --
Corporation tax and Advance Corporation
Tax payable........................... 4,164 2,540
Other taxes and social security......... 1,222 1,448
Other creditors......................... 142 278
Accruals and deferred income............ 2,067 2,838
Dividends............................... 655 --
------ ------
22,198 26,949
====== ======
</TABLE>
The bank overdrafts and loan are secured by charges over the Group's
assets.
15. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Bank loan................................................... 2,520 1,800
Obligations under hire purchase and finance lease
contracts................................................. 3,178 4,774
----- -----
5,698 6,574
===== =====
Bank loan and overdrafts are repayable as follows:
Within one year............................................. 720 6,561
Between one and two years................................... 720 720
Between two and five years.................................. 1,800 1,080
----- -----
3,240 8,361
===== =====
</TABLE>
F-63
<PAGE> 172
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Obligations under hire purchase and finance lease contracts are payable as
follows:
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Within one year............................................. 1,461 2,400
Between one and two years................................... 1,377 4,498
Between two and five years.................................. 1,801 276
----- -----
4,639 7,174
===== =====
</TABLE>
16. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Deferred taxation........................................... 2,068 2,616
Pension provision........................................... 655 --
----- -----
2,723 2,616
===== =====
</TABLE>
(a) Deferred taxation
Deferred taxation is provided using the liability method at a rate of 33%
(1996: 33%) as follows:
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Accelerated capital allowances.............................. 1,996 2,413
Short term timing differences............................... 236 203
----- -----
2,232 2,616
Less: ACT recoverable....................................... (164) --
----- -----
2,068 2,616
===== =====
</TABLE>
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
At beginning of year........................................ 449 2,068
Charged to profit and loss account.......................... 266 432
Arising on purchase of businesses........................... 1,445 (48)
Movement in Advance Corporation Tax......................... (92) 164
----- -----
At end of year.............................................. 2,068 2,616
===== =====
</TABLE>
F-64
<PAGE> 173
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Unprovided deferred taxation in respect of deferred capital gains amounted
to L744,000 (1996: L744,000).
(b) Pension provision
The pension provision arose during the year ended 31 January 1996 as a
result of the acquisition of Exacta Circuits Limited. This was subsequently
released during the year ended 31 January 1997 as a result of the reassessment
of provisional fair values referred to in notes 11 and 22.
17. SHARE CAPITAL
<TABLE>
<CAPTION>
1996 1997
--------------- ----------------
(L000) (L000) (L000) (L000)
------ ------ ------ ------
<S> <C> <C> <C> <C>
Authorised:
Ordinary shares of 5p each....................... 19,000 950 72,900 3,645
====== ====== ====== =====
Allotted, called up and fully paid:
Ordinary shares of 5p each....................... 13,577 679 55,088 2,754
====== ====== ====== =====
Shares to be issued:
Ordinary shares of 5p each....................... 64 3 -- --
====== ====== ====== =====
</TABLE>
On 19 June 1995 the Company's authorised share capital was increased by the
creation of an additional 8,000,000 Ordinary shares of 5p each.
On 21 June 1995 2,785,961 Ordinary shares with a nominal value of L139,298
were issued for a cash consideration of L2.70 per share pursuant to a placing
and open offer, raising L7,522,000.
On the same date the Company issued 2,381,662 Ordinary shares with a
nominal value of L119,083 as part consideration for the 839,506 ordinary L1
shares representing the whole of the issued share capital of Exacta Circuits
Limited.
On 13 March 1996 the Company issued 63,593 Ordinary shares for a non-cash
consideration of L157,000 as part of the arrangements regarding the purchase of
the remaining shares under option in Exacta Circuits Limited.
On 20 May 1996 the Company issued 17,597 Ordinary shares in connection with
the acquisition of Manchester Circuits Limited for a non-cash consideration of
L134,000.
On 27 June 1996 the Company issued 5,658 Ordinary shares in connection with
the acquisition of TI Technologies (Pty) Limited for a non-cash consideration of
L59,000.
On 28 June 1996 the Company's authorised share capital was increased by the
creation of an additional 53,900,000 Ordinary shares of 5p each.
On 28 June 1996 the Company authorised a 3 for 1 capitalisation issue
resulting in 40,991,664 new shares being allotted and distributed.
During the year ended 31 January 1997, and following the capitalisation
issue, the Company issued 432,400 Ordinary shares with an aggregate nominal
value of L21,620 under the terms of the Forward Group Share Option Scheme for a
total cash consideration of L92,000.
F-65
<PAGE> 174
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
At the end of the year options over 810,000 Ordinary shares have been
granted and remain outstanding. These options, which also reflect the
capitalisation issue referred to above, are exercisable as follows:
<TABLE>
<CAPTION>
NUMBER
OF SHARES EXERCISE PRICE EXERCISE PERIOD
- --------- -------------- ---------------
<C> <C> <C>
140,000.. 51.5p 1996/2003
40,000... 47p 1997/2004
280,000.. 61.75p 1998/2005
260,000.. 88.75p 1998/2005
20,000... 180p 1999/2006
70,000... 107p 1999/2006
-------
810,000
=======
</TABLE>
18. RESERVES
<TABLE>
<CAPTION>
SHARE PROFIT
PREMIUM MERGER REVALUATION AND LOSS
ACCOUNT RESERVE RESERVE ACCOUNT TOTAL
(L000) (L000) (L000) (L000) (L000)
------- ------- ----------- -------- ------
<S> <C> <C> <C> <C> <C>
At 1 February 1995................. 1,438 -- 591 6,493 8,522
Retained profit for the financial
year............................. -- -- -- 3,834 3,834
Issue of shares (net of
expenses)........................ 7,402 5,917 -- -- 13,319
Goodwill written off on acquisition
of businesses (note 11).......... -- (5,852) -- -- (5,852)
Transfer........................... -- -- (13) 13 --
------ ------ --- ------ ------
At 31 January 1996................. 8,840 65 578 10,340 19,823
Retained profit for the financial
year............................. -- -- -- 4,846 4,846
Capitalisation issue (including
expenses of L24,000)............. (2,073) -- -- -- (2,073)
Issue of shares.................... 70 191 -- -- 261
Goodwill written off on acquisition
of businesses (note 11).......... -- (256) -- (1,190) (1,446)
Currency translation adjustment.... -- -- -- (22) (22)
Transfer........................... -- -- (12) 12 --
------ ------ --- ------ ------
At 31 January 1997................. 6,837 -- 566 13,986 21,389
====== ====== === ====== ======
</TABLE>
At the end of the year cumulative goodwill written off against reserves in
respect of the acquisition of businesses amounted to L7,447,000 (1996:
L6,001,000).
F-66
<PAGE> 175
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
19. RECONCILIATION OF MOVEMENT IN CONSOLIDATED EQUITY SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ ------
<S> <C> <C> <C>
Profit for the financial year........................... 2,976 4,923 5,398
Dividends............................................... (494) (1,089) (552)
----- ------ ------
2,482 3,834 4,846
Issue of shares......................................... 10 13,432 284
Shares to be issued..................................... -- 157 --
Expenses of capitalisation issue........................ -- -- (24)
Goodwill written off.................................... -- (5,852) (1,446)
Goodwill reinstated on sale of business................. 572 -- --
Currency translation adjustment......................... -- -- (22)
----- ------ ------
Net increase in equity shareholders' funds.............. 3,064 11,571 3,638
At beginning of year.................................... 5,870 8,934 20,505
----- ------ ------
At end of year.......................................... 8,934 20,505 24,143
===== ====== ======
</TABLE>
20. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
1995 1996 1997
(L000) (L000) (L000)
------ ------ ------
<S> <C> <C> <C>
Operating profit....................................... 2,445 7,976 9,101
Depreciation........................................... 1,215 2,701 4,694
Profit on sale of tangible fixed assets................ (55) (15) (169)
------ ------ ------
3,605 10,662 13,626
Movements in working capital:
(Increase)/decrease in stocks.......................... (266) (1,552) 1,454
(Increase)/decrease in debtors......................... (840) (778) 2,837
Increase in creditors.................................. 223 2,335 644
------ ------ ------
(883) 5 4,935
------ ------ ------
Net cash inflow from operating activities.............. 2,722 10,667 18,561
====== ====== ======
</TABLE>
(b) Analysis of changes in financing during the year
<TABLE>
<CAPTION>
SHARE HIRE
CAPITAL AND PURCHASE CONTINGENT
PREMIUM OBLIGATIONS CONSIDERATION
(L000) (L000) (L000)
----------- ----------- -------------
<S> <C> <C> <C>
1995
At beginning of year............................. 1,840 1,150 220
Net cash flows on financing...................... 10 (669) (220)
Inception of hire purchase contracts............. -- 594 --
Currency adjustment.............................. -- 40 --
----- ------ -----
1,850 1,115 --
===== ====== =====
</TABLE>
F-67
<PAGE> 176
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
SHARE HIRE
CAPITAL AND PURCHASE BANK
PREMIUM OBLIGATIONS LOAN
(L000) (L000) (L000)
----------- ----------- -------------
<S> <C> <C> <C>
1996
At beginning of year............................. 1,850 1,115 --
Acquisition of businesses........................ -- 4,016 4,030
Net cash flows on financing...................... 7,550 (1,170) (790)
Issues of shares for non-cash consideration...... 119 -- --
Shares to be issued.............................. 3 -- --
Inception of hire purchase contracts............. -- 658 --
Currency adjustment.............................. -- 20 --
----- ------ -----
9,522 4,639 3,240
===== ====== =====
</TABLE>
<TABLE>
<CAPTION>
SHARE HIRE
CAPITAL AND PURCHASE BANK
PREMIUM OBLIGATIONS LOAN
(L000) (L000) (L000)
----------- ----------- ------
<S> <C> <C> <C>
1997
At beginning of year.................................. 9,522 4,639 3,240
Acquisition of businesses............................. -- 424 --
Net cash flows on financing........................... 68 (2,393) (720)
Issues of shares for non-cash consideration........... 1 -- --
Inception of hire purchase contracts.................. -- 4,548 --
Currency adjustment................................... -- (44) --
----- ------ -----
9,591 7,174 2,520
===== ====== =====
</TABLE>
(c) Analysis of cash and cash equivalents
<TABLE>
<CAPTION>
CHANGE CHANGE CHANGE
1994 IN YEAR 1995 IN YEAR 1996 IN YEAR 1997
(L000) (L000) (L000) (L000) (L000) (L000) (L000)
------ ------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand.............. 4 (1) 3 786 789 (789) --
Bank overdrafts....................... (1,722) 1,091 (631) 631 -- (5,841) (5,841)
------ ------ ---- ----- ---- ------ ------
(1,718) 1,090 (628) 1,417 789 (6,630) (5,841)
====== ====== ==== ===== ==== ====== ======
</TABLE>
F-68
<PAGE> 177
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
(d) Acquisition of businesses
The investing cash flows arising in respect of acquisitions during the year
ended 31 January 1996 were as follows:
<TABLE>
<CAPTION>
1996
(L000)
------
<S> <C>
Ferranti International plc Hybrids Manufacturing and Test
Division
Cash consideration........................................ 10
Exacta Circuits Limited
Cash consideration including costs of acquisition......... 7,904
Overdraft................................................. 285
Cash balances............................................. (8)
-----
8,191
=====
</TABLE>
The investing cash flows arising in respect of acquisitions during the year
ended 31 January 1997 were as follows:
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Exacta Circuits Limited
Deferred cash consideration............................... 2,823
GEC-Marconi's hybrid business
Cash consideration including costs of acquisition......... 2,756
Manchester Circuits Limited
Cash consideration including costs of acquisition......... 759
Overdraft................................................. 1,645
TI Technologies (Pty) Limited
Cash consideration including costs of acquisition......... 518
Overdraft................................................. 698
Cash balances............................................. (15)
-----
9,184
=====
</TABLE>
Further information on the acquisitions is given in note 11.
(e) Disposal of business
The divesting cash flows arising in respect of the disposal of the
specialist chemicals business in the year ended 31 January 1995 were as follows:
<TABLE>
<CAPTION>
1995
(L000)
------
<S> <C>
Cash consideration.......................................... 2,962
Cash and bank balances...................................... (214)
Associated costs of sale.................................... (258)
-----
2,490
=====
</TABLE>
(f) Major non-cash transactions
Fixed asset additions of L4,548,000 (1996: L658,000; 1995: L594,000) were
financed by hire purchase borrowings.
F-69
<PAGE> 178
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
21. COMMITMENTS
Capital commitments for which no provision has been made in these financial
statements, are as follows:
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Contracted but not provided for............................. 2,596 830
===== ===
</TABLE>
Annual commitments under operating leases are as follows:
<TABLE>
<CAPTION>
LAND AND BUILDINGS OTHER
------------------ ----------------
1996 1997 1996 1997
(L000) (L000) (L000) (L000)
------- ------- ------ ------
<S> <C> <C> <C> <C>
Expiring within one year........................ -- 8 25 61
Expiring between two and five years............. 7 30 252 180
Expiring in more than five years................ 206 344 -- --
</TABLE>
22. PENSIONS
Exacta Circuits Limited operates a funded defined benefit pension scheme
covering substantially all of its employees. Employer contributions are
determined by a qualified actuary on the basis of triennial valuations using the
projected unit method.
The most recent full valuation by William M Mercer Limited was as at 5
April 1996. The assumptions which have the most significant effect on the result
of the valuation are those relating to the rate of return on investments and the
rates of increase in salaries and pensions. It was assumed that the investment
returns would be 9% per annum, that salary increases would average 7% per annum,
that present and future pensions would increase at rates of between 3% and 4.5%
per annum and that equity dividend growth would average 5% per annum. The
valuation showed that the market value of the scheme's assets at that date was
L17,593,000 and that the actuarial value of assets represented 110% of the
benefits that has accrued to members, after allowing for expected future
increases in earnings. Group contributions to the scheme in the year were
L955,000 (1996: L492,000).
As part of its provisional review of the fair value of the net assets of
Exacta Circuits Limited the Group took actuarial advice regarding the current
position of the pension scheme. This highlighted uncertainty concerning the
impact of equalisation of retirement ages. In view of this uncertainty, the
SSAP24 provision of Exacta Circuits Limited of L655,000 at the date of
acquisition was replaced by a provision of the same amount. Following the
valuation as at 5 April 1996 the provision was released.
In addition, the Group made contributions of L284,000 (1996: L253,000)
during the year to several defined contribution schemes.
23. POST BALANCE SHEET EVENT
On 26 March 1997 the Recommended Cash Offer for Forward Group PLC by Hicks,
Muse, Tate and Furst Equity Fund III, L.P. was declared unconditional in all
respects and, in due course, the Company will become a wholly owned subsidiary
of PCB Investments plc.
F-70
<PAGE> 179
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
24. SUBSIDIARY UNDERTAKINGS
The Company has the following trading subsidiary undertakings:
<TABLE>
<CAPTION>
COUNTRY OF
PRINCIPAL CLASS OF
COMPANY OPERATION SHARE HOLDING PRINCIPAL ACTIVITY
------- ---------- -------- ------- ------------------
<S> <C> <C> <C> <C>
Forward Circuits Limited England L1 100% Manufacture of printed circuit
Ordinary boards
Exacta Circuits Limited Scotland L1 100% Manufacture of printed circuit
Ordinary boards
Technograph Microcircuits England L1 100% Manufacture of ceramic based
Limited Ordinary microcircuits
Forward Circuits England L1 100% International trading in
International Limited Ordinary printed circuit boards
Manchester Circuits Limited England L1 100% Manufacture of printed circuit
Ordinary boards
L1 100%
Preferred
Ordinary
L1 100%
Cumulative
redeemable
preference
TI Technologies (Pty) Limited South Africa R1 100% Manufacture of printed circuit
Ordinary boards
Swift International (Pty) South Africa R1 100% Manufacture of printed circuit
Limited Ordinary boards
Exacta Circuits (France) SARL France FF 100 100% Sale of printed circuit boards
Ordinary in France
</TABLE>
25. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
OF AMERICA GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The Group's consolidated financial statements are prepared in conformity
with generally accepted accounting principles applicable in the United Kingdom
(UK GAAP), which differ in certain significant respects from those applicable in
the United States of America (US GAAP). These differences, together with the
approximate effects of the adjustments on net profit and equity shareholders'
funds, relate principally to the items set out below:
(a) Goodwill: Under UK GAAP, goodwill arising from acquisitions is
written off against equity shareholders' funds. Upon the subsequent
disposal of the business, goodwill previously written off is reinstated and
considered in the calculation of the gain or loss on disposal. Under US
GAAP, goodwill is capitalised and amortised over its estimated useful life.
For the purpose of calculating the amortisation of goodwill a life of 40
years has been assumed. Upon the subsequent disposal of the business,
unamortised goodwill is considered in the calculation of the gain or loss
on disposal.
(b) Dividends: Under UK GAAP, proposed dividends on ordinary shares,
as recommended by the Directors, are deducted from equity shareholders'
funds and shown as a liability in the
F-71
<PAGE> 180
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
balance sheet at the end of the period to which they relate. Under US GAAP,
such dividends are deducted from equity shareholders' funds at the date of
declaration of the dividend.
(c) Deferred taxation: UK GAAP requires that no provision for deferred
taxation should be made if there is reasonable evidence that such taxation
will not be payable in the foreseeable future. Under US GAAP, deferred
taxation is recognised under the full liability method which permits
deferred tax assets to be recognised if their realisation is considered
more likely than not.
Deferred taxation also arises in relation to the tax effect of other US
GAAP differences.
(d) Revaluation of properties: UK GAAP allows periodic revaluations of
freehold land and buildings and the related depreciation is calculated on
the revalued amounts. The surplus on revaluation of property is credited
directly to equity shareholders' funds. Under US GAAP, such revaluations
are not permitted and depreciation is provided on the original cost.
(e) Pension costs: Under UK GAAP, the expected cost of pensions is
charged to the profit and loss account so as to spread the cost of pensions
over the expected service lives of employees. Surpluses arising from the
actuarial valuation are similarly spread. Under US GAAP, costs and
surpluses are also spread over the expected service lives but based on
prescribed actuarial assumptions, allocation of costs and valuation
methods, which differ from those used for UK GAAP.
(f) Cash flows: The principal difference between UK GAAP and US GAAP
is in respect of classification. Under UK GAAP, the Group presents its cash
flows for operating activities, returns on investments and servicing of
finance, taxation, investing activities, and financing activities. US GAAP
requires only three categories of cash flow activities which are operating,
investing and financing.
Cash flows arising from taxation and returns on investments and
servicing of finance under UK GAAP would, with the exception of dividends
paid, be included as operating activities under US GAAP; dividend payments
would be included as a financing activity under US GAAP. In addition, under
UK GAAP, cash and cash equivalents include short term borrowings which
under US GAAP would be presented as financing activities.
F-72
<PAGE> 181
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Under US GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED 31 JANUARY ENDED 31 MARCH
-------------------------- -------------------
1995 1996 1997 1996 1997
(L000) (L000) (L000) (L000) (L000)
------ ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net cash provided by operating
activities............................ 1,901 8,594 13,995 3,255 2,687
Net cash provided by/(used in) investing
activities............................ 301 (12,045) (16,373) (5,037) (488)
Net cash (used in)/provided by financing
activities............................ (2,203) 4,237 1,589 680 (2,199)
------ ------- ------- -------- --------
Net (decrease)/increase in cash and cash
equivalents........................... (1) 786 (789) (1,102) --
====== ======= ======= ======== ========
Cash and cash equivalents under US
GAAP.................................. 3 789 -- -- --
====== ======= ======= ======== ========
</TABLE>
(g) Current assets and liabilities: Current assets and liabilities
under UK GAAP include amounts which fall due after more than one year.
Under US GAAP such assets would be classified as non-current assets.
Provisions for liabilities and other charges under UK GAAP include amounts
due within one year which would be classified as current liabilities under
US GAAP.
Approximate effects on net profit of differences between UK and US GAAP:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED 31 JANUARY 31 MARCH
-------------------------- ------------------
1995 1996 1997 1996 1997
(L000) (L000) (L000) (L000) (L000)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net profit in conformity with UK GAAP... 2,976 4,923 5,398 2,592 321
Adjustments:
Goodwill.............................. (17) (99) (188) (39) (51)
Profit on disposal of businesses...... 20 -- -- -- --
Revaluation of properties............. 13 13 12 3 3
Pension cost.......................... -- 35 160 30 40
Tax effect of US GAAP adjustments..... (744) (11) (53) (10) (13)
----- ----- ----- ----- ---
Net profit in conformity with US GAAP... 2,248 4,861 5,329 2,576 300
===== ===== ===== ===== ===
</TABLE>
F-73
<PAGE> 182
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Approximate effects on equity shareholders' funds of differences between UK
and US GAAP:
<TABLE>
<CAPTION>
AT 31 JANUARY
---------------- AT 31 MARCH
1996 1997 1997
(L000) (L000) (L000)
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Equity shareholders' funds in conformity with UK
GAAP.............................................. 20,505 24,143 24,064
Adjustments:
Goodwill.......................................... 5,993 7,690 7,656
Dividends......................................... 655 -- --
Deferred taxation................................. (744) (744) (744)
Revaluation of properties......................... (578) (566) (564)
Pension cost...................................... (120) (615) (588)
Tax effect of US GAAP adjustments................. 40 203 194
------ ------ ------
Equity shareholders' funds in conformity with US
GAAP.............................................. 25,751 30,111 30,018
====== ====== ======
</TABLE>
26. CONVERSION OF U.K. GAAP AMOUNTS TO U.S. GAAP AMOUNTS IN U.S. DOLLARS
(UNAUDITED)
The following tables set forth in U.K.L the balance sheet and profit and
loss account of the Group as of and for the year ended January 31, 1997 and as
of and for the three months ended March 31, 1997, on a historical basis and
adjusts the amounts to U.S. GAAP in U.K.L. based solely on those adjustments
shown in Note 25. The U.K.L amounts are then translated to U.S.$ based on a
translation rate of U.K.L.62=U.S.$1.00 at January 31, 1997 and
U.K.L =U.S.$1.00 at March 31, 1997. Such amounts are shown translated to
U.S.$ for convenience purposes only. The U.S. GAAP amounts do not constitute
financial information presented in conformity with U.S. GAAP as differences in
presentation and classification exist. Furthermore, disclosures required under
U.S. GAAP have not been provided.
Consolidated profit and loss account (unaudited)
<TABLE>
<CAPTION>
YEAR ENDED 31 JANUARY 1997
--------------------------------------------------------------
U.S. GAAP
U.K. GAAP ADJUSTMENTS U.S. GAAP TRANSLATION U.S. GAAP
(L000) (L000) (L000) RATE (U.S.$000)
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Turnover
Continuing operations................. 97,001 -- 97,001 .62 156,453
Acquisitions.......................... 8,028 -- 8,028 .62 12,949
------- --- ------- -------
105,029 -- 105,029 .62 169,402
------- --- ------- -------
Operating profit........................
Continuing operations................. 8,079 (16) 8,063 .62 13,005
Acquisitions.......................... 1,022 -- 1,022 .62 1,648
------- --- ------- -------
9,101 (16) 9,085 .62 14,653
Net interest payable.................. (996) -- (996) .62 (1,606)
------- --- ------- -------
Profit on ordinary activities before
taxation.............................. 8,105 (16) 8,089 .62 13,047
Tax on profit on ordinary activities.... (2,707) (53) (2,760) .62 (4,452)
------- --- ------- -------
Profit for the financial year........... 5,398 (69) 5,329 .62 8,595
======= === ======= =======
</TABLE>
F-74
<PAGE> 183
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
THREE MONTHS ENDED 31 MARCH 1997
--------------------------------------------------------------
U.S. GAAP
U.K. GAAP ADJUSTMENTS U.S. GAAP TRANSLATION U.S. GAAP
(L000) (L000) (L000) RATE (U.S.$000)
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Turnover
Continuing operations................. 25,287 -- 25,287 .61 41,454
Acquisitions.......................... -- -- -- .61 --
------- --- ------- -------
25,287 -- 25,287 .61 41,454
------- --- ------- -------
Operating profit........................
Continuing operations................. 2,853 (8) 2,845 .61 4,665
Acquisitions.......................... -- -- -- .61 --
------- --- ------- -------
2,853 (8) 2,845 .61 4,665
Expenses related to sale.............. (1,318) -- (1,318) .61 (2,161)
Net interest payable.................. (381) -- (381) .61 (625)
------- --- ------- -------
Profit on ordinary activities before
taxation.............................. 1,154 (8) 1,146 .61 1,879
Tax on profit on ordinary activities.... (833) (13) (846) .61 (1,387)
------- --- ------- -------
Profit for the financial period......... 321 (21) 300 .61 492
======= === ======= =======
</TABLE>
Consolidated balance sheet (unaudited)
<TABLE>
<CAPTION>
31 JANUARY 1997
--------------------------------------------------------------
U.S. GAAP
U.K. GAAP ADJUSTMENTS U.S. GAAP TRANSLATION U.S. GAAP
(L000) (L000) (L000) RATE (U.S.$000)
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Fixed assets
Intangible assets..................... -- 7,690 7,690 .62 12,403
Tangible assets....................... 36,407 (566) 35,841 .62 57,808
------- ------- ------- -------
36,407 7,124 43,531 .62 70,211
------- ------- ------- -------
Current assets
Stocks................................ 6,586 -- 6,586 .62 10,623
Debtors............................... 17,289 -- 17,289 .62 27,885
------- ------- ------- -------
23,875 -- 23,875 .62 38,508
Creditors: amounts falling due within
one year.............................. (26,949) -- (26,949) .62 (43,466)
------- ------- ------- -------
Net current liabilities................. (3,074) -- (3,074) .62 (4,958)
------- ------- ------- -------
Total assets less current liabilities... 33,333 7,124 40,457 .62 65,253
Creditors: amounts falling due after
more than one year.................... (6,574) -- (6,574) .62 (10,603)
Provisions for liabilities and
charges............................... (2,616) (1,156) (3,772) .62 (6,084)
------- ------- ------- -------
Net assets.............................. 24,143 5,968 30,111 .62 48,566
======= ======= ======= =======
Capital and reserves
Called up share capital............... 2,754 -- 2,754 .62 4,442
Share premium account................. 6,837 -- 6,837 .62 11,027
Revaluation reserve................... 566 (566) -- .62 --
Profit and loss account............... 13,986 6,534 20,520 .62 33,097
------- ------- ------- -------
Equity shareholders' funds.............. 24,143 5,968 30,111 .62 48,566
======= ======= ======= =======
</TABLE>
F-75
<PAGE> 184
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
31 MARCH 1997
--------------------------------------------------------------
U.S. GAAP
U.K. GAAP ADJUSTMENTS U.S. GAAP TRANSLATION U.S. GAAP
(L000) (L000) (L000) RATE (U.S.$000)
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Fixed assets
Intangible assets.................... -- 7,656 7,656 .61 12,551
Tangible assets...................... 36,707 (564) 36,143 .61 59,251
------- ------ ------- -------
36,707 7,092 43,799 .61 71,802
------- ------ ------- -------
Current assets
Stocks............................... 7,285 -- 7,285 .61 11,943
Debtors.............................. 19,729 -- 19,729 .61 32,343
------- ------ ------- -------
27,014 -- 27,014 .61 44,286
Creditors: amounts falling due within
one year............................. (30,624) -- (30,624) .61 (50,203)
------- ------ ------- -------
Net current liabilities................ (3,610) -- (3,610) .61 (5,917)
------- ------ ------- -------
Total assets less current
liabilities.......................... 33,097 7,092 40,189 .61 65,885
Creditors: amounts falling due after
more than one year................... (6,417) -- (6,417) .61 (10,520)
Provisions for liabilities and
charges.............................. (2,616) (1,138) (3,754) .61 (6,154)
------- ------ ------- -------
Net assets............................. 24,064 5,954 30,018 .61 49,211
======= ====== ======= =======
Capital and reserves
Called up share capital.............. 2,762 -- 2,762 .61 4,528
Share premium account................ 6,908 -- 6,908 .61 11,325
Revaluation reserve.................. 564 (564) -- .61 --
Profit and loss account.............. 13,830 6,518 20,348 .61 33,358
------- ------ ------- -------
Equity shareholders' funds............. 24,064 5,954 30,018 .61 49,211
======= ====== ======= =======
</TABLE>
27. COMPANIES ACT 1985
These consolidated financial statements do not comprise the Company's
statutory accounts within the meaning of Section 240 of the Companies Act 1985
of Great Britain. Statutory accounts have been prepared for each of the years
ended 31 January 1997, 1996 and 1995, on which the auditors' reports were
unqualified. The statutory accounts for the years ended 31 January 1996 and 1995
have been delivered to the Registrar of Companies for England and Wales. Those
for the year ended 31 January 1997 have not yet been so delivered.
F-76
<PAGE> 185
REPORT OF INDEPENDENT AUDITORS
To: The Directors
Interconnection Systems (Holdings) Limited
We have audited the consolidated balance sheets of Interconnection Systems
(Holdings) Limited as at March 29, 1996 and April 4, 1997 and the related
consolidated profit and loss accounts and statements of total recognized gains
and losses and cash flows for the years ended March 31, 1995, March 29, 1996 and
April 4, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with United Kingdom auditing
standards which do not differ in any significant respect from United States
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 consolidated financial position of
Interconnection Systems (Holdings) Limited as at March 29, 1996 and April 4,
1997, and the consolidated results of its operations and its consolidated cash
flows for the years ended March 31, 1995, March 29, 1996 and April 4, 1997 in
conformity with accounting principles generally accepted in the United Kingdom
which differ in certain respects from those followed in the United States (see
Note 25 of the Notes to the Consolidated Financial Statements).
Ernst & Young
Chartered Accountants
Newcastle upon Tyne, England
May 27, 1997
F-77
<PAGE> 186
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
-------------------------------- --------------------
MARCH 31, MARCH 29, APRIL 4, MARCH 29, APRIL 4,
1995 1996 1997 1996 1997
NOTES (L000) (L000) (L000) (L000) (L000)
----- --------- --------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Turnover................................ 2 70,805 104,611 141,643 30,231 38,266
Cost of sales......................... 59,433 90,170 112,980 24,262 33,711
------ ------- ------- ------ ------
Gross profit.......................... 11,372 14,441 28,663 5,969 4,555
Distribution costs.................... 1,042 1,148 1,632 343 525
Administrative expenses............... 5,738 6,913 9,491 1,678 1,557
------ ------- ------- ------ ------
4,592 6,380 17,540 3,948 2,473
Other operating income................ 109 -- 44 -- 44
------ ------- ------- ------ ------
Operating profit........................ 3 4,701 6,380 17,584 3,948 2,517
Interest receivable................... 6 -- -- 414 -- 48
Interest payable...................... 7 (921) (807) (1,232) (262) (308)
------ ------- ------- ------ ------
Profit on ordinary activities before
taxation.............................. 3,780 5,573 16,766 3,686 2,257
Tax on profit on ordinary
activities......................... 8 2,539 4,422 6,874 2,015 668
------ ------- ------- ------ ------
Profit for the year after taxation*..... 1,241 1,151 9,892 1,671 1,589
Dividends............................. 9 94 500 450 200 150
------ ------- ------- ------ ------
Retained profit for the period.......... 20 1,147 651 9,442 1,471 1,439
====== ======= ======= ====== ======
</TABLE>
* A summary of the significant adjustments to profit for the years that
would be required if United States generally accepted accounting principles had
been applied instead of those generally accepted in the United Kingdom is set
forth in Note 25 of the Notes to the Consolidated Financial Statements.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
-------------------------------- --------------------
MARCH 31, MARCH 29, APRIL 4, MARCH 29, APRIL 4,
1995 1996 1997 1996 1997
(L000) (L000) (L000) (L000) (L000)
--------- --------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Note of historical cost profits
Reported profit on ordinary activities before
taxation.................................. 3,780 5,573 16,766 3,686 2,257
Depreciation charged during the period in
respect of the excess of valuation over
historical cost of revalued assets........ 1,581 1,449 1,500 362 375
------ ------- ------ ------ ------
Historical cost profit on ordinary activities
before taxation........................... 5,361 7,022 18,266 4,048 2,632
====== ======= ====== ====== ======
Historical cost profit on ordinary activities
after taxation and dividends.............. 2,728 2,100 10,942 1,833 1,814
====== ======= ====== ====== ======
</TABLE>
The Notes to the Consolidated Financial Statements are an integral part of
these Financial Statements.
F-78
<PAGE> 187
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
-------------------------------- --------------------
MARCH 31, MARCH 29, APRIL 4, MARCH 29, APRIL 4,
1995 1996 1997 1996 1997
NOTES (L000) (L000) (L000) (L000) (L000)
----- --------- --------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Profit on ordinary activities after
taxation.............................. 1,241 1,151 9,892 1,671 1,589
Unrealized surplus on revaluation of
freehold land and buildings........... 10 315 -- (1,564) -- (1,564)
Unrealized surplus on revaluation of
plant and machinery................... 10 5,727 -- 23,743 -- 23,743
----- ----- ------ ----- ------
Total recognized gains and losses
relating to the period................ 7,283 1,151 32,071 1,671 23,768
===== ===== ====== ===== ======
</TABLE>
The Notes to the Consolidated Financial Statements are an integral part of these
Financial Statements.
F-79
<PAGE> 188
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
NOTES (L000) (L000)
----- --------- --------
<S> <C> <C> <C>
Fixed assets
Tangible assets........................................... 10 39,895 70,542
------- -------
Current assets
Stocks.................................................... 11 7,447 9,132
Debtors................................................... 12 17,371 24,003
Cash at bank and in hand.................................. 13 2,636 26,244
------- -------
27,454 59,379
Creditors: amounts falling due within one year.............. 14 (33,305) (47,863)
------- -------
Net current (liabilities)/assets............................ (5,851) 11,516
------- -------
Total assets less current liabilities....................... 34,044 82,058
Creditors: amounts falling due after more than one year
Loans..................................................... 16 9,430 27,336
Obligations under finance leases.......................... 15 4,116 3,203
Accruals and deferred income
Deferred Government grants................................ 18 600 --
------- -------
19,898 51,519
======= =======
Capital and reserves*
Called up share capital................................... 19 -- --
Share premium account..................................... 20 4,650 4,650
Revaluation reserve....................................... 20 5,685 26,364
Other reserves............................................ 20 216 216
Profit and loss account................................... 20 9,347 20,289
------- -------
19,898 51,519
======= =======
</TABLE>
*A summary of the significant adjustments to capital and reserves that
would be required if United States generally accepted accounting principles had
been applied instead of those generally accepted in the United Kingdom is set
forth in Note 25 of the Notes to the Consolidated Financial Statements.
The Notes to the Consolidated Financial Statements are an integral part of these
Financial Statements.
F-80
<PAGE> 189
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
-------------------------------- --------------------
MARCH 31, MARCH 29, APRIL 4, MARCH 29, APRIL 4,
1995 1996 1997 1996 1997
NOTES (L000) (L000) (L000) (L000) (L000)
----- --------- --------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net cash inflow from operating
activities.......................... 3(b) 13,784 22,757 33,842 10,615 12,430
------- ------- ------- ------- -------
Returns on investments and servicing
of finance
Interest paid....................... (875) (776) (1,077) (202) (13)
Interest received................... -- -- 414 -- 48
Dividends paid to parent company
shareholders..................... (94) (500) (450) (200) (150)
------- ------- ------- ------- -------
Net cash outflow from returns on
investments and servicing of
finance............................. (969) (1,276) (1,113) (402) (115)
------- ------- ------- ------- -------
Taxation
Corporation tax paid................ (658) (2,811) (4,903) (953) (4,072)
------- ------- ------- ------- -------
Tax paid.............................. (658) (2,811) (4,903) (953) (4,072)
------- ------- ------- ------- -------
Management of liquid resources
Investment in term deposit.......... -- -- (16,000) -- --
------- ------- ------- ------- -------
Net cash outflow from management of
liquid resources.................... -- -- (16,000) -- --
------- ------- ------- ------- -------
Investing activities
Payments to acquire tangible fixed
assets........................... (12,659) (16,816) (24,119) (3,632) (9,490)
Purchase of shares in
Interconnection Systems
Limited.......................... (11) -- -- -- --
------- ------- ------- ------- -------
Net cash outflow from investing
activities.......................... (12,670) (16,816) (24,119) (3,632) (9,490)
------- ------- ------- ------- -------
Net cash inflow/(outflow) before
financing........................... (513) 1,854 (12,293) 5,628 (1,247)
======= ======= ======= ======= =======
Financing
New loans........................... 16 (5,000) -- (22,089) -- (6,089)
Repayment of loans.................. 16 2,283 682 1,183 14 529
Repayment of finance leases......... 15 -- 623 1,005 1,541 331
Receipt of government grants........ 18 (1,250) -- -- -- --
------- ------- ------- ------- -------
Net cash outflow/(inflow) from
financing........................... (3,967) 1,305 (19,901) 1,555 (5,229)
Increase in cash and cash
equivalents......................... 13 3,454 549 7,608 4,073 3,982
------- ------- ------- ------- -------
(513) 1,854 (12,293) 5,628 (1,247)
======= ======= ======= ======= =======
</TABLE>
The significant differences between the cash flow statement presented above
and that required under United States generally accepted accounting principles
are described in Note 25 of the Notes to the Consolidated Financial Statements.
The Notes to the Consolidated Financial Statements are an integral part of these
Financial Statements.
F-81
<PAGE> 190
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN BRITISH POUNDS STERLING)
1. ACCOUNTING POLICIES
Accounting convention
The financial statements are prepared under the historical cost convention
modified to include the revaluation of certain tangible fixed assets.
The financial statements are prepared in accordance with applicable United
Kingdom accounting standards.
Basis of consolidation
The consolidated financial statements consolidate the accounts of
Interconnection Systems (Holdings) Limited (the "Company") and its subsidiary
undertaking Interconnection Systems Limited (together the "Group"). They do not
include the financial statements of Interconnection Systems Sales Limited as, in
the opinion of the directors, it would be of no real value to the Company's
members in view of the insignificant amounts involved. Interconnection Systems
Sales Limited has not traded since incorporation. The accounting period for both
companies comprises 52 weeks ending on the Friday nearest to March 31.
Periodically a 53 week period will be necessary to realign the accounting period
with the calendar.
Goodwill
Goodwill, both positive and negative, arising on the acquisition of
Interconnection Systems Limited has been taken directly to reserves under "Other
reserves".
Depreciation
Depreciation is provided on all tangible fixed assets, at rates calculated
to write off the cost or valuation of each asset evenly over its expected useful
life, as follows:
<TABLE>
<S> <C>
Freehold buildings -- over 40 years
Plant and machinery -- over 2 to 10 years
Fixtures and fittings -- over 3 to 10 years
</TABLE>
The part of the annual depreciation charge on revalued assets which relates
to the surplus over cost is transferred from the revaluation reserve to retained
profits.
Stocks
Stocks are stated at the lower of cost and net realizable value as follows:
Costs incurred in bringing each product to its present location and
condition:
<TABLE>
<S> <C>
Raw materials -- purchase cost on a first-in, first-out
basis
Work in progress and finished goods -- cost of direct materials and labor plus
attributable overheads based on a normal
level of activity
</TABLE>
Net realizable value is based on estimated selling price less further costs
expected to be incurred to completion and disposal.
F-82
<PAGE> 191
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Finance leases
Assets held under finance leases are capitalized in the balance sheet and
are depreciated over their useful lives. The interest element of rental
obligations is charged to the profit and loss account over the period of the
lease in accordance with Statement of Standard Accounting Practice 21.
Research and development
Research and development expenditure is written off as incurred.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the balance sheet
date. All differences are taken to the profit and loss account.
Deferred taxation
Deferred taxation is provided using the liability method on all timing
differences to the extent that they are expected to reverse in the future
without being replaced, calculated at the rate at which it is estimated that
taxation will be payable.
Pensions
Interconnection Systems Limited operates a defined benefit pension scheme
which is funded by the payment of contributions to a separately administered
fund.
Contributions to the fund are charged to the profit and loss account so as
to spread the cost of pensions over the employees' working lives.
Future variations in pension cost, which are identified as a result of an
actuarial valuation, will be amortised over the expected remaining lives of
current employees in the scheme. Differences between the amounts funded and the
amounts charged to the profit and loss account will be treated as either
provisions or prepayments in the balance sheet.
Condensed Consolidated Financial Data
The condensed consolidated profit and loss account and statements of total
recognized gains and losses and cash flows for the three month periods ended
March 29, 1996 and April 4, 1997 are unaudited. However, in the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation of the financial position and
results of operations have been included.
2. TURNOVER
Turnover represents the net invoiced sales, excluding value added tax, of
goods sold during the period.
The turnover and pre-tax profit is attributable to one continuing activity,
the manufacture of printed circuit boards.
F-83
<PAGE> 192
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
An analysis of turnover by geographical market is given below:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
United Kingdom......................................... 42,525 55,236 61,209
Continental Europe..................................... 28,280 49,375 80,434
------ ------- -------
70,805 104,611 141,643
====== ======= =======
</TABLE>
3. OPERATING PROFIT
(a) This is stated after charging/(crediting):
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Directors' remuneration (see note 4)................. 24 42 192
Auditors' remuneration for audit services............ 27 31 35
Auditors' remuneration for non audit services........ 23 63 75
Depreciation of tangible fixed assets................ 10,822 17,302 19,123
Exceptional depreciation charge...................... -- -- --
Exchange gains....................................... 451 41 (431)
Hire of plant and machinery.......................... 42 18
Regional Selective Assistance........................ (600) (600) (600)
====== ====== ======
</TABLE>
(b) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Operating profit..................................... 4,701 6,380 17,584
Depreciation......................................... 10,822 17,302 19,123
Loss on disposal of tangible fixed assets............ -- -- --
Government grants released........................... (600) (600) (600)
Increase in debtors.................................. (3,754) (2,691) (6,632)
Increase in stocks................................... (1,037) (3,301) (1,685)
Increase in creditors................................ 3,652 5,667 6,052
------ ------ ------
Net cash inflow from operating activities............ 13,784 22,757 33,842
====== ====== ======
</TABLE>
F-84
<PAGE> 193
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
4. DIRECTORS' REMUNERATION
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Fees................................................. -- -- --
Other emoluments (including pension contributions)... 24 42 192
------ ------ -------
24 42 192
====== ====== =======
Emoluments of the chairman (excluding pension
contributions) were:............................... 23,814 23,547 9,078
====== ====== =======
Emoluments of the highest paid director (excluding
pension contributions) were:....................... 23,814 23,547 181,413
====== ====== =======
</TABLE>
Directors emoluments (excluding pension contributions) fell within the
following ranges:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
APRIL 4,
MARCH 31, MARCH 29, 1997
1995 1996 (L000)
--------- --------- --------
<S> <C> <C> <C>
LNil -- L5,000 1 1 --
L5,001 -- L10,000 -- -- 1
L15,001 -- L20,000 -- 1 --
L20,001 -- L25,000 1 1 --
L180,001 -- L185,000 -- -- 1
</TABLE>
5. STAFF COSTS
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Wages and salaries....................................... 14,121 19,320 26,429
Social security costs.................................... 1,284 1,706 2,185
Other pension costs...................................... 183 232 212
------ ------ ------
15,588 21,258 28,826
====== ====== ======
</TABLE>
The average weekly number of employees during the period was made up as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
APRIL 4,
MARCH 31, MARCH 29, 1997
1995 1996 (L000)
--------- --------- --------
<S> <C> <C> <C>
Sales and administration................................. 67 78 67
Manufacturing............................................ 789 1,050 1,332
------ ------ -----
856 1,128 1,399
====== ====== =====
</TABLE>
F-85
<PAGE> 194
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
6. INTEREST RECEIVABLE
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Bank deposit interest.................................. -- -- 414
===== ===== =====
</TABLE>
7. INTEREST PAYABLE
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Bank overdraft........................................... 171 141 10
Other loans wholly repayable within five years (net of
rebate)................................................ 476 389 478
Other loans not wholly repayable within five years....... 72 77 544
Loan stock............................................... 200 200 200
Other interest........................................... 2 -- --
------ ------ ------
921 807 1,232
====== ====== ======
</TABLE>
8. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
The taxation charge is made up as follows:
Based on the profit for the period
Corporation tax at 33%................................. 2,613 4,422 6,463
Deferred taxation...................................... (93) -- --
----- ----- -----
2,520 4,422 6,463
Corporation tax under/(over) provided in previous
periods.............................................. 19 -- 411
----- ----- -----
2,539 4,422 6,874
===== ===== =====
</TABLE>
If full recognition had been made in respect of deferred taxation for the
period in respect of capital allowances in advance of depreciation and other
timing differences the taxation charge would have decreased by L2,252,930 (1996:
decreased by L1,466,000; 1995: increased by L392,000).
9. DIVIDENDS
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Ordinary-- interim paid................................ 94 500 450
-- final proposed............................. -- -- --
----- ----- -----
94 500 450
===== ===== =====
</TABLE>
F-86
<PAGE> 195
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
10. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
PLANT AND
MACHINERY
FREEHOLD LAND AND FIXTURES
AND BUILDINGS AND FITTINGS TOTAL
(L000) (L000) (L000)
------------- ------------ -------
<S> <C> <C> <C>
Cost or valuation:
At April 2, 1994................................ 3,804 33,511 37,315
Additions....................................... 1,771 12,706 14,477
Revaluation..................................... 136 -- 136
------ ------- -------
At March 31, 1995............................... 5,711 46,217 51,928
Additions....................................... 2,710 22,834 25,544
------ ------- -------
At March 29, 1996............................... 8,421 69,051 77,472
Additions....................................... 8,605 18,986 27,591
Revaluation..................................... (1,957) -- (1,957)
Reclassification................................ (960) 960 --
------ ------- -------
At April 4, 1997................................ 14,109 88,997 103,106
------ ------- -------
Depreciation:
At April 2, 1994................................ 120 15,240 15,360
Provided during the period...................... 113 10,709 10,822
Revaluation..................................... (179) (5,728) (5,907)
------ ------- -------
At March 31, 1995............................... 54 20,221 20,275
Provided during the period...................... 947 16,355 17,302
------ ------- -------
At March 29, 1996............................... 1,001 36,576 37,577
Provided during the period...................... 352 18,771 19,123
Revaluation..................................... (393) (23,743) (24,136)
Reclassification................................ (960) 960 --
------ ------- -------
At April 4, 1997................................ -- 32,564 32,564
------ ------- -------
Net book value
At March 31, 1995............................... 5,657 25,996 31,653
====== ======= =======
At March 29, 1996............................... 7,420 32,475 39,895
====== ======= =======
At April 4, 1997................................ 14,109 56,433 70,542
====== ======= =======
</TABLE>
F-87
<PAGE> 196
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
The historical cost of assets included at valuation is as follows:
<TABLE>
<CAPTION>
PLANT AND
MACHINERY
FREEHOLD LAND AND FIXTURES
AND BUILDINGS AND FITTINGS TOTAL
(L000) (L000) (L000)
------------- ------------ ------
<S> <C> <C> <C>
Historical cost:
At April 1, 1994................................ 1,914 1,141 3,055
Historical cost of assets revalued in period.... 1,771 38,284 40,055
----- ------ ------
At March 31, 1995 and March 29, 1996............ 3,685 39,425 43,110
Historical cost of additions revalued in
period........................................ 2,796 40,684 43,480
----- ------ ------
At April 4, 1997................................ 6,481 80,109 86,590
===== ====== ======
Depreciation based on cost:
At April 1, 1994................................ 90 152 242
Provided during period.......................... 70 9,171 9,241
Depreciation on prior year asset additions
revalued in period............................ -- 9,108 9,108
----- ------ ------
At March 31, 1995............................... 160 18,431 18,591
Provided during the period...................... 83 6,504 6,587
----- ------ ------
At March 29, 1996............................... 243 24,935 25,178
Provided during the period...................... 131 17,474 17,605
Depreciation on prior year asset additions
revalued in period............................ 48 8,258 8,306
----- ------ ------
At April 4, 1997................................ 422 50,667 51,089
===== ====== ======
</TABLE>
Included in the valuation of freehold land and buildings is land valued at
L670,000 which is not depreciated.
The net book value within plant and machinery and fixtures and fittings in
respect of assets held under finance leases and hire purchase contracts is as
follows:
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Plant and machinery......................................... 4,230 2,936
===== =====
Fixtures and fittings....................................... -- --
===== =====
</TABLE>
The freehold land and buildings and all of the plant and machinery and
fixtures and fittings were revalued for existing use at depreciated replacement
cost on November 1, 1994 by Weatherall, Green & Smith (Chartered Surveyors). The
freehold land and buildings valuation of L5,600,000 resulted in a valuation
surplus of L315,000. The plant and machinery and fixtures and fittings valuation
of L28,271,000 resulted in a valuation surplus of L5,727,000.
The freehold land and buildings and all of the plant and machinery and
fixtures and fittings at the South Shields plant excluding computer software
were revalued for existing use at depreciated replacement cost on April 1, 1997
by Weatherall, Green & Smith (Chartered Surveyors). The South Shields freehold
land and buildings valuation of L6,550,000 resulted in a valuation deficit of
L1,564,000. The South Shields plant and machinery and fixtures and fittings
valuation of
F-88
<PAGE> 197
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
L53,685,975 resulted in a valuation surplus of L23,743,000. If the revalued
assets were sold at their valuation a taxation liability of L8,720,000 would
arise.
11. STOCKS
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Raw materials and consumables............................... 3,966 5,401
Work in progress............................................ 1,842 2,492
Finished goods for resale................................... 1,639 1,239
------ ------
7,447 9,132
====== ======
</TABLE>
12. DEBTORS
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Trade debtors............................................... 17,109 20,910
Other debtors............................................... 57 2,499
Prepayments and accrued income.............................. 205 594
------ ------
17,371 24,003
====== ======
</TABLE>
13. CASH AND CASH EQUIVALENTS
Analysis of balances as shown in the consolidated balance sheet and changes
during the periods:
<TABLE>
<CAPTION>
CHANGE
1994 1995 IN PERIOD
YEAR ENDED MARCH 31, 1995 (L000) (L000) (L000)
------------------------- ------ ------ ---------
<S> <C> <C> <C>
Cash at bank and in hand................................. 27 2,087 2,060
Bank overdraft........................................... (1,394) -- 1,394
------ ------ -----
(1,367) 2,087 3,454
====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
CHANGE
1995 1996 IN PERIOD
YEAR ENDED MARCH 29, 1996 (L000) (L000) (L000)
------------------------- ------ ------ ---------
<S> <C> <C> <C>
Cash at bank and in hand................................. 2,087 2,636 549
====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
CHANGE
1996 1997 IN PERIOD
YEAR ENDED APRIL 4, 1997 (L000) (L000) (L000)
------------------------ ------ ------ ---------
<S> <C> <C> <C>
Cash at bank and in hand.................................. 2,636 10,244 7,608
Short-term deposits....................................... -- 16,000 16,000
----- ------ ------
2,636 26,244 23,608
===== ====== ======
</TABLE>
Included within liquid resources are term deposits of less than one year.
F-89
<PAGE> 198
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Current installment due on loan (note 16)................... 1,183 4,183
Trade creditors............................................. 15,179 21,021
Amounts under finance leases (note 15)...................... 970 1,032
Current corporation tax..................................... 5,262 7,233
Other taxes and social security costs....................... 578 702
Other creditors............................................. 453 361
Accruals.................................................... 9,680 13,331
------ ------
33,305 47,863
====== ======
</TABLE>
15. OBLIGATIONS UNDER FINANCE LEASES AND HIRE PURCHASE CONTRACTS
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Amounts payable:
Within one year........................................... 1,254 1,371
In two to five years...................................... 4,804 3,654
------ ------
6,058 5,025
Less: finance charges allocated to future periods........... 972 790
------ ------
5,086 4,235
====== ======
Finance leases and hire purchase contracts are analyzed as
follows:
Current obligations (note 14)............................. 970 1,032
Noncurrent obligations.................................... 4,116 3,203
------ ------
5,086 4,235
====== ======
</TABLE>
Analysis of changes in finance leases and hire purchase contracts:
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Opening balance............................................. -- 5,086
Inception of finance lease contracts........................ 5,709 154
Capital element on finance lease rental payments............ (623) (1,005)
----- ------
Closing balance............................................. 5,086 4,235
===== ======
</TABLE>
F-90
<PAGE> 199
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
16. LOANS
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
GROUP (L000) (L000)
----- --------- --------
<S> <C> <C>
Wholly repayable within five years:
Bank loan Bank of Scotland(1)............................. 4,500 3,500
Loan stock................................................ 2,000 2,000
European Coal and Steel Community (ECSC) loan(1).......... 250 125
European Coal and Steel Community (ECSC) loan(2).......... 3,000 3,000
European Coal and Steel Community (ECSC) loan(3).......... -- 6,000
Not wholly repayable within five years:
Medium term loan at 1.75% over Libor per annum repayable
in 80 quarterly installments of L14,375 from June 28,
1991................................................... 863 805
Bank loan Barclays repayable in 10 six monthly
installments of L450,000 commencing July 31, 1999...... -- 6,500
Bank loan Bank of Scotland(2) repayable in 10 six monthly
installments of L450,000 commencing July 31, 1999...... -- 6,500
DTI loan at variable interest rates repayable in one
installment on April 15, 2016.......................... -- 2,431
English Partnerships loan at variable interest rates
repayable in one installment on September 30, 2016..... -- 658
------ ------
10,613 31,519
Less: included in current liabilities (see note 14)......... (1,183) (4,183)
------ ------
9,430 27,336
====== ======
For loans not wholly repayable within five years the amounts
repayable by installments are:
Within five years......................................... 288 8,090
After five years.......................................... 575 8,804
------ ------
863 16,894
====== ======
</TABLE>
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Loans are repayable as follows:
Amounts falling due: --
Within one year........................................... 1,183 4,183
Between one and two years................................. 6,183 3,058
Between two and five years................................ 2,672 15,474
In five years or more..................................... 575 8,804
------ ------
10,613 31,519
====== ======
</TABLE>
The first ECSC loan is secured by a first fixed charge over Interconnection
Systems Limited's tangible fixed assets and book debts and a floating charge
over its other assets.
The second ECSC loan is secured by chattel mortgages over Interconnection
Systems Limited's plant and machinery, assignment of the book debts insurance
policy and assignment of key persons' life policies.
The first Bank of Scotland loan is secured by a fixed and floating charge
over all of Interconnection Systems Limited's assets.
F-91
<PAGE> 200
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
The medium term loan is secured by a fixed charge over Interconnection
Systems Limited's freehold land and buildings.
The second Bank of Scotland loan, the Barclays loan and the third ECSC loan
are secured by a first charge over the assets of Interconnection Systems Limited
excluding the property at Balliol Business Park and excluding assets acquired
under finance leases, and a second charge over the property at Balliol Business
Park.
The DTI loan and the English Partnerships' loan are secured by a first
charge over the property at Balliol Business Park.
The loan stock is unsecured. The loan stock holders have indicated that
redemption will not be sought before April 5, 1998.
An analysis of changes in loan financing is as follows:
<TABLE>
<CAPTION>
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Opening balance...................................... 8,578 11,295 10,613
New loans raised..................................... 5,000 -- 22,089
Repayment of loans................................... (2,283) (682) (1,183)
------ ------ ------
Closing balance...................................... 11,295 10,613 31,519
====== ====== ======
</TABLE>
17. DEFERRED TAXATION
Deferred taxation provided in the financial statements and the amounts not
provided are as follows:
<TABLE>
<CAPTION>
PROVIDED NOT PROVIDED
-------------------- --------------------
MARCH 29, APRIL 4, MARCH 29, APRIL 4,
1996 1997 1996 1997
(L000) (L000) (L000) (L000)
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Capital allowances in advance of depreciation......... -- -- (837) 725
Other timing differences.............................. -- -- (629) (2,978)
Taxation on valuation surplus......................... -- -- 2,137 8,720
----- ----- ----- ------
-- -- 671 6,467
===== ===== ===== ======
</TABLE>
The directors consider that the valuation surplus will not be realized in
the foreseeable future and therefore no provision for deferred tax on the
valuation surplus has been made.
18. DEFERRED GOVERNMENT GRANTS
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Opening balance.......................................... 550 1,200 600
Received in the period................................... 1,250 -- --
Released during the period............................... (600) (600) (600)
----- ----- ----
Closing balance.......................................... 1,200 600 --
===== ===== ====
</TABLE>
F-92
<PAGE> 201
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
19. SHARE CAPITAL
The authorised and allotted, called up and fully paid share capital at
April 1, 1994, March 31, 1995, March 29, 1996 and April 4, 1997 was L200,
consisting of 200 ordinary shares of L1 each.
20. RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENTS ON RESERVES
<TABLE>
<CAPTION>
SHARE PROFIT AND
SHARE PREMIUM REVALUATION OTHER LOSS
CAPITAL ACCOUNT RESERVE RESERVE ACCOUNT TOTAL
(L000) (L000) (L000) (L000) (L000) (L000)
------- ------- ----------- ------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
At April 2, 1994........................ -- 4,650 2,673 227 4,519 12,069
Revaluation during the period........... -- -- 6,042 -- -- 6,042
Transfer to retained profits............ -- -- (1,581) -- 1,581 --
Retained profit for the period.......... -- -- -- -- 1,147 1,147
Arising on acquisition.................. -- -- -- (11) -- (11)
----- ----- ------ ----- ------ ------
At March 31, 1995....................... -- 4,650 7,134 216 7,247 19,247
Transfer to retained profits............ -- -- (1,449) -- 1,449 --
Retained profit for the period.......... -- -- -- -- 651 651
----- ----- ------ ----- ------ ------
At March 29, 1996....................... -- 4,650 5,685 216 9,347 19,898
Revaluation during the period........... -- -- 22,179 -- -- 22,179
Transfer to retained profits............ -- -- (1,500) -- 1,500 --
Retained profit for the period.......... -- -- -- -- 9,442 9,442
----- ----- ------ ----- ------ ------
At April 4, 1997........................ -- 4,650 26,364 216 20,289 51,519
===== ===== ====== ===== ====== ======
</TABLE>
21. CAPITAL COMMITMENTS
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Contracted for but not provided......... -- --
===== ======
Authorized but not contracted for....... 7,069 32,429
===== ======
</TABLE>
22. PENSION COMMITMENTS
Interconnection Systems Limited operates a defined benefit pension scheme
which is funded by the payment of contributions to a separately administered
fund.
The contributions to the scheme are determined on behalf of the company
with the advice of an independent qualified actuary on the basis of a triennial
valuation using the Projected Unit Method. The most recent valuation was carried
out as at January 1, 1996. The actuary's valuation used the following main
assumptions:
<TABLE>
<S> <C>
Long term investment return................................. 8.5% per annum
Increase in pensionable salaries............................ 6.5% per annum
Increase in pensions in payment............................. 3.0% per annum
</TABLE>
This valuation showed that the market value of the Scheme's assets at
January 1, 1996 amounted to L5,660,314 and the actuarial value was sufficient to
cover 103% of the benefits that had accrued to members after projecting
pensionable salaries to the assumed date of retirement or death.
F-93
<PAGE> 202
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Included within accruals under "Creditors -- amounts falling due within one
year" is a pension scheme accrual of L515,877 (1996 -- L402,327).
23. DIRECTORS' INTERESTS
I H Bradbury has an interest in payments of L389,933 (1996 -- L383,640;
1995 -- L382,800) made by Interconnection Systems Limited to Interconnection
Systems (Holdings) Limited in the period ended 4 April 1997 in respect of
consultancy services provided to Interconnection Systems Limited by I H
Bradbury.
In addition, the company purchased a property during the year at its market
value of L145,000 from T P Robinson, a director of Interconnection Systems
Limited and Interconnection Systems (Holdings) Limited.
24. COMPANIES ACT 1985
These financial statements do not comprise the Company's statutory accounts
within the meaning of section 240 of the Companies Act 1985 of Great Britain.
Statutory accounts for the years ended March 29, 1996 and March 31, 1995, have
been, and for the year ended April 4, 1997, will be, delivered to the Registrar
of Companies for England and Wales. The auditors' reports on these accounts were
unqualified.
25. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The Group's consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United Kingdom ("UK GAAP")
which differ from United States generally accepted accounting principles ("US
GAAP"). The significant differences as they apply to the Group are summarized
below.
Pension costs
The Group provides for the cost of retirement benefits based upon
consistent percentages of employees' pensionable pay as recommended by
independent qualified actuaries. US GAAP require that the projected benefit
obligation (pension liability) be matched against the fair value of the plan's
assets and be adjusted to reflect any unrecognized obligations or assets in
determining the pension cost or credit for the year. For the purposes of the
reconciliations below, US GAAP have been adopted as of April 1, 1994. The
Company has not implemented FAS 87 as of the effective date specified in the
standard for a foreign plan (fiscal years beginning after December 15, 1988) due
to the unavailability of actuarial data. A portion of the transition liability
at April 1, 1994 has been allocated to shareholders' funds based on a ratio of
5/15, being the number of years elapsed between the effective date of FAS 87 and
April 1, 1994 over the 15 year period being used to amortize the transition
liability.
Summary of principal assumptions made by the actuary:
<TABLE>
<CAPTION>
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
% % %
--------- --------- --------
<S> <C> <C> <C>
Discount rate.................................... 8.0% 9.0% 8.5%
Salary growth.................................... 6.0 7.0 6.5
Long-term return on assets....................... 9.0 9.0 9.0
Pension increases................................ 3.0 3.0 3.0
</TABLE>
F-94
<PAGE> 203
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Goodwill and negative goodwill
Under UK GAAP, goodwill and negative goodwill arising on acquisitions is
set off against or credited to shareholders' funds in the year of acquisition.
Under US GAAP, such goodwill would be capitalized and amortized over its
estimated useful life which in the case of the acquisition of Interconnection
Systems Limited is estimated to be 10 years. Under US GAAP, negative goodwill
would be eliminated by reducing the value of the interest in the noncurrent
assets acquired.
Accordingly, under US GAAP the carrying value of the additional 20%
interest in the tangible fixed assets of Interconnection Systems Limited
acquired in 1994 would have been reduced by L1,067,000 and subsequent
depreciation would have been reduced by L201,000 per annum.
Revaluation of fixed assets
Under UK GAAP, the Group's tangible fixed assets are carried at valuations
and depreciation is computed based on the revalued amounts. Under US GAAP, such
revaluations are not permitted and all tangible assets would be carried at cost
subject to any impairment write down and the depreciation charge would be based
on such carrying amount. The gain or loss arising on the disposal of tangible
assets under US GAAP would differ from that arising under UK GAAP by the amount
of the revaluation gain thus realized, which in the years ended March 31, 1995,
March 29, 1996 and April 4, 1997 is not material.
Deferred taxation
Under UK GAAP, deferred taxation is provided using the liability method on
all timing differences to the extent that they are expected to reverse in the
future without being replaced, calculated at the rate at which it is estimated
that taxation will be payable. Under US GAAP, deferred taxation would be
computed on all temporary differences between the tax and book bases of assets
and liabilities which will result in taxable or tax deductible amounts in future
years. Deferred taxation assets would be recognized to the extent that it is
more likely than not that they will be realized.
Deferred taxation also arises in relation to the tax effect of other UK
GAAP to US GAAP adjustments.
Approximate effects on net income of differences between UK GAAP and US
GAAP:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
-------------------------------- --------------------
MARCH 31, MARCH 29, APRIL 4 MARCH 29, APRIL 4,
1995 1996 1997 1996 1997
(L000) (L000) (L000) (L000) (L000)
--------- --------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Profit for the year as reported in the consolidated
profit and loss account............................... 1,241 1,151 9,892 1,671 1,589
Pension costs........................................... 130 58 77 14 19
Amortization of Goodwill................................ (84) (84) (84) (21) (21)
Depreciation of tangible fixed assets................... 1,782 1,634 1,685 408 421
Deferred taxation -- methodology........................ 501 1,858 787 464 322
-- on adjustments.................... (42) (20) (25) (5) (6)
------ ------ ------ ------ ------
Net income for the year as adjusted to accord with US
GAAP.................................................. 3,528 4,597 12,332 2,531 2,324
====== ====== ====== ====== ======
</TABLE>
F-95
<PAGE> 204
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Approximate effects on shareholders' funds of differences between UK GAAP
and US GAAP:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
(L000) (L000) (L000)
--------- --------- --------
<S> <C> <C> <C>
Shareholders' funds as reported in the consolidated
balance sheet........................................ 19,247 19,898 51,519
Intangible fixed assets -- goodwill:
Cost................................................. 840 840 840
Amortization......................................... (388) (472) (556)
Tangible fixed assets:
Cost................................................. (9,782) (8,201) (28,931)
Amortization......................................... 1,782 1,634 1,685
Current assets/liabilities:
Pension costs........................................ 621 679 756
Deferred taxation -- methodology..................... -- 1,466 2,253
-- on adjustments............... -- (224) (249)
Provisions for liabilities and charges:
Deferred taxation -- methodology..................... (392) -- --
-- on adjustments............... (204) -- --
------ ------ -------
Shareholders' equity as adjusted to accord with US
GAAP................................................. 11,724 15,620 27,317
====== ====== =======
</TABLE>
Consolidated statement of cash flows
The consolidated statement of cash flows prepared under UK GAAP presents
substantially the same information as that required under US GAAP. The
statements differ however with regard to the classification of items within the
statements and as regards the definition of cash and cash equivalents.
Under US GAAP, cash and cash equivalents would not include bank overdrafts.
Under UK GAAP, cash flows are presented separately for operating activities,
returns on investments and servicing of finance, taxation, investing activities
and financing. US GAAP require only three categories of cash flow activity to be
reported; operating, investing and financing. Cash flows from taxation and
returns on investments and servicing of finance shown under UK GAAP would be
included as operating activities under US GAAP.
F-96
<PAGE> 205
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
The categories of cash flow activity under US GAAP can be summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
-------------------------------- --------------------
MARCH 31, MARCH 29, APRIL 4, MARCH 29, APRIL 4,
1995 1996 1997 1996 1997
(L000) (L000) (L000) (L000) (L000)
--------- --------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash inflow from operating
activities..................... 10,763 18,670 27,826 7,823 8,243
Cash outflow on investing
activities..................... (12,670) (16,816) (24,119) (3,632) (9,490)
Cash (outflow)/inflow from
financing activities........... 3,967 (1,305) 19,901 (1,555) 5,229
------- ------- ------- ------ -------
Increase in cash and cash
equivalents.................... 2,060 549 23,608 2,636 3,982
Cash and cash equivalents:
Opening balance................ 27 2,087 2,636 -- 22,262
------- ------- ------- ------ -------
Closing balance................ 2,087 2,636 26,244 2,636 26,244
======= ======= ======= ====== =======
</TABLE>
26. CONVERSION OF UK GAAP AMOUNTS TO US GAAP AMOUNTS IN US DOLLARS (UNAUDITED)
The following tables set forth in UKL the historical balance sheet and
profit and loss accounts of the Company as of and for the year ended April 4,
1997, on a historical basis and adjusts the amounts to US GAAP in UKL. The UKL
amounts are the translated to US$ based on a translation rate of UKL.61 =
US$1.00. Such amounts are shown translated to U.S.$ for convenience purposes
only.
Consolidated profit and loss account (unaudited)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 4, 1997
----------------------------------------------------------------
U.K. U.S. GAAP
GAAP ADJUSTMENTS U.S. GAAP TRANSLATION U.S. GAAP
(L000) (L000) (L000) RATE (U.S.$000)
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Turnover.................................... 141,643 -- 141,643 .61 232,202
Cost of sales............................. 112,980 (1,685) 111,295 .61 182,451
------- ------ ------- -------
Gross profit.............................. 28,663 1,685 30,348 .61 49,751
Distribution costs........................ 1,632 7 1,639 .61 2,687
Administrative expenses................... 9,491 -- 9,491 .61 15,559
Other operating income.................... (44) -- (44) .61 (72)
------- ------ ------- -------
Operating profit............................ 17,584 1,678 19,262 .61 31,577
Interest receivable....................... 414 -- 414 .61 679
Interest payable.......................... (1,232) -- (1,232) .61 (2,020)
------- ------ ------- -------
Profit on ordinary activities before
taxation.................................. 16,766 1,678 18,444 .61 30,236
Tax on profit on ordinary activities...... 6,874 (762) 6,112 .61 10,020
------- ------ ------- -------
Profit on ordinary activities after
taxation.................................. 9,892 2,440 12,332 .61 20,216
======= ====== ======= =======
</TABLE>
F-97
<PAGE> 206
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 4, 1997 (UNAUDITED)
----------------------------------------------------------------
U.K. U.S. GAAP
GAAP ADJUSTMENTS U.S. GAAP TRANSLATION U.S. GAAP
(L000) (L000) (L000) RATE (U.S.$000)
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Turnover.................................... 38,266 -- 38,266 0.61 62,731
Cost of sales............................. 33,711 (408) 33,303 0.61 54,595
------- ----- ------- -------
Gross profit.............................. 4,555 408 4,963 0.61 8,136
Distribution costs........................ 525 -- 525 0.61 862
Administrative expenses................... 1,557 (11) 1,546 0.61 2,535
Other operating income.................... (44) -- (44) 0.61 (72)
------- ----- ------- -------
Operating profit............................ 2,517 419 2,936 0.61 4,811
Interest receivable....................... 48 -- 48 0.61 79
Interest payable.......................... (308) -- (308) 0.61 (505)
------- ----- ------- -------
Profit on ordinary activities before
taxation.................................. 2,257 419 2,676 0.61 4,385
Tax on profit on ordinary activities...... 668 (316) 352 0.61 576
------- ----- ------- -------
Profit on ordinary activities after
taxation.................................. 1,589 735 2,324 0.61 3,809
======= ===== ======= =======
</TABLE>
Consolidated balance sheet (unaudited)
<TABLE>
<CAPTION>
APRIL 4, 1997
----------------------------------------------------------------
U.K. U.S. GAAP
GAAP ADJUSTMENTS U.S. GAAP TRANSLATION U.S. GAAP
(L000) (L000) (L000) RATE (U.S.$000)
---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Fixed assets
Intangible assets......................... -- 284 284 .61 466
Tangible assets........................... 70,542 (27,246) 43,296 .61 70,977
------ ------- ------ -------
70,542 (26,962) 43,580 .61 71,443
Current assets
Stocks.................................... 9,132 -- 9,132 .61 14,970
Debtors................................... 24,003 2,493 26,496 .61 43,436
Cash at bank and in hand.................. 26,244 -- 26,244 .61 43,023
------ ------- ------ -------
59,379 2,493 61,872 .61 101,429
Creditors: amounts falling due within one year... 47,863 (267) 47,596 .61 78,026
------ ------- ------ -------
Net current assets.......................... 11,516 2,760 14,276 .61 23,403
------ ------- ------ -------
Total assets less current liabilities....... 82,058 (24,202) 57,856 .61 94,846
Creditors: amounts falling due after more
than one year
Loans..................................... 27,336 -- 27,336 .61 44,813
Obligations under finance leases.......... 3,203 -- 3,203 .61 5,251
Accruals and deferred income
Deferred Government grants................ -- -- -- .61 --
------ ------- ------ -------
51,519 -- (24,202) 27,317 .61 44,782
====== ======= ====== =======
Capital and reserves*
Called up share capital................... -- -- -- .61 --
Share premium account..................... 4,650 -- 4,650 .61 7,623
Revaluation reserve....................... 26,364 (26,364) -- .61 --
Other reserves............................ 216 (216) -- .61 --
Profit and loss account................... 20,289 2,378 22,667 .61 37,159
------ ------- ------ -------
51,519 (24,202) 27,317 .61 44,782
====== ======= ====== =======
</TABLE>
F-98
<PAGE> 207
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE NEW NOTES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE NEW NOTES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE NEW NOTES
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT
BEEN A CHANGE IN FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
- ------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information.......................... i
Certain Definitions, Industry Data and
Financial Information........................ ii
Exchange Rates................................. iii
Summary........................................ 1
Risk Factors................................... 10
Use of Proceeds................................ 19
Selected Financial Data........................ 20
Unaudited Pro Forma Financial Information...... 25
Management's Discussion and Analysis of Results
of Operations and Financial Condition........ 37
Business....................................... 44
Management..................................... 50
Security Ownership of Certain Beneficial
Owners....................................... 56
Certain Transactions........................... 58
Description of Senior Credit Facilities........ 61
The Exchange Offer............................. 63
Description of New Notes....................... 71
Certain Federal Income Tax Considerations...... 100
Plan of Distribution........................... 101
Legal Matters.................................. 101
Experts........................................ 102
Index to Financial Statements.................. F-1
</TABLE>
- ------------------------------------------------------------
UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW
NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
OFFER TO EXCHANGE ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES
DUE 2007 FOR
9 3/4% SENIOR SUBORDINATED NOTES
DUE 2007
[VIASYSTEMS, INC. LOGO]
------------------------
PROSPECTUS
------------------------
, 1997
<PAGE> 208
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance and distribution of the securities
being registered are estimated (other than with respect to the SEC registration
fee) to be as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $121,212.12
Printing and Engraving Expenses............................. *
Accounting Fees and Expenses................................ *
Legal Fees and Expenses..................................... *
Miscellaneous............................................... *
-----------
Total............................................. *
============
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation of Viasystems, Inc. ("the Registrant")
provides for the mandatory indemnification of the directors and officers to the
fullest extent permitted by the General Corporation Law of the State of Delaware
(the "Delaware Code"). Pursuant to Section 145 of the Delaware Code, the
Registrant has the discretionary power to indemnify its present and former
directors and officers against expenses actually and reasonably incurred by them
in connection with any suit (other than an action by or in the right of the
Registrant) to which such directors and officers were, are, or are threatened to
be made, a party by reason of their serving in such positions, so long as they
acted in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interest of the corporation for which they served in such
positions, and with respect to any criminal action, they had no reasonable cause
to believe their conduct was unlawful.
Under the Delaware Code, a corporation may also indemnify any person who
was or is a party to an action brought by or in the right of the Registrant, but
only for actual or reasonable defense and settlement expenses and not for any
satisfaction of a judgment or settlement of the claim itself, and with the
further limitation that in such actions no indemnification shall be made in the
event of any adjudication that such director or officer is liable to the
corporation unless the court, upon application, finds that in light of all the
circumstances such person is fairly and reasonably entitled to indemnity for
such expenses. The Delaware Code further provides that the indemnification
authorized thereby shall not be deemed exclusive of any other rights to which
any such officer or director may be entitled under any bylaws, agreements, vote
of stockholders or disinterested directors, or otherwise.
The above discussion of the Certificate of Incorporation of the Registrant
and of Section 145 of the Delaware Code is not intended to be exhaustive and is
qualified in its entirety by such Certificate of Incorporation and the Delaware
Code.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in this Item 14, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has
II-1
<PAGE> 209
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On April 11, 1997, the Registrant issued 1,000 shares of its common stock,
par value $.01 per share, to Viasystems Group, Inc. in a private transaction for
a cash purchase price of $1,000 in reliance on the exemption, set forth in
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
from the registration requirement set forth in Section 5 of the Securities Act.
On June 6, 1997, the Registrant sold $400,000,000 aggregate principal
amount of its 9 3/4% Senior Subordinated Notes due 2007 (the "Old Notes") in a
private placement in reliance on Section 4(2) under the Securities Act, at a
price equal to 100% of the stated principal amount of such Old Notes.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
2.1 -- Securities Purchase Agreement dated as of October 1,
1996, among Circo Craft Holding Company and certain
Purchasers (defined therein)*
2.2 -- Acquisition Agreement, dated November 26, 1996, among
Lucent Technologies Inc., Circo Technologies Group, Inc. and
Circo Craft Technologies, Inc.*
2.3 -- Agreement and Plan of Merger dated as of April 11, 1997,
by and among Viasystems Group, Inc., HMTF Acquisition, L.P.,
HMTF U.K. Acquisition Company, Hicks, Muse, Tate & Furst
Equity Fund III, and HM3 Coinvesters, L.P.*
2.4 -- Agreement and Plan of Merger dated as of June 6, 1997, by
and between Viasystems Group, Inc. and Chips Holdings, Inc.*
2.5 -- Agreement and Plan of Merger dated as of June 6, 1997, by
and between Viasystems, Inc. and Chips Acquisition, Inc.*
3.1 -- Certificate of Incorporation of Viasystems, Inc.*
3.2 -- Bylaws of Viasystems, Inc.*
4.1 -- Indenture, dated as of June 6, 1997, by and between
Viasystems, Inc. and The Bank of New York, as Trustee.*
4.2 -- Form of the Old Note (included in Exhibit 4.1, Exhibit A)*
4.3 -- Form of the New Note (included in Exhibit 4.1, Exhibit B)*
4.4 -- Second Amended and Restated Credit Agreement dated as of
June 5, 1997 among Viasystems Group, Inc., Viasystems, Inc.,
Circo Craft Co. Inc., PCB Investments PLC, Forward Group
PLC, Chips Acquisition Limited and Interconnection
Systems (Holdings) Limited; and The Chase Manhattan Bank
of Canada, and Chase Manhattan International Limited and
The Chase Manhattan Bank.*
4.5 -- Amended and Restated Guarantee and Collateral Agreement
dated as of April 11, 1997*
4.6 -- Supplement to Guarantee and Collateral Agreement dated as
of June 5, 1997*
5.1 -- Opinion of Legality of Weil, Gotshal & Manges LLP+
10.1 -- Supply Agreement dated as of November 26, 1996, by and
between Lucent Technologies Inc. and Circo Craft
Technologies, Inc. (confidential treatment will be sought
with respect to certain portions of this exhibit)+
</TABLE>
II-2
<PAGE> 210
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.2 -- General Purchase Agreement dated as of November 26, 1996
between Lucent Technologies, Inc. and Circo Craft
Technologies, Inc. (confidential treatment will be sought
with respect to certain portions of this exhibit)+
10.3 -- Amended and Restated Viasystems Group, Inc. 1997 Stock
Option Plan*
10.4 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and
James N. Mills+
10.5 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and
David M. Sindelar+
10.6 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and
Larry S. Bacon+
10.7 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and W.
Thomas McGhee+
10.8 -- Stock Option Agreement dated as of June 6, 1997 between
Viasystems Group, Inc. and James N. Mills+
10.9 -- Stock Option Agreement dated as of June 6, 1997 between
Viasystems Group, Inc. and David M. Sindelar+
10.10 -- Stock Option Agreement dated as of June 6, 1997 between
Viasystems Group, Inc. and Larry S. Bacon+
10.11 -- Stock Option Agreement dated as of June 6 1997 between
Viasystems Group, Inc. and W. Thomas McGhee+
10.12 -- Viasystems Group, Inc. Stock Option Agreement dated as of
February 4, 1997, with Richard W. Vieser+
10.13 -- Viasystems Group, Inc. Stock Option Agreement dated as of
February 4, 1997, with Kenneth F. Yontz+
10.14 -- Third Amended and Restated Monitoring and Oversight
Agreement, dated June 6, 1997, among Viasystems Group, Inc.,
Viasystems, Inc., Viasystems Technologies Corp., Circo
Craft Co. Inc., Viasystems International, Inc., PCB
Acquisition Limited, PCB Investments plc, Chips
Acquisition Limited and Hicks, Muse & Co. Partners, L.P.+
10.15 -- Third Amended and Restated Financial Advisory Agreement,
dated June 6, 1997, among Viasystems Group, Inc.,
Viasystems, Inc., Viasystems Technologies Corp., Circo
Craft Co. Inc., Viasystems International, Inc., PCB
Acquisition Limited, PCB Investments plc, Chips
Acquisition Limited and Hicks, Muse & Co. Partners, L.P.
+
10.16 -- Purchase Agreement, dated as of June 2, 1997, by and
among Viasystems, Inc. and Chase Securities Inc., NatWest
Capital Markets Limited and Schroder Wertheim & Co.
Incorporated*
10.17 -- Exchange and Registration Rights Agreements, dated as of
June 6, 1997, by and among Viasystems, Inc. and Chase
Securities, Inc., NatWest Capital Markets Limited and
Schroder Wertheim & Co. Incorporated*
10.18 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and James N. Mills+
10.19 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and David M. Sindelar+
10.20 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and Robert N. Mills+
10.21 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and Larry S. Bacon+
</TABLE>
II-3
<PAGE> 211
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.22 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and W. Thomas McGhee+
10.23 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and Gerald C. Nelson+
10.24 -- Agreement dated as of December 30, 1996, between Circo
Craft Technologies, Inc. and the Communication Workers of
America+
10.25 -- Environmental, Health and Safety Agreement, dated as of
November 26, 1996, between Lucent Technologies and Circo
Craft Technologies, Inc.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges of
Viasystems Group, Inc.*
12.2 -- Computation of Ratio of EBITDA to Interest Expense, Net*
12.3 -- Computation of Ratio of Net Debt to EBITDA*
21.1 -- Subsidiaries of Viasystems, Inc.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement)+
23.2 -- Consent of Coopers & Lybrand L.L.P., independent
accountants*
23.3 -- Consent of Coopers & Lybrand L.L.P., independent
accountants*
23.4 -- Consent of Coopers & Lybrand, chartered accountants*
23.5 -- Consent of Deloitte & Touche, chartered accountants*
23.6 -- Consent of Coopers & Lybrand L.L.P., independent
accountants*
23.7 -- Consent of KPMG Audit Plc, independent auditors*
23.8 -- Consent of Ernst & Young, independent auditors*
24.1 -- Powers of Attorney (see pages II-4 of this Registration
Statement)
25.1 -- Statement of Eligibility and Qualification of The Bank of
New York, as Trustee under the Indenture filed as Exhibit
4.1 on Form T-1*
27.1 -- Financial Data Schedule*
99.1 -- Form of Letter of Transmittal*
99.2 -- Form of Notice of Guaranteed Delivery*
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment.
(b) Financial Statement Schedules:
The following financial statement schedule is included in this Registration
Statement:
S-1 Report of Independent Public Accountants on Financial Statement
Schedule
S-2 Schedule II -- Valuation and Qualifying Accounts
All other schedules are omitted since the required information is not
present or is not present in the amounts sufficient to require submission of the
schedules, or because the information required is included in the financial
statements and notes thereto.
II-4
<PAGE> 212
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(h) See Item 14.
II-5
<PAGE> 213
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis, State of
Missouri, on June 19, 1997.
VIASYSTEMS, INC.
By: /s/ JAMES N. MILLS
----------------------------------
James N. Mills
Chairman of the Board of Directors
and Chief Executive Officer
Each person whose signature to this Registration Statement appears below
hereby appoints James N. Mills and David M. Sindelar, and each of them
individually, any one of whom may act without the joinder of the other, as his
agent and attorney-in-fact to sign on his behalf individually and in the
capacity stated below and to file all pre- and post-effective amendments to this
Registration Statement, which may make such changes and additions to this
Registration Statement as such agent and attorney-in-fact may deem necessary or
appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES N. MILLS Chairman of the Board of June 19, 1997
- ----------------------------------------------------- Directors and Chief Executive
James N. Mills Officer (Principal Executive
Officer)
/s/ DAVID M. SINDELAR Chief Financial Officer June 19, 1997
- ----------------------------------------------------- (Principal Accounting and
David M. Sindelar Financial Officer)
/s/ ROBERT N. MILLS President, Chief Operating June 19, 1997
- ----------------------------------------------------- Officer and Director
Robert N. Mills
/s/ THOMAS O. HICKS Director June 19, 1997
- -----------------------------------------------------
Thomas O. Hicks
/s/ JACK D. FURST Director June 19, 1997
- -----------------------------------------------------
Jack D. Furst
/s/ RICHARD W. VIESER Director June 19, 1997
- -----------------------------------------------------
Richard W. Vieser
/s/ KENNETH F. YONTZ Director June 19, 1997
- -----------------------------------------------------
Kenneth F. Yontz
</TABLE>
II-6
<PAGE> 214
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Viasystems Group, Inc.:
In connection with our audit of the consolidated financial statements of
Viasystems Group, Inc. and subsidiaries as of December 31, 1996, and for the
period from inception (August 28, 1996) to December 31, 1996, which financial
statements are included in the Registration Statement on Form S-1, we have also
audited the financial statement schedule included herein.
In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly, in
all material respects, the information required to be included herein.
Coopers & Lybrand L.L.P.
St. Louis, Missouri
February 28, 1997
S-1
<PAGE> 215
VIASYSTEM GROUP, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts... -- 17 392(a) --(b) 409
Reserve for excess and obsolete
inventory....................... -- 261 3,359(a) (363)(b) 3,257
</TABLE>
- ---------------
(a) Allowance of acquired company at acquisition date.
(b) Write-offs, net of recoveries.
S-2
<PAGE> 216
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
2.1 -- Securities Purchase Agreement dated as of October 1,
1996, among Circo Craft Holding Company and certain
Purchasers (defined therein)*
2.2 -- Acquisition Agreement, dated November 26, 1996, among
Lucent Technologies Inc., Circo Technologies Group, Inc. and
Circo Craft Technologies, Inc.*
2.3 -- Agreement and Plan of Merger dated as of April 11, 1997,
by and among Viasystems Group, Inc., HMTF Acquisition, L.P.,
HMTF U.K. Acquisition Company, Hicks, Muse, Tate & Furst
Equity Fund III, and HM3 Coinvesters, L.P.*
2.4 -- Agreement and Plan of Merger dated as of June 6, 1997, by
and between Viasystems Group, Inc. and Chips Holdings, Inc.*
2.5 -- Agreement and Plan of Merger dated as of June 6, 1997, by
and between Viasystems, Inc. and Chips Acquisition, Inc.*
3.1 -- Certificate of Incorporation of Viasystems, Inc.*
3.2 -- Bylaws of Viasystems, Inc.*
4.1 -- Indenture, dated as of June 6, 1997, by and between
Viasystems, Inc. and The Bank of New York, as Trustee.*
4.2 -- Form of the Old Note (included in Exhibit 4.1, Exhibit A)*
4.3 -- Form of the New Note (included in Exhibit 4.1, Exhibit B)*
4.4 -- Second Amended and Restated Credit Agreement dated as of
June 5, 1997 among Viasystems Group, Inc., Viasystems, Inc.,
Circo Craft Co. Inc., PCB Investments PLC, Forward Group
PLC, Chips Acquisition Limited and Interconnection
Systems (Holdings) Limited; and The Chase Manhattan Bank
of Canada, and Chase Manhattan International Limited and
The Chase Manhattan Bank.*
4.5 -- Amended and Restated Guarantee and Collateral Agreement
dated as of April 11, 1997*
4.6 -- Supplement to Guarantee and Collateral Agreement dated as
of June 5, 1997*
5.1 -- Opinion of Legality of Weil, Gotshal & Manges LLP+
10.1 -- Supply Agreement dated as of November 26, 1996, by and
between Lucent Technologies Inc. and Circo Craft
Technologies, Inc. (confidential treatment will be sought
with respect to certain portions of this exhibit)+
</TABLE>
<PAGE> 217
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.2 -- General Purchase Agreement dated as of November 26, 1996
between Lucent Technologies, Inc. and Circo Craft
Technologies, Inc. (confidential treatment will be sought
with respect to certain portions of this exhibit)+
10.3 -- Amended and Restated Viasystems Group, Inc. 1997 Stock
Option Plan*
10.4 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and
James N. Mills+
10.5 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and
David M. Sindelar+
10.6 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and
Larry S. Bacon+
10.7 -- Amended and Restated Stock Option Agreement dated as of
November 26, 1996 between Circo Craft Holding Company and W.
Thomas McGhee+
10.8 -- Stock Option Agreement dated as of June 6, 1997 between
Viasystems Group, Inc. and James N. Mills+
10.9 -- Stock Option Agreement dated as of June 6, 1997 between
Viasystems Group, Inc. and David M. Sindelar+
10.10 -- Stock Option Agreement dated as of June 6, 1997 between
Viasystems Group, Inc. and Larry S. Bacon+
10.11 -- Stock Option Agreement dated as of June 6 1997 between
Viasystems Group, Inc. and W. Thomas McGhee+
10.12 -- Viasystems Group, Inc. Stock Option Agreement dated as of
February 4, 1997, with Richard W. Vieser+
10.13 -- Viasystems Group, Inc. Stock Option Agreement dated as of
February 4, 1997, with Kenneth F. Yontz+
10.14 -- Third Amended and Restated Monitoring and Oversight
Agreement, dated June 6, 1997, among Viasystems Group, Inc.,
Viasystems, Inc., Viasystems Technologies Corp., Circo
Craft Co. Inc., Viasystems International, Inc., PCB
Acquisition Limited, PCB Investments plc, Chips
Acquisition Limited and Hicks, Muse & Co. Partners, L.P.+
10.15 -- Third Amended and Restated Financial Advisory Agreement,
dated June 6, 1997, among Viasystems Group, Inc.,
Viasystems, Inc., Viasystems Technologies Corp., Circo
Craft Co. Inc., Viasystems International, Inc., PCB
Acquisition Limited, PCB Investments plc, Chips
Acquisition Limited and Hicks, Muse & Co. Partners, L.P.
+
10.16 -- Purchase Agreement, dated as of June 2, 1997, by and
among Viasystems, Inc. and Chase Securities Inc., NatWest
Capital Markets Limited and Schroder Wertheim & Co.
Incorporated*
10.17 -- Exchange and Registration Rights Agreements, dated as of
June 6, 1997, by and among Viasystems, Inc. and Chase
Securities, Inc., NatWest Capital Markets Limited and
Schroder Wertheim & Co. Incorporated*
10.18 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and James N. Mills+
10.19 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and David M. Sindelar+
10.20 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and Robert N. Mills+
10.21 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and Larry S. Bacon+
</TABLE>
<PAGE> 218
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.22 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and W. Thomas McGhee+
10.23 -- Executive Employment Agreement dated as of January 1,
1997, by and among Circo Technologies Group, Inc., Circo
Craft Technologies, Inc. and Gerald C. Nelson+
10.24 -- Agreement dated as of December 30, 1996, between Circo
Craft Technologies, Inc. and the Communication Workers of
America+
10.25 -- Environmental, Health and Safety Agreement, dated as of
November 26, 1996, between Lucent Technologies and Circo
Craft Technologies, Inc.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges of
Viasystems Group, Inc.*
12.2 -- Computation of Ratio of EBITDA to Interest Expense, Net*
12.3 -- Computation of Ratio of Net Debt to EBITDA*
21.1 -- Subsidiaries of Viasystems, Inc.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement)+
23.2 -- Consent of Coopers & Lybrand L.L.P., independent
accountants*
23.3 -- Consent of Coopers & Lybrand L.L.P., independent
accountants*
23.4 -- Consent of Coopers & Lybrand, chartered accountants*
23.5 -- Consent of Deloitte & Touche, chartered accountants*
23.6 -- Consent of Coopers & Lybrand L.L.P., independent
accountants*
23.7 -- Consent of KPMG Audit Plc, independent auditors*
23.8 -- Consent of Ernst & Young, independent auditors*
24.1 -- Powers of Attorney (see pages II-4 of this Registration
Statement)
25.1 -- Statement of Eligibility and Qualification of The Bank of
New York, as Trustee under the Indenture filed as Exhibit
4.1 on Form T-1*
27.1 -- Financial Data Schedule*
99.1 -- Form of Letter of Transmittal*
99.2 -- Form of Notice of Guaranteed Delivery*
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment.
<PAGE> 1
EXHIBIT 2.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated
as of October 1, 1996, is entered into among CIRCO CRAFT HOLDING COMPANY, a
Delaware corporation (the "Company"), and the Purchasers listed on the
signature pages hereof.
In consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Commitments to Purchase. The Company agrees to sell and,
subject to the terms and conditions set forth herein and in reliance on the
representations and warranties of the Company contained herein, each of the
Purchasers agrees, severally but not jointly, to purchase the number of shares
of Common Stock, par value $.01 per share (the "Common Stock"), or Class A
Common Stock, par value $.01 per share (the "Class A Common Stock" and together
with the Common Stock, the "Securities"), of the Company set forth below such
Purchaser's name on Exhibit A hereto, for the cash purchase price set forth
below such Purchaser's name on Exhibit A hereto.
1.2 Closing.
(a) The purchases and sales of the Securities will take
place at a closing (the "Closing") at the offices of Weil, Gotshal & Manges,
100 Crescent Court, Suite 1300, Dallas, Texas 75201, at 9:00 a.m., Dallas time,
on October 1, 1996, or on such other date as is specified by the Company to the
Purchasers in writing at least one (1) business day prior thereto.
(b) At the Closing, the Company shall deliver to each
Purchaser, against payment of the purchase price therefor, certificates for the
shares of Common Stock or Class A Common Stock purchased by such Purchaser.
Each Security so purchased shall be registered in the name of such Purchaser or
such other Person or Persons (each as hereinafter defined) as such Purchaser
may designate.
<PAGE> 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Purchasers to purchase the Securities as herein
provided, the Company makes the following representations and warranties to the
Purchasers, each and all of which shall be true and correct as of the date of
the execution and delivery of this Agreement and shall survive the execution
and delivery of this Agreement:
2.1 Corporate Existence. The Company: (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization; (b)
has all requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted and to consummate the
transactions contemplated by this Agreement; and (c) is qualified to do
business in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure to so qualify would
have a material adverse effect on the results of operations, business or
financial condition of the Company and its subsidiaries taken as a whole.
2.2 Authorization. The Company has all requisite corporate power
and authority to enter into this Agreement, issue the Securities and perform
its obligations hereunder. The execution, delivery and performance of this
Agreement and the Stockholders Agreement (as hereinafter defined) have been
duly authorized by all necessary corporate action on the part of the Company,
and this Agreement and the Stockholders Agreement have been duly executed and
delivered by the Company. This Agreement and the Stockholders Agreement
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms subject, as to
enforceability, to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general applicability affecting
the rights of creditors and to general principles of equity.
2.3 No Conflict. The execution, delivery and performance by the
Company of this Agreement and the Stockholders Agreement do not and will not
(a) violate or contravene or be in conflict with (i) any provision of the
Certificate of Incorporation or By-Laws of the Company, (ii) any provision of
any law, rule or regulation applicable to the Company, (iii) any order,
judgment or decree of any court or other agency, (b) violate, result in a
breach of or constitute a default under any term of any mortgage, indenture,
contract or agreement to which the Company is a party or by which the Company
or any property of the Company is bound; or
<PAGE> 3
(c) result in the creation of any tax, charge, claim, lien, security interest
or other encumbrance of any kind whatsoever on any of the properties or assets
of the Company.
2.4 Capitalization. The duly authorized capital stock of the
Company consists of (i) 90,000,000 shares of Common Stock, of which 67,949,754
shares will be issued and outstanding immediately after the consummation of the
transactions contemplated by this Agreement, and (ii) 10,000,000 shares of
Class A Common Stock, of which 7,111,111 shares will be issued and outstanding
immediately after the consummation of the transactions contemplated by this
Agreement. Except for the Class A Common Stock and the 2,315,066 IRR Stock
Options (as defined), there are no options, warrants, calls, subscriptions,
conversion or other rights, agreements or commitments obligating the Company to
issue any additional shares of capital stock of the Company or any other
securities convertible into, exchangeable for or evidencing the right to
subscribe for any shares of capital stock of the Company. Except as set forth
in the Stockholders Agreement, neither the Company nor any of its subsidiaries
has entered into any agreement to register any capital stock of the Company
under the Securities Act of 1933, as amended (the "Securities Act"). When
issued in accordance with the provisions of this Agreement, the Securities will
be duly authorized, validly issued, fully paid and non-assessable and will be
free and clear of any and all taxes, charges, claims, liens and security
interests or other encumbrances of any kind whatsoever.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
3.1 Private Placement.
(a) Each Purchaser (as to itself only) understands and
acknowledges that:
(i) the offering and sale of the Securities is
intended to be exempt from registration under the Securities Act of
1933, as amended, by virtue of the provisions of either Section 4(2)
of the Securities Act or Rule 506 of Regulation D ("Regulation D")
promulgated under the Securities Act by the Securities and Exchange
Commission (the "SEC");
3
<PAGE> 4
(ii) the offering itself will be reported by the
Company to the SEC to the extent required by Regulation D and to
various state securities or blue sky commissioners to the extent
required by applicable state law; and
(iii) there is no existing public or other market for
the Securities and there can be no assurance that any Purchaser will
be able to sell or dispose of such Purchaser's Securities.
(b) Each Purchaser (as to itself only) represents and
warrants to the Company that:
(i) the Securities to be acquired by it pursuant to
this Agreement are being acquired for its own account, not as a
nominee or agent for any other Person and without a view to the
distribution of such Securities or any interest therein in violation
of the Securities Act; and
(ii) such Purchaser is an "accredited investor"
within the meaning of Rule 501(a) under Regulation D, and has such
knowledge and experience in financial and business matters so as to be
capable of evaluating the merits and risks of its investment in the
Securities, and such Purchaser is capable of bearing the economic
risks of such investment and is able to bear the complete loss of its
investment in the Securities.
(c) Each Purchaser further represents that the execution,
delivery, and performance of this Agreement is within such Purchaser's powers
(corporate or otherwise) and has been duly authorized by all requisite action
(corporate or otherwise).
(d) Each Purchaser acknowledges that the Securities have
not been registered under the Securities Act and understands that the
Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or such sale is permitted pursuant to an available
exemption from such registration requirement.
4
<PAGE> 5
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Obligation of the Purchasers. Notwithstanding
any other provision of this Agreement and without affecting in any manner the
rights of the Purchasers hereunder, the Company shall have no rights under this
Agreement (but shall have all applicable obligations hereunder), and the
Purchasers shall not be obligated to purchase the Securities hereunder, unless
and until each of the following conditions precedent shall have been fulfilled
or (with the consent of each Purchaser) waived:
(a) The Securities being purchased by each Purchaser,
shall have been delivered duly executed to the Purchasers;
(b) Simultaneously with the purchase of the Securities,
HMTF Canada Acquisition Inc., a Quebec corporation and a subsidiary of the
Company ("Sub"), shall have entered into a Credit Agreement (the "Credit
Agreement"), among the Company, The Chase Manhattan Bank of Canada and Chemical
Bank of Canada which will provide the Company a credit facility in an aggregate
amount up to $110 million;
(c) Simultaneously with the purchase of the Securities,
Sub shall have acquired at least 66-2/3% of the common shares of Circo Craft
Co. Inc., a Quebec corporation; and
(d) The representations and warranties of the Company
contained herein shall be true and correct in all material respects on and as
of the Closing Date as though made on and as of such date.
ARTICLE V
MANAGEMENT OF THE COMPANY
Concurrently with the execution hereof, the Company and the Purchasers
are entering into a Stockholders Agreement in the form attached hereto as
Exhibit B (the "Stockholder Agreement"). Accordingly, the certificates
evidencing the Securities will contain certain legended information set forth
in the Stockholder Agreement.
5
<PAGE> 6
ARTICLE VI
MISCELLANEOUS
6.1 Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by telecopier or registered or certified mail, postage
prepaid, return receipt requested, addressed as follows (or at such other
address as may be substituted by notice given as herein provided):
If to the Company:
Circo Craft Holding Company
c/o Mills & Partners
101 South Hanley Road, Suite 300
St. Louis, Missouri 63105
Attention: David M. Sindelar
Copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Thomas A. Roberts
If to any Purchaser, at its address listed on the signature pages
hereof or such other address as any Purchaser may provide by notice to
the Company.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered, if personally delivered; when
receipt is acknowledged, if telecopied; and three calendar days after mailing
if sent by registered or certified mail (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).
6
<PAGE> 7
Failure to mail a notice or communication to a Purchaser or any defect
in it shall not affect its sufficiency with respect to other Purchasers. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
6.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
6.3 Successors and Assigns. This Agreement shall be binding upon
the Company, each Purchaser and each of their respective successors and
assigns.
6.4 Duplicate Originals. All parties may sign any number of
copies of this Agreement. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
6.5 Severability. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby
6.6 No Waivers; Amendments.
(a) No failure or delay on the part of the Company or any
Purchaser in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy at law or in equity or otherwise.
(b) Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Company or the party against whom such amendment is operative.
7
<PAGE> 8
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
CIRCO CRAFT HOLDING COMPANY
By: /s/
-------------------------------------
Name: Ellen L. Lipsitz
-----------------------------------
Title: Vice President
----------------------------------
<PAGE> 9
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
HICKS, MUSE, TATE & FURST EQUITY FUND
III, L.P.
By: Hicks, Muse GP Partners III,
L.P., its General Partner
By: Hicks, Muse Fund III
Incorporated, its
General Partner
By: /s/
Name: Lawrence D. Stuart, Jr.
Title: Managing Director and
Principal,
Executive Vice President
Address of Purchaser:
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 10
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
HM3 COINVESTORS, L.P.
By: Hicks, Muse GP Partners III,
L.P., its General Partner
By: Hicks, Muse Fund III
Incorporated, its
General Partner
By: /s/
-------------------------------------
Name: Lawrence D. Stuart, Jr.
-----------------------------------
Title: Managing Director and Principal
and Executive Vice President
----------------------------------
Address of Purchaser:
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 11
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
JAMES N. MILLS
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 12
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
DAVID M. SINDELAR
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 13
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
LARRY S. BACON
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 14
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
ELLEN L. LIPSITZ
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 15
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
W. THOMAS McGHEE
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 16
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
ROBERT N. MILLS
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 17
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
R V LINN
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 18
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
JUDY A. ROWDEN
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 19
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
Name of Purchaser:
/s/
----------------------------------------
TIMOTHY L. CONLON
Address of Purchaser:
c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
with a copy to:
Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
<PAGE> 20
Exhibit A
Purchaser: Hicks, Muse, Tate & Furst Equity Fund III, L.P.
Number of Shares of Common Stock to be Purchased: 65,588,053
Purchase Price: $65,588,053.00
Purchaser: Hicks, Muse & Co. Partners, L.P.
Number of Shares of Common Stock to be Purchased: 2,361,701
Purchase Price: $2,361,701.00
Purchaser: James N. Mills
Number of Shares of Class A Common Stock
to be Purchased: 3,274,667
Purchase Price: $32,746.67
Purchaser: David M. Sindelar
Number of Shares of Class A Common Stock
to be Purchased: 1,991,111
Purchase Price: $19,911.11
Purchaser: Larry S. Bacon
Number of Shares of Class A Common Stock
to be Purchased: 426,667
Purchase Price: $4,266.67
Purchaser: Ellen L. Lipsitz
Number of Shares of Class A Common Stock
to be Purchased: 213,333
Purchase Price: $2,133.33
Purchaser: W. Thomas McGhee
Number of Shares of Class A Common Stock
to be Purchased: 426,667
Purchase Price: $4,266.67
<PAGE> 21
Purchaser: Robert N. Mills
Number of Shares of Class A Common Stock
to be Purchased: 288,000
Purchase Price: $2,880.00
Purchaser: R.V. Linn
Number of Shares of Class A Common Stock
to be Purchased: 213,333
Purchase Price: 2,133.33
Purchaser: Judy A. Rowden
Number of Shares of Class A Common Stock
to be Purchased: 64,000
Purchase Price: $640.00
Purchaser: Timothy L. Conlon
Number of Shares of Class A Common Stock
to be Purchased: 213,333
Purchase Price: $2,133.33
<PAGE> 1
EXHIBIT 2.2
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT (this "Acquisition Agreement" or
"Agreement") is made and entered into as of the 26th day of November, 1996,
among LUCENT TECHNOLOGIES INC., a Delaware corporation ("Seller"), CIRCO
TECHNOLOGIES GROUP, INC., a Delaware corporation ("Parent"), and CIRCO CRAFT
TECHNOLOGIES, INC., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Purchaser").
RECITALS:
A. Seller, through its Microelectronics Group, Interconnection
Technologies Unit, presently conducts, primarily at its facility at Richmond
Works, 4500 South Laburnum Avenue, Richmond, Virginia 23231 (the "Facility"),
and also at its leased premises at Tres Cantos, Madrid, Spain ("Tres Cantos"),
the business of designing, manufacturing and marketing printed circuit boards,
backplanes and related products and components (the "Products") for
telecommunications and other applications (the "Business");
B. Seller desires to Transfer (as hereinafter defined), and
Purchaser desires to purchase, the Assets (as hereinafter defined), on the
terms and subject to the conditions set forth in this Agreement;
C. Seller wishes to delegate to Purchaser, and Purchaser is
willing to assume, the Assumed Liabilities (as hereinafter defined), on the
terms and subject to the conditions set forth in this Agreement;
D. In order to induce Seller to enter into this Agreement, Parent
is willing to make certain representations and warranties in connection with
the issuance of the Preferred Stock (as hereinafter defined); and
E. Seller and Purchaser wish to enter into certain collateral
agreements, as herein specified, namely the Technology Transfer Agreement (as
hereinafter defined), the Transition Agreement (as hereinafter defined), the
Environmental, Health and Safety Agreement (as hereinafter defined), and the
Supply Contract (as hereinafter defined) (collectively, the
<PAGE> 2
"Related Agreements"), each in connection with the transactions contemplated by
this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
I. ASSETS ACQUIRED
1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions hereof, at the Closing (as hereinafter defined), Seller will, and
will cause its Affiliates (as hereinafter defined) as required to, sell,
transfer, convey, assign and deliver ("Transfer"), and Purchaser will purchase
and accept, all right, title and interest of Seller (as herein specified) in
and to the rights, properties and assets of the Business specified in this
Section 1.1 (collectively, the "Assets"):
1.1.1 Real Property. The land and buildings comprising the Facility
together with all appurtenant easements thereunto and all structures, fixtures
and improvements located on the property described on Schedule 1.1.1
(collectively, the "Real Estate");
1.1.2 Tangible Personal Property: The manufacturing, production,
maintenance, packaging and/or testing machinery and equipment, tools, artwork,
test fixtures, spare and maintenance parts, furniture, office equipment,
vehicles and other tangible personal property of the Business owned by Seller
and located at the Facility (subject to any exceptions listed on Schedule
1.1.2) as of the Closing, and all other tangible personal property owned by
Seller as of the Closing listed on Schedule 1.1.2 (collectively, the "Tangible
Personal Property");
1.1.3 Inventories and Stores and Supplies. All raw materials,
components, work-in-process, finished products, packaging materials, stores and
supplies, spare parts and samples (collectively, "Inventories") located at the
Facility (subject to any exceptions listed on Schedule 1.1.3) and all other
Inventories listed on Schedule 1.1.3;
1.1.4 Contract Rights. Subject to Section 1.3, all Transferable
rights and incidents of interest of Seller as of the Closing in and to all
sales contracts, orders, leases, software licenses (the "Software"), agreements
and other contracts and legally binding contractual rights and obligations
(collectively, "Contracts") listed on Schedule 1.1.4 and all Transferable
warranties or other rights relating to any Asset;
1.1.5 Intellectual Property. Seller's interest in and to the
certain copyrights, trademarks, Software, patents, and registrations and
applications therefor, trade secrets, technical knowledge, know-how and related
ownership, use or other rights or licenses under
<PAGE> 3
any of the foregoing as transferred pursuant to the terms of the Technology
Transfer Agreement (collectively, the "Intellectual Property Rights");
1.1.6 Governmental Licenses, Permits and Approvals. Subject to
Section 1.3, all Transferable rights and incidents of interest in and to all
licenses, permits and other approvals (collectively, "Permits") issued to
Seller or its Affiliates for the Business by any Governmental Entity (as
hereinafter defined), as listed on Schedule 1.1.6;
1.1.7 Books and Records. (a) All Seller's books, records, reports,
documents and files relating exclusively or principally to the Business (other
than archive records, which Seller shall provide access to pursuant to Section
8.2.3 of this Agreement), in original or copy form, including customer lists,
purchase and sales records, accounting and financial data, property records,
manufacturing records, product engineering, drawings, film masters, design
data, and research and development records; provided, however, that extracts
pertaining only to the Business will be furnished where such records also
reflect other aspects of Seller's businesses;
(b) All of Seller's records relating to Employees (as hereinafter
defined) which are required to be transferred by applicable law and which are
of the type described on Schedule 1.1.7(b);
1.1.8 Miscellaneous Assets. Except for Excluded Assets (as
hereinafter defined), such other rights, properties and assets owned by Seller
that are reflected on the Statement of Assets (as hereinafter defined) or were
acquired by or for the Business subsequent to the Statement of Assets Date (as
hereinafter defined);
1.2 Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, the following rights, properties and assets
(collectively, the "Excluded Assets") will not be included in the Assets:
1.2.1 Cash. All cash, bank accounts, marketable securities and
other cash equivalents of Seller, wherever located;
1.2.2 Receivables. All accounts receivables or notes receivable for
services provided or Products manufactured and sold by Seller in connection
with the operation of the Business prior to the Closing Date (as hereinafter
defined);
1.2.3 Ordinary Course Dispositions. All tangible and intangible
personal property of Seller disposed of or consumed in the ordinary course of
business consistent with the past practices of Seller between the date of this
Agreement and the Closing Date, and as permitted under the terms hereof;
3
<PAGE> 4
1.2.4 Terminated Contracts. All Contracts that have terminated or
expired prior to the Closing Date in the ordinary course of business consistent
with the past practices of Seller and as permitted hereunder;
1.2.5 Corporate Governance Documents. Seller's corporate seal,
minute books, charter documents, corporate stock record books and such other
books and records as pertain to the organization, existence or share
capitalization of Seller and such records as are necessary to enable Seller to
file its tax returns and reports as well as all other records or materials
relating to Seller generally and not involving or relating to the Assets or the
operation of the Business;
1.2.6 Insurance Contracts. Contracts of insurance, and all
insurance proceeds or claims made by Seller, including those relating to
property or equipment repaired, replaced or restored by Seller, prior to the
Closing Date;
1.2.7 Tax Refunds. Seller's rights to any and all tax refunds
relating to the operation of the Business prior to the Closing Date;
1.2.8 Tres Cantos. The current leased premises in Seller's facility
at Tres Cantos; and
1.2.9 Claims. All of Seller's rights, claims or causes of action
against third parties relating to the Assets or the Business arising prior to
the Closing Date.
1.2.10 Other Assets. All other assets, properties, interests and
rights of Seller not specifically identified or described in Section 1.1.
1.3 Nonassignable Contracts or Permits.
1.3.1 Nonassignability. Without limiting or otherwise affecting the
rights of Purchaser pursuant to Articles VI or VII hereof, to the extent that
any Contract or Permit to be Transferred pursuant to the terms of Section 1.1.4
or 1.1.6, as the case may be, is not capable of being Transferred without the
consent, approval or waiver of a third person or entity (including without
limitation a Governmental Entity), nothing in this Agreement will constitute a
Transfer or require the Transfer thereof except to the extent provided in this
Section 1.3.
1.3.2 Seller to Use Reasonable Efforts. Notwithstanding anything
contained in this Agreement to the contrary, Seller will not be obligated to
Transfer to Purchaser any of its rights and obligations in and to any of the
Contracts or Permits referred to in Section 1.3.1 without first having obtained
all consents, approvals and waivers necessary for such Transfers; provided,
however, that Seller will use its reasonable efforts to obtain all such
consents, approvals and waivers prior to and, if the Closing occurs, after the
Closing Date.
4
<PAGE> 5
1.3.3 If Waivers or Consents Cannot Be Obtained. To the extent that
the consents, approvals and waivers referred to in Section 1.3.1 are not
obtained by Seller, Seller will use its commercially reasonable efforts to (a)
provide to Purchaser the financial and business benefits of any Contract or
Permit referred to in Section 1.3.1 to the extent relating to the Business and
(b) enforce, at the request of Purchaser, for the account of Purchaser, any
rights of Seller arising from any such Contract or Permit (including without
limitation the right to elect to terminate in accordance with the terms thereof
upon the advice of Purchaser).
1.3.4 Obligation of Purchaser to Perform. Purchaser will perform
Seller's obligations arising under all Contracts and Permits referred to in
Section 1.3.3. If Purchaser fails to so perform such obligations as to any
particular Contract or Permit, then Seller will have no obligation to Purchaser
under Section 1.3.3 with respect to such Contract or Permit unless and until
such failure is substantially cured.
II. ASSUMPTION AND EXCLUSION OF LIABILITIES
2.1 Assumed and Retained Liabilities. (a) As of the Closing,
Purchaser will assume and thereafter in due course pay and fully satisfy,
subject to Section 1.3, (i) all liabilities arising out of events occurring
after the Closing Date related to the Business or operations of the Business
after the Closing Date and (ii) obligations of Seller arising under the
executory portion as of the Closing Date of all Contracts described on Schedule
1.1.4; provided, however, that Purchaser does not hereby assume any liability
or obligation for any breach or failure to perform or any alleged breach or
alleged failure to perform by Seller under such Contracts prior to the Closing
(the "Assumed Liabilities").
(b) Notwithstanding anything contained in this Agreement to the
contrary, Purchaser does not assume or agree to pay, satisfy, discharge or
perform, and will not be deemed by virtue of the execution and delivery of this
Agreement or any document delivered at the Closing pursuant to this Agreement
(a "Closing Document"), or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of the
Business, Seller or any Affiliate of Seller, whether primary or secondary,
direct or indirect, other than the Assumed Liabilities. Seller will retain and
pay, satisfy, discharge and perform in accordance with the terms thereof, all
liabilities and obligations of the Business other than the Assumed Liabilities
to the extent specifically provided in Section 2.1(a), including without
limitation those set forth below (such liabilities and obligations retained by
Seller being referred to herein as the "Retained Liabilities"):
(i) all obligations or liabilities of Seller or any
predecessor or Affiliate of Seller which relate to any of the Excluded Assets;
5
<PAGE> 6
(ii) all obligations or liabilities of Seller or any
predecessor or Affiliate of Seller relating to Taxes (as hereinafter defined)
of Seller (or any predecessor or Affiliate) or with respect to the Business or
otherwise, for all periods, or portions thereof, through the Closing;
(iii) all obligations or liabilities for any legal,
accounting, investment banking, brokerage or similar fees or expenses incurred
by Seller or its Affiliates in connection with, resulting from or attributable
to the transactions contemplated by this Agreement;
(iv) all liabilities and obligations of Seller with
respect to any return, warranty or similar liabilities relating to Products
which were produced or sold by Seller or any predecessor or Affiliate of Seller
on or prior to the Closing Date or which were held in the inventory of the
Business on the Closing Date;
(v) all liabilities and obligations of Seller or any
predecessor or Affiliate of Seller for death, personal injury, other injury to
persons or property damage resulting from, caused by or arising out of,
directly or indirectly, use or exposure to any Products (or any part or
component thereof), including without limitation any such liabilities or
obligations for failure to warn, or breach of express or implied warranties of
merchantability or fitness for any purpose or use, manufactured, sold or
serviced by Seller or any predecessor or Affiliate of Seller at any time prior
to the Closing, or resulting from, caused by or arising out of, directly or
indirectly, the conduct of the Business at any time prior to the Closing;
(vi) all liabilities and obligations of Seller or any
predecessor or Affiliate of Seller resulting from, caused by or arising out of,
directly or indirectly, the conduct of the Business or ownership or lease of
any of the Assets or any properties or assets previously used in the Business
at any time prior to or on the Closing Date, including without limitation such
of the foregoing as constitute, may constitute or are alleged to constitute a
tort, breach of contract or violation or requirement of any domestic or foreign
statute, law, ordinance, rule or regulation ("Law") of any domestic or foreign
court, government, governmental agency, authority, entity or instrumentality
("Governmental Entity"), or which relate to, result in or arise out of the
existence or imposition of any liability or obligation to remediate or
contribute or otherwise pay any amount under or in respect of any
environmental, superfund or other environmental cleanup or remedial Laws,
occupational safety and health Laws or other Laws;
(vii) all liabilities and obligations of Seller or any
predecessor or Affiliate of Seller in respect of claims, actions, suits,
proceedings and investigations relating to or arising out of, directly or
indirectly, the conduct of the Business or ownership or lease of any of the
Assets on or prior to the Closing Date;
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(viii) all claims for severance, other employee benefits
(including without limitation benefits mandated by Law) or other compensation
or damages by or on behalf of any Employees or Former Employees (as hereinafter
defined) or by or on behalf of any Governmental Entity in respect of Employees
or Former Employees involving any alleged employment loss, violation of any Law
or termination of employment actually or constructively (by operation of Law or
pre-existing Contract, including without limitation any liability for
severance), all liabilities and obligations of Seller or any predecessor or
Affiliate of Seller with respect to Employees and Former Employees under
Employee Plans (as hereinafter defined) and any Employee Plan that is an
employee welfare benefit plan within the meaning of Section 3(1) of ERISA (as
hereinafter defined), or in respect of payments for unemployment compensation
or unemployment insurance, and all other obligations in respect of Employees
and Former Employees, all relating to periods of employment ending on or prior
to the Closing Date;
(ix) all accounts payable owed by Seller or any Affiliate
of Seller relating to the Business; and
(x) all liabilities and obligations in respect of
indebtedness for borrowed money.
III. PURCHASE PRICE
3.1 Purchase Price. At the Closing, in addition to assuming the
Assumed Liabilities, Purchaser will pay for the Assets and the covenants of
Seller included herein a purchase price (collectively, the "Purchase Price"),
payable as follows:
(a) $170,000,000 in cash, to be paid in accordance with Section
6.6 below; and
(b) 1,200,000 shares of Preferred Stock of Parent (the "Preferred
Stock"), having a liquidation preference of $30,000,000, and having the terms
described in Exhibit 5.8, to be issued in accordance with Sections 5.8 and 6.6
below.
3.2 Allocation of Purchase Price. Purchaser and Seller shall
negotiate in good faith with the goal of reaching an agreement regarding the
allocation of the Purchase Price among the Assets. In the event that an
agreement regarding the allocation of the Purchase Price among the Assets is
reached by Purchaser and Seller (the "Agreed Allocation"), then Purchaser and
Seller shall file all Tax Returns (as hereinafter defined) (including any
information returns pursuant to Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code")) on a basis which is consistent with the Agreed
Allocation.
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IV. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller. Seller represents
and warrants to Purchaser as follows:
4.1.1 Corporate Matters. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold the Assets owned, leased or otherwise held by it and to carry on the
Business as presently conducted by it. Following the Closing, neither Seller
nor any of its Affiliates will have an interest in any of the Assets or the
Business (other than the Intellectual Property Rights as expressly specified in
the Technology Transfer Agreement and the Trademark License Agreement). Seller
is in good standing and duly qualified to conduct business as a foreign
corporation in every state of the United States in which its ownership or lease
of property or conduct of the Business makes such qualifications necessary, the
absence of which would have a material adverse effect on the Business.
4.1.2 Authorization and Effect of Agreement. Seller has the
requisite corporate power to execute and to deliver this Agreement and to
perform the transactions contemplated hereby to be performed by it. The
execution and delivery by Seller of this Agreement and the performance by it of
the transactions contemplated hereby to be performed by it have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and, assuming the due
execution and delivery of this Agreement by Purchaser, constitutes a valid and
binding obligation of Seller enforceable against it in accordance with its
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefrom may be brought.
4.1.3 No Restrictions Against Sale of the Assets. The execution and
delivery of this Agreement by Seller does not, and the performance by Seller of
the transactions contemplated hereby to be performed by it will not, conflict
with, or result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, any provision of the Certificate of Incorporation or Bylaws of
Seller or any Contract or Permit, other than any such conflicts, violations or
defaults as are listed or described on Schedule 4.1.3. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
Seller in connection with the execution and delivery of this Agreement by
Seller or the performance by Seller of the transactions contemplated hereby to
be performed by it, except for (a) filings, if any, required to be made by
Seller under
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applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and (b) such of the foregoing as are listed
or described on Schedule 4.1.3.
4.1.4 Financial Statements. (a) Attached as Schedule 4.1.4(a) are
the unaudited statements of revenues, expenses and overhead allocations of the
Business for the fiscal years ended December 31, 1993, 1994 and 1995, and for
the nine months ended September 30, 1996 (the "Statement of Assets Date")
(collectively, the "P&L Statements"), the unaudited statement of assets of the
Business as of December 31, 1993, 1994 and 1995 (the "Historical Statement of
Assets"), and the unaudited statement of assets of the Business as of the
Statement of Assets Date (the "Statement of Assets"). Except as set forth on
Schedule 4.1.4(a), the P&L Statements, the Historical Statement of Assets and
the Statement of Assets (collectively, the "Financial Statements") present
fairly in all material respects the financial position of the Business as of
the dates thereof and the results of operations of the Business for the periods
indicated therein in conformity with generally accepted accounting principles
("GAAP") consistently applied, subject to the explanatory notes set forth in
Schedule 4.1.4(a).
(b) To the knowledge of Seller, there are no material liabilities
or financial obligations of the Seller of any kind (whether absolute, accrued,
contingent or otherwise, and whether due or to become due), relating to,
resulting from or arising out of the Business, and the Seller knows of no valid
basis for the assertion of any such liabilities or financial obligations,
whether or not accrued and whether or not contingent or absolute, determined or
determinable, other than liabilities and obligations: (a) provided for or
reserved (and not satisfied) in the Financial Statements, (b) arising after the
Statement of Assets Date in the ordinary course of business consistent with
past practices, or (c) disclosed in Schedule 4.1.4(b).
(c) The inventory shown on the Statement of Assets consists of
items usable and saleable in the ordinary course of business and is stated in
accordance with the inventory accounting policies described in Schedule
4.1.4(c).
4.1.5 Conduct of the Business Since the Statement of Assets Date.
Except as described on Schedule 4.1.5, since the Statement of Assets Date, (a)
the Business has been conducted in the ordinary course, consistent with past
practices, (b) Seller has not taken any action which would have constituted a
violation of Section 5.5 below if Section 5.5 had applied to Seller since the
Statement of Assets Date, and (c) there has not been any material adverse
change in the Business or the financial condition, results of operations or
prospects of the Business, nor has there been, to the knowledge of Seller and
exclusive of general business or economic conditions, any event or
circumstances which would be reasonably likely to cause such a change.
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4.1.6 Compliance with Laws. Except as described on Schedule 4.1.6,
or 4.1.11 or the Schedules to the Environmental, Health and Safety Agreement,
Seller holds all licenses, franchises, permits and authorizations necessary for
the lawful conduct of the Business under and pursuant to (and the Business is
not being conducted in violation of) any provision of any federal, state, local
or foreign, law, ordinance, rule, regulation, judgment, decree, order, grant,
franchise, permit or license or other governmental authorization or approval
applicable to the Business, the effect of which failure to hold or violation
would have a material adverse effect on the conduct, financial condition,
results of operations or prospects of the Business.
4.1.7 Assets and Title. (a) Except as listed or described on
Schedules 1.1.4 and 4.1.7(a), the Assets to be Transferred to Purchaser at the
Closing pursuant to Section 1.1 constitute all the assets used in and
reasonably necessary to conduct the Business as presently conducted.
(b) Except as set forth on Schedule 4.1.7(b) and subject to the
applicable Related Agreements, Seller has, and following the Closing Purchaser
will have, good, valid, and marketable title to the Assets free and clear of
all title defects or objections, mortgages, liens, claims, charges, pledges,
security interests or other encumbrances of any nature whatsoever, including
without limitation licenses, leases, chattel or other mortgages, collateral
security arrangements, pledges, title imperfections, defect or objection liens,
security interests, conditional and installment sales agreements, encumbrances,
charges, easements, encroachments or restrictions, of any kind and other title
or interest retention arrangements, reservations or limitations of any nature
(collectively, "Liens"), other than (a) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business and which will be discharged as of the Closing Date and (b) Liens for
Taxes, assessments and other governmental charges which are not due and payable
or which may thereafter be paid without penalty. (The items referred to in the
exception to the immediately preceding sentence are hereinafter referred to as
"Permitted Liens").
(c) Except as set forth on Schedule 4.1.7(c) and the current title
report attached as Exhibit 4.1.7(c), Seller has good and marketable title in
fee simple to the Real Estate and in good and transferable leaseholds in the
leased Real Estate, in each case, under valid and enforceable leases. Except
as disclosed in Exhibit 4.1.7(c) or on Schedule 4.1.7(c), and subject to
Seller's access rights under the Environmental, Health and Safety Agreement and
the Transition Agreement, none of such real properties is subject to any
easements, rights of way, licenses, grants, building or use restrictions,
exceptions, reservations, limitations or other impediments which materially and
adversely affect the value thereof or which interfere with or impair the
present and continued use in the usual and normal conduct of the Business.
Schedule 4.1.7(c) lists (i) the street address of each parcel of the Real
Estate and (ii) as to each parcel of Real Estate, the number of the title
policy, if any, and the name of the company issuing such policy, insuring that
Seller is the fee owner of such parcel (each such policy being referred to
herein as a "Title Policy" and the insured under each such policy being
referred to herein as an "Insured"). Seller has delivered to Purchaser true
and
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complete copies of (a) each Title Policy and (b) as to each parcel of Real
Estate, the recorded deed whereby the Insured acquired title to such parcel.
Title to the Real Estate Transferred will be conveyed pursuant to a special
warranty deed, substantially in the form attached as Exhibit 4.1.7(c)A, and the
subject of title insurance as agreed by the parties.
4.1.8 Environmental Compliance. The representations and warranties
made by Seller in the Environmental, Health and Safety Agreement are
incorporated herein by this reference.
4.1.9 Intellectual Property. The representations and warranties made
by Seller in the Technology Transfer Agreement are incorporated herein by this
reference.
4.1.10 Litigation; Decrees. Except as listed or described on
Schedules 4.1.6 or 4.1.10, the Schedules to the Environmental, Health and
Safety Agreement or referred to in this Section 4.1.10, there are no lawsuits,
claims or administrative or other proceedings relating to the conduct of the
Business pending or, to the knowledge of Seller, threatened by, against or
affecting Seller, and Seller is not in default under any judgment, order or
decree of any Governmental Entity which is material to the conduct of the
Business or the ownership or use of the Assets. Without limiting the
generality or effect of any other provisions hereof, (i) all claims or
allegations of which Seller has notice asserted within the past three years
that any Product was defective or caused any injury or harm to any person,
including without limitation all such claims and allegations relating to
returns, warranty claims, failure to warn, breach of warranties of
merchantability or fitness for any purpose or use are described on Schedule
4.1.10 and (ii) no basis exists, to the knowledge of Seller, for any person to
make any such claim except as so described.
4.1.11 Contract Rights. Except as described on Schedule 1.1.4 or
4.1.11, as of the date hereof, Seller is not a party to or bound by any
Contract relating to or arising out of the conduct of the Business that is of a
type described below:
(a) any employment or consulting Contract with an Employee or
Former Employee that is not terminable at will without liability;
(b) any collective bargaining agreement with any labor union;
(c) any Contract for capital expenditures or the acquisition or
construction of fixed assets in excess of $50,000;
(d) any Contract relating to cleanup, abatement or other action in
connection with environmental liabilities;
(e) any Contract granting to any person a first-refusal,
first-offer or similar preferential right to purchase or acquire any Asset
referred to in Section 1.1;
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(f) any indenture, mortgage, loan or credit Contract under which
Seller has borrowed any money or issued any note, bond, indenture or other
evidence of indebtedness for borrowed money, or guaranteed indebtedness for
money borrowed by others related exclusively to the Business;
(g) any Contract with any manufacturer's representative or other
sales agent requiring commission payments;
(h) any Contract under which Seller is (i) a lessee of, or holds
or uses, any machinery, equipment, vehicle or other tangible personal property
owned by a third party or (ii) a lessor of, or makes available for use by any
third party, any tangible personal property owned by Seller, in any such case
which requires aggregate annual payments in excess of $50,000; or
(i) any other Contract, other than sales or purchase orders
arising in the ordinary course of business, which (i) involves future payment
by or to Seller in excess of $50,000 or (ii) is otherwise material to the
conduct of the Business or the operation or use of the Assets.
Copies of all of the Contracts described on Schedules 1.1.4 and 4.1.11 have
been made available to Purchaser. Except as set forth on Schedules 1.1.4 and
4.1.11, each Contract described on Schedules 1.1.4 and 4.1.11, or required to
be so described by the terms thereof, is a valid and binding obligation of
Seller and is in full force and effect without amendment. Except as set forth
on Schedules 1.1.4 and 4.1.11, Seller has performed in all material respects
all obligations required to be performed by it through the date hereof under
the Contracts so described, or required to be so described by the terms hereof,
and is not (with or without the lapse of time or the giving of notice, or both)
in material breach or default in any respect thereunder. Except as listed on
Schedule 4.1.11 and identified with an asterisk, no Contract listed on Schedule
1.1.4 requires the consent of any party to its assignment in connection with
the transactions contemplated hereby.
4.1.12 Employee Plans. Seller has no Employee Plans except as listed
or described on Schedule 4.1.12. For purposes of this Agreement, the term
"Employee Plan" means each employee benefit plan as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by, or on behalf of or for the benefit of Seller, or to which Seller
contributes, is obligated to contribute or has contributed within five years of
the date hereof and under which any person presently employed by Seller
primarily in the conduct of the Business (an "Employee") or formerly so
employed by Seller or any of their predecessors (a "Former Employee")
participates or has accrued any rights, or under which Seller is liable in
respect of an Employee or Former Employee. The terms "Employee" and "Former
Employee" will include, where applicable, the beneficiaries and dependents of
an Employee or Former Employee.
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4.1.13 Condition of Assets. (a) Seller has made reasonable provision
in the Financial Statements provided to Purchaser for repair and maintenance of
the structural improvements and mechanical and other systems located on the
Real Estate and Purchaser and its authorized representatives may have
reasonable access thereto for inspection, at Purchaser's expense. Except as so
provided in the Financial Statements and as set forth in Schedule 4.1.13, to
Seller's knowledge (which for purposes of this Section 4.1.13 shall be deemed
to be the actual knowledge of Robert C. Whiteman, Manager - Environmental
Health & Safety Engineering and Plant Services, at the Facility), the
improvements located on the Real Estate are in good condition and are
structurally sound, and all mechanical and other systems located therein are in
good operating condition, subject to normal wear, and no condition exists
regarding material repairs, alterations or corrections.
(b) Except as provided for in the Financial Statements and described
on Schedule 4.1.13, the Assets which constitute Tangible Personal Property are
in good and usable condition (ordinary wear and tear excepted) and are not in
need of material repair.
4.1.14 Transition Matters. Any representations and warranties of
Seller relating to transitional support or services to be furnished to
Purchaser are set forth in the Transition Agreement and said representations
and warranties are incorporated herein by this reference.
4.1.15 Customers and Suppliers. Schedule 4.1.15 sets forth a list of
(i) the 10 largest purchasers (internal or external) of the Products based on
sales during the fiscal year ended December 31, 1995 and (ii) the 10 largest
purchasers (internal and external) of the Products during the nine months ended
September 30, 1996, showing the approximate total sales by Seller with respect
to the Business to each such purchaser during the fiscal year ended December
31, 1995 and the nine months ended September 30, 1996, respectively, (b) a list
of (i) the 10 largest suppliers of the Business based on purchases during the
fiscal year ended December 31, 1995, and (ii) the 10 largest suppliers of the
Business based on purchases during the nine months ended September 30, 1996,
showing the approximate total purchases by Seller with respect to the Business
from each such supplier during the fiscal year ended December 31, 1995, and the
nine months ended September 30, 1996, respectively. Except as described on
Schedule 4.1.15, there has not been any material adverse change in the business
relationship of Seller with any purchaser or supplier named on Schedule 4.1.15
and Seller has no reason to believe that there will be any such material
adverse change in the future as a result of the consummation of the
transactions contemplated by this Agreement or otherwise.
4.1.16 Taxes. (a) All Tax Returns which are required to be filed on
or before the Closing Date by or with respect to Seller which are related to
the Business have been duly filed on a timely basis under the statutes, rules
or regulations of each applicable jurisdiction, the due date for such Tax
Returns being determined with regard to all applicable and timely extensions,
and all Taxes relating to the Business which are due on or before the Closing
Date have been duly and timely paid.
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(b) For purposes of this Agreement, the terms "Tax" and "Taxes"
shall mean all federal, state, local, or foreign income, payroll, employee
withholding, unemployment insurance, social security, sales, use, service,
service use, leasing, leasing use, excise, franchise, gross receipts, value
added, alternative or add-on minimum, estimated, occupation, real and personal
property, stamp, transfer, workers' compensation, severance, windfall profits,
environmental (including taxes under Section 59A of the Code), or other tax of
the same or of a similar nature, including any interest, penalty, or addition
thereto, whether disputed or not. The term "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes or any amendment thereto, and including any schedule or
attachment thereto.
4.1.17 Absence of Undisclosed Liabilities. Except as set forth in
the Schedules hereto, Seller has no knowledge of any material liability
(matured or unmatured, fixed or contingent) relating to the Assets or to which
the Assets are subject or Purchaser would become obligated other than the
Assumed Liabilities.
4.1.18 Insurance. Seller has insurance policies in full force and
effect for such amounts as are sufficient, in Seller's reasonable business
judgment, for material compliance with all requirements of law and of all
agreements to which Seller is a party or by which it is bound to the extent
applicable to the Business.
4.1.19 Disclosure. Seller has no reason to believe that any
statement contained in any of the Confidential Information Memorandum (the
"Confidential Memorandum") prepared by Seller, the letter dated July 2, 1996
from Mike Matyus, a representative of Seller, to Jack Furst, a representative
of Purchaser (the "Matyus Letter"), the Financial Statements, the Closing
Documents and the Schedules hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading or necessary in
order fully and fairly to provide the information required to be provided in
any such document. The information (including the projections) contained in
the Confidential Memorandum and the Matyus Letter have been prepared by Seller
in good faith, in light of the circumstances then and currently prevailing and
in accordance with the terms of those documents, and nothing herein (to the
extent Seller has not breached its representation in the preceding sentence)
shall be deemed to require Seller to amend, alter, update or modify the
documents themselves in any respect. Notwithstanding the foregoing, while
certain of the projected information contained in the Confidential Memorandum
and Matyus Letter is presented with numerical specificity, these projections
are based upon a variety of assumptions relating to the Business which, though
considered reasonable by the Company, may not be realized and are subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company. To the knowledge of Seller, Seller has not failed to
disclose to Purchaser any fact which would reasonably be determined to have a
material adverse effect on the business, financial
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condition, results of operations or prospects of the Business, or which is
otherwise material to the Business or the Assets.
4.1.20 Acquisition for Own Account. This Agreement is made with
Seller in reliance upon Seller's representations to Purchaser, which by
Seller's execution of this Agreement Seller hereby confirms, that (i) the
Preferred Stock to be acquired by it pursuant to this Agreement (the "Preferred
Stock") is being acquired for its own account, not as a nominee or agent for
any other Person (as hereinafter defined) and without a view to the
distribution of such Preferred Stock or any interest therein in violation of
the Securities Act of 1933, as amended (the "Securities Act"); (ii) Seller has
no commitment or arrangement to sell the Preferred Stock; and (iii) Seller is
an "accredited investor" within the meaning of Rule 501(a) under Regulation D
promulgated under the Securities Act, and has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Preferred Stock, and Seller is capable of
bearing the economic risks of such investment and is able to bear the complete
loss of its investment in the Preferred Stock. As used herein, "Person" shall
mean any individual, partnership, joint venture, corporation, trust,
unincorporated organization, or other entity.
4.1.21 Receipt of Information. Seller represents that it has been
provided, to its satisfaction, the opportunity to ask questions concerning the
terms and conditions of the offering and sale of the Preferred Stock, has had
all such questions answered to its satisfaction and has been supplied all
additional information deemed necessary by it to verify the accuracy of the
information provided to it.
4.1.22 Restricted Securities. Seller understands that the Preferred
Stock has not been registered under the Securities Act and may not be sold,
transferred or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Preferred Stock or an available exemption
from registration under the Securities Act, the Preferred Stock must be held
indefinitely. To the extent applicable, each certificate or other document
evidencing any of the Preferred Stock shall be endorsed with the following
restrictive legend:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN
EFFECTIVE REGISTRATION THEREOF, OR EXEMPTION UNDER
SUCH ACT."
4.1.23 Software. Except as set forth in Schedule 4.1.23, Seller has
no knowledge of any defects in the programming or operation of the Transferred
Software. Seller will deliver to Purchaser, as permitted in connection with
the Transfer, all copies of Software embodied
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in physical form and user and technical documentation related to the Software
in Seller's possession.
4.1.24 No Other Representations. Except as specifically set forth in
this Section 4.1, Seller makes no representation or warranties with respect to
the Business or the transactions contemplated hereby.
4.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:
4.2.1 Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted. Purchaser is in good standing and duly qualified to
conduct business as a foreign corporation in every state of the United States
in which its ownership or lease of property or conduct of the Business makes
such qualification necessary, the absence of which would have a material
adverse effect on the Business.
4.2.2 Authorization and Effect of Agreement. Purchaser has the
requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby to be consummated by it. The
execution and delivery by Purchaser of this Agreement and the consummation by
it of the transactions contemplated hereby to be consummated by it have been
duly authorized by all necessary corporate action on the part of Purchaser.
Purchaser has all requisite legal capacity to purchase, own or hold the Assets
and to carry on the Business upon the consummation of the transactions
contemplated by this Agreement. This Agreement has been duly executed and
delivered by Purchaser and, assuming the due execution and delivery of this
Agreement by Seller, constitutes a valid and binding obligation of Purchaser,
except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefrom may be brought.
4.2.3 No Restrictions Against Purchase of the Assets. Except as
listed or described on Schedule 4.2.3, the execution and delivery of this
Agreement by Purchaser does not, and the performance by Purchaser of the
transactions contemplated hereby to be performed by it, including its proposed
conduct and operation of the acquired Business, will not, conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under,
any provision of the Certificate of Incorporation or Bylaws of Purchaser or any
contract or Permit applicable to Purchaser. Except for any applicable
requirements of the HSR Act, no consent, approval, order or authorization of,
or
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registration, declaration or filing with, any Governmental Entity is required
to be obtained or made by or with respect to Purchaser in connection with the
execution and delivery of this Agreement by Purchaser or the consummation by it
of the transactions contemplated hereby to be consummated by it.
4.2.4 Financing. Purchaser has obtained written commitment letters
copies of which have been delivered to Seller in respect of debt financing from
reputable financing sources in an aggregate amount which together with
Purchaser's own funds (or funds to be provided by Hicks, Muse, Tate & Furst
Equity Fund III, L.P.) is sufficient to (i) pay the cash portion of the
Purchase Price and (ii) pay all expenses incurred by Purchaser in connection
with the transactions contemplated by this Agreement. To the knowledge of
Purchaser, Purchaser has the resources (financial or otherwise) to operate the
Business as presently conducted and as proposed to be conducted pursuant to the
terms and conditions of the Related Agreements.
4.3 Representations and Warranties of Parent. Parent represents
and warrants to Seller as follows:
4.3.1 Corporate Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted. Parent is in good standing and duly qualified to conduct
business as a foreign corporation in every state of the United States in which
its ownership or lease of property or conduct of the Business makes such
qualification necessary, the absence of which would have a material adverse
effect on the Business.
4.3.2 Authorization and Effect of Agreement. Parent has the
requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby to be consummated by it. The
execution and delivery by Parent of this Agreement and the consummation by it
of the transactions contemplated hereby to be consummated by it have been duly
authorized by all necessary corporate action on the part of Parent. Parent has
all requisite legal capacity to issue the Preferred Stock upon the consummation
of the transactions contemplated by this Agreement. This Agreement has been
duly executed and delivered by Parent and, assuming the due execution and
delivery of this Agreement by Seller and Purchaser, constitutes a valid and
binding obligation of Parent, except to the extent that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefrom may be brought.
4.3.3 No Restrictions Against Sale of Preferred Stock. Except as
listed or described on Schedule 4.3.3, the execution and delivery of this
Agreement by Parent does not, and the performance by Parent of the transactions
contemplated hereby to be performed by it will
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not, conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a benefit under, any provision of the Certificate of Incorporation or Bylaws
of Parent or any contract or Permit applicable to Parent. Except for any
applicable requirements of the HSR Act, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Parent in
connection with the execution and delivery of this Agreement by Parent or the
consummation by it of the transactions contemplated hereby to be consummated by
it.
4.3.4 Capitalization. Schedule 4.3.4(a) sets forth a table
indicating the capitalization of Parent prior to giving effect to the issuance
of the Preferred Stock. Such capitalization table sets forth for each class
and series of stock the authorized number of shares and the number of shares
issued and outstanding. All such issued and outstanding shares have been duly
authorized, are validly issued, are fully paid and nonassessable and are free
of preemptive rights. All such issued and outstanding shares were issued in
compliance with all applicable state and federal laws concerning the issuance
of securities. Schedule 4.3.4(b) sets forth a table indicating the pro forma
capitalization of Parent after giving effect to the issuance of the Preferred
Stock. Such capitalization table sets forth for each class and series of stock
the authorized number of shares and the number of shares issued and
outstanding. All shares of Preferred Stock have been duly authorized and, upon
the issuance thereof in exchange for due consideration, will be validly issued,
fully paid and nonassessable and will be free of preemptive rights. As of the
Closing Date, Parent shall have received at least $30,000,000 in consideration
for the issuance of its Common Stock.
4.3.5 Preferred Stock. The Preferred Stock will be issued on the
terms set forth in Exhibit 5.8.
4.3.6 Disclosure. Parent has not failed to disclose to Seller any
fact which would reasonably be determined to have a material adverse effect on
the value of the Preferred Stock, or the business, financial conditions or
prospects of Parent or Purchaser.
V. COVENANTS
5.1 Investigations. (a) Prior to the Closing, upon reasonable
notice from Purchaser to Seller given in accordance with this Agreement, Seller
will afford to the officers, attorneys, accountants or other authorized
representatives of Purchaser reasonable access during normal business hours to
the employees, facilities and the books and records of the Business and of
Seller relating to the Business so as to afford Purchaser full opportunity to
make such review, examination and investigation of the Business as Purchaser
may reasonably desire to make including without limitation, but subject to the
Environmental, Health and Safety Agreement, an environmental evaluation of the
Business. Purchaser will be permitted to make extracts from or to make copies
of such books and records as may be
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reasonably necessary in connection therewith, subject to Section 5.1(c) below
and to compliance with employees' privacy rights and Seller's policies
pertaining thereto. Prior to the Closing, Seller will promptly furnish or
cause to be furnished to Purchaser such available updated financial and
operating data and other information pertaining to the Business as Purchaser
may reasonably request.
(b) Purchaser will likewise make available and furnish to Seller
all financial and operating data of Purchaser as Seller may reasonably request
for its assurance with respect to Purchaser's representations and warranties
under Section 4.2.4 and 4.3 hereof.
(c) Each of the parties will treat in confidence all documents,
materials and other information (including without limitation information
relating to supply and sales agreements and relationships with third parties)
disclosed by any other party that is not its Affiliate, whether during the
course of the negotiations leading to the execution of this Agreement or
thereafter, in its investigation of the other parties and in the preparation of
agreements, schedules and other documents relating to the consummation of the
transactions contemplated hereby. Prior to the Closing, and in the event that
this Agreement is terminated, none of the parties will use any information
furnished by any other party that is not its Affiliate in its or any of its
Affiliates' businesses. If this Agreement is terminated, each of the parties
will use its reasonable best efforts to return to the other parties all
originals and copies of non-public documents and materials of the type provided
for in this Section 5.1 which have been furnished in connection with this
Agreement and will make no further use thereof or of the information furnished
hereunder.
5.2 Press Releases. Prior to the Closing, neither party will
disclose or issue or cause the publication of any press release or other public
announcement with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other party, which consent will
not be unreasonably withheld; provided, however, that nothing herein will
prohibit either party from issuing or causing publication of any such press
release or public announcement to the extent that such party determines such
action to be required by law or the rules of any national stock exchange
applicable to it or its Affiliates, in which event the party making such
determination will, if practicable in the circumstances, use reasonable efforts
to allow the other party reasonable time to comment on such release or
announcement in advance of its issuance.
5.3 Regulatory Filings. Each of the parties will use its
reasonable best efforts to obtain, and to cooperate with the other in
obtaining, all authorizations, consents, orders and approvals of Governmental
Entities that may be or become necessary in connection with the consummation of
the transactions contemplated by this Agreement, prior to or following the
Closing, and to take all reasonable actions to avoid the entry of any order or
decree by any Governmental Entity prohibiting the consummation of the
transactions contemplated hereby.
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5.4 Injunctions. Without limiting the generality or effect of any
provision of Section 5.3 or Article VI, if any United States, state or foreign
court having jurisdiction over any party issues or otherwise promulgates any
injunction, decree or similar order prior to the Closing which prohibits the
consummation of the transactions contemplated hereby, the parties will use
their respective reasonable efforts to have such injunction dissolved or
otherwise eliminated as promptly as possible and, prior to or after the
Closing, to pursue the underlying litigation diligently and in good faith.
5.5 Operation of the Business. Except as set forth on Schedule
5.5, as otherwise provided herein or as otherwise consented to by Purchaser in
writing, prior to the Closing, Seller will, in respect of its conduct of the
Business:
(a) Use its reasonable efforts to keep the Business intact, not
take or permit to be taken or do or suffer to be done anything other than in
the ordinary course of the Business as presently conducted and use reasonable
efforts to maintain the goodwill associated with the Business;
(b) Maintain the Assets in at least as good condition (reasonable
wear and tear excepted) as they were being maintained as of the date hereof;
(c) Not purchase, sell, lease or dispose of, or make any contract
for the purchase, sale, lease or disposition of, or subject to Lien, any
material Assets other than in the ordinary course of the Business;
(d) Not grant to any Employee of the Business any increase in
compensation or in severance or termination pay, grant any severance or
termination pay, or enter into any employment agreement with any Employee,
except (i) as may be required or permitted under employment or termination
agreements or established policies or practices of Seller in effect on the date
hereof, (ii) increases in compensation or severance pay or grants of severance
or termination pay occurring in the ordinary course of business consistent with
past practices or (iii) grants of so-called "stay bonuses" so long as Seller
shall remain obligated to pay any amounts granted thereunder;
(e) Not adopt or amend any collective bargaining agreements with
respect to the Business; and
(f) Not take or omit to take any action which would render any
representation or warranty of Seller in Article IV materially untrue or
incorrect if such representation or warranty were made immediately following
the taking of or failure to take such action.
5.6 Employees. (a) Purchaser shall offer employment, as of the
Closing Date, to the management and professional personnel of the Business work
force, as Purchaser deems necessary for its future operations, on terms and
conditions of employment established by
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Purchaser, provided, however, that Purchaser will endeavor to employ such
personnel in sufficient numbers to ensure compliance with its obligations under
Section 4.2.4 of this Agreement; and will provide Seller with sufficient
advance notice thereof to permit Seller to meet all its contractual and other
requirements and policies relating to discontinuance of employment in each
case. Nothing herein will be deemed to create any obligation on the part of
Seller's employees to consider or accept employment by Purchaser.
(b) Purchaser will also recognize the labor union currently
representing the unionized personnel of the Business work force as the
bargaining unit for such personnel and will negotiate in good faith with such
union for a new contract to be effective as of the Closing Date provided for in
Article VI hereof. It is further agreed, in accordance with said Article VI,
that consummation of such new collective bargaining agreement between the union
and Purchaser and due termination by Seller of said unionized personnel of the
Business work force without liability to Seller (other than as provided under
the terms of the current Agreement) shall be conditions precedent to be
satisfied at or prior to the Closing.
5.7 Related Agreements. On or prior to the Closing Date, each of
the parties will enter into the following agreements:
(a) The Technology Transfer Agreement in substantially the form of
Exhibit 5.7(a) (the "Technology Transfer Agreement");
(b) the Transition Services Agreement in substantially the form of
Exhibit 5.7(b) (the "Transition Agreement");
(c) the Environmental, Health and Safety Agreement in
substantially the form of Exhibit 5.7(c) (the "Environmental, Health and Safety
Agreement"); and
(d) the Supply Agreement in substantially the form of Exhibit
5.7(d) (the "Supply Contract").
5.8 Preferred Stock. Purchaser shall issue and deliver to Seller,
at the Closing, shares of Preferred Stock of Parent having a liquidation
preference of $30,000,000 in accordance with the terms set forth in Exhibit
5.8.
5.9 Transfer of Software Licenses. Seller will pay all fees and
similar charges required to be paid in connection with the Transfer of the
Software to Purchaser pursuant to Section 1.1.4.
5.10 Quarterly Statements. (a) Within 50 days after the end of
each fiscal quarter (other than the final quarter of any year) commencing with
the quarter ending March 31, 1997, Parent will deliver to Seller (a) a
consolidated internal, unaudited balance sheet and statement of income and
retained earnings and cash flows of Parent as of the end of each
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such quarter, and (b) internal unaudited balance sheets and statements of
income and retained earnings and cash flows of Parent and Purchaser; provided,
that Parent shall not be obligated to deliver the financial statements referred
to in this Section 5.10 until 100 days after the close of each fiscal quarter
that is the last fiscal quarter of each fiscal year; provided further, that
Parent shall not be obligated to deliver the financial statements referred to
in this Section 5.10 if, at the time such delivery would otherwise be required,
Parent has any security registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, in which case Parent shall provide to Seller
within five (5) days of filing with the Securities and Exchange Commission
copies of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.
(b) Seller and its authorized representatives shall, upon written
demand, have the right during the usual hours for business to inspect for any
proper purpose the books and records of Purchaser and Parent in accordance with
the Delaware General Corporation laws.
5.11 Satisfaction of Conditions. Without limiting the generality
or effect of any provision of Article VI, prior to the Closing, each of the
parties will use reasonable efforts with due diligence and in good faith to
satisfy promptly all conditions required hereby to be satisfied by such party
in order to expedite the consummation of the transactions contemplated hereby.
VI. THE CLOSING
6.1 Conditions Precedent to Obligations of Purchaser and Seller.
The respective obligations of each of Purchaser and Seller under this Agreement
to consummate the transactions contemplated hereby will be subject to the
satisfaction, at or prior to the Closing, of the conditions that:
(a) all waiting periods with respect to the HSR Act shall have
expired, been earlier terminated, or been determined to be inapplicable;
(b) each of the governmental or third party approvals, consents or
waivers identified with an asterisk on Schedule 4.1.3, 4.1.11 or 4.2.3 as being
a condition of the Closing shall have been obtained;
(c) there shall not have been entered a preliminary or permanent
injunction, temporary restraining order or other judicial or administrative
order or decree in any domestic jurisdiction, the effect of which prohibits the
Closing;
(d) Purchaser and Seller shall have executed and delivered each of
the Related Agreements, namely, the Technology Transfer Agreement (Exhibit
5.7(a)), the Transition
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Agreement (Exhibit 5.7(b)), the Environmental, Health and Safety Agreement
(Exhibit 5.7(c)), and the Supply Contract (Exhibit 5.7(d)); and
(e) Purchaser will have bargained in good faith and concluded a
new contract with the labor union currently representing the unionized
personnel of the Business work force to replace the current contract with
Seller, as provided in Section 5.6 above; and Seller will have terminated, in
compliance with applicable law and all union contractual requirements, without
liability to Seller (other than as provided under the terms of the current
Agreement) said unionized personnel of the Business work force, as provided in
Section 5.6 above.
6.2 Additional Conditions Precedent to Obligations of Purchaser.
The obligations of Purchaser under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of all of the following conditions, any one or more of
which may be waived at the option of Purchaser.
6.2.1 No Material Misrepresentation or Breach. There shall have
been no material breach by Seller in the performance of any of its covenants
herein to be performed by it in whole or in part prior to the Closing, and the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the Closing Date as if made
anew on and as of such date, and Seller shall have delivered to Purchaser a
certificate certifying each of the foregoing, dated the Closing Date and signed
by one of its officers on its behalf.
6.2.2 Transfer Documents. Seller shall have delivered to Purchaser
the Transfer Documents (as specified in Section 6.5.2).
6.2.3 Legal Opinion. Purchaser shall have received a written
opinion of counsel for Seller dated the Closing Date, in substantially the form
set forth in Exhibit 6.2.3.
6.2.4 Financing. Purchaser shall have received the proceeds from
the financing commitment described in Section 4.2.4 (provided that Purchaser
shall have used its best reasonable and good faith efforts to secure such
proceeds).
6.3 Additional Conditions Precedent to Obligations of Seller. The
obligations of Seller under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to the
Closing, of all the following conditions, any one or more of which may be
waived at the option of Seller.
6.3.1 No Material Misrepresentation or Breach. There shall have
been no material breach by Purchaser in the performance of any of the covenants
herein to be performed by it in whole or in part prior to the Closing, and the
representations and warranties of Purchaser contained in this Agreement shall
be true and correct in all material respects as of the Closing Date as if made
anew on and as of such date, and Purchaser shall have delivered to
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Seller a certificate certifying each of the foregoing, dated the Closing Date
and signed by one of its officers on its behalf.
6.3.2 Legal Opinion. Seller shall have received a written opinion
of counsel for Purchaser dated the Closing Date, in substantially the form set
forth in Exhibit 6.3.2.
6.4 The Closing. (a) Subject to the fulfillment or waiver of the
conditions precedent specified in Sections 6.1, 6.2 and 6.3, the consummation
of the purchase and sale of the Assets contemplated hereby (the "Closing") will
take place at 10:00 a.m., local time on November 26, 1996 or such other date as
provided in Section 6.4(b) (the "Closing Date"). The Closing will take place
at Seller's offices at 2 Oak Way, Berkeley Heights, New Jersey or such other
place as the parties may agree.
(b) Subject to Section 6.7(c), if the Closing has not occurred by
the date specified in Section 6.4(a), then the Closing Date will be extended to
the earlier of (i) the second business day after the conditions set forth in
Sections 6.1, 6.2 and 6.3 have been satisfied and (ii) such other date to which
Purchaser and Seller mutually agree.
6.5 Seller's Obligations. At the Closing, Seller will deliver to
Purchaser the following, at the expense of Seller and in proper form for
recording when appropriate:
6.5.1 Officer Certificate. The certificate described in Section
6.2.1;
6.5.2 Transfer Documents. Such bills of sale, assumption
agreements, assignments, deeds, consents and other good and sufficient
instruments of transfer (collectively, "Transfer Documents") conveying and
transferring to Purchaser title to the Assets and obligations for the Assumed
Liabilities as Purchaser may reasonably request;
6.5.3 UCC-3s. All documents, including without limitation, executed
UCC-3 termination statements, as are necessary to release all Liens on the
Assets; and
6.5.4 Receipts. Appropriate receipts.
6.6 Purchaser's Obligations. At the Closing, Purchaser will
deliver to Seller the following, at the expense of Purchaser:
6.6.1 Cash. Cash in the amount of $170,000,000, payment to be made
by bank wire transfer to Seller's designated bank account;
6.6.2 Preferred Stock. Certificates representing the Preferred
Stock of Parent validly issued and outstanding in the name of Seller in
accordance with the terms of Exhibit 5.8; and
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6.6.3 Officer Certificate. The certificate described in 6.3.1.
6.7 Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior
to the Closing if the party seeking to terminate is not then in material
default or breach of this Agreement:
(a) By the mutual written consent of Purchaser and Seller;
(b) By either Purchaser or Seller if, prior to the Closing Date,
the other party is in material breach of any representation, warranty, covenant
or agreement herein contained and such breach shall not be cured within fifteen
(15) days of the date of notice of default served by the party claiming such
material default, provided that such terminating party shall not also be in
material breach of this Agreement at the time notice of termination is
delivered;
(c) By either Purchaser or Seller, by written notice to the other,
if the Closing shall not have occurred on or before November 30, 1996; or
(d) By either Purchaser or Seller, by written notice to the other,
if there shall have been entered a final, nonappealable order or injunction of
any court or other governmental entity restraining or prohibiting the
consummation of the transactions contemplated hereby or any material part
thereof.
In the event of termination of this Agreement under this Section 6.7, each
party will pay all of its own fees and expenses. Except by reason of a
material breach of any representation, warranty, or covenant contained in this
Agreement, there will be no further liability hereunder on the part of any
party if this Agreement is so terminated.
VII. SURVIVAL AND INDEMNIFICATION
7.1 Survival of Representations and Warranties. Except as
otherwise expressly provided in Sections 7.3(b)(iii) or elsewhere herein or in
any Related Agreement, each of the representations and warranties contained in
this Agreement will survive the Closing and remain in full force and effect for
two (2) years following the Closing Date (except for the representations and
warranties contained in (a) Sections 4.1.2 and 4.1.7 (to the extent they relate
to title to Assets) and Sections 4.1.8 and 4.1.16, which shall survive the
Closing and remain in effect for the statute of limitation period applicable
thereto and (b) Section 4.1.13(b) which shall survive the closing and remain in
full force and effect for one year). Any claim by a party with respect to any
of such matters which is not asserted by notice given as herein provided
relating thereto within such specified period of survival (the "Claim Period")
may not be pursued and is hereby irrevocably waived after such time. Any claim
for an Indemnifiable Loss (as hereinafter defined) asserted within the Claim
Period as herein provided will be timely made for purposes hereof.
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7.2 Limitations on Liability. (a) For purpose of this Agreement,
(i) "Indemnity Payment" means any amount of Indemnifiable Losses required to be
paid pursuant to this Agreement, (ii) "Indemnitee" means any person or entity
entitled to indemnification under this Agreement, (iii) "Indemnifying Party"
means any person or entity required to provide indemnification under this
Agreement, (iv) "Indemnifiable Losses" means, subject to Section 7.2(b) and
(c), any and all damages, losses, liabilities, obligations, costs and expenses,
and any and all claims, demands or suits (by any person or entity, including
without limitation any Governmental Entity), including without limitation the
costs and expenses of any and all actions, suits, proceedings, demands,
assessments, judgments, settlements and compromises relating thereto and
including reasonable attorneys' fees and expenses in connection therewith, and
(v) "Third Party Claim" means any claim, action or proceeding made or brought
by any person or entity who or which is not a party to this Agreement.
(b) Notwithstanding any other provision hereof or of any
applicable Law, no Indemnitee will be entitled to make a claim against an
Indemnifying Party in respect of any breach of a representation or warranty
under Sections 7.3(a)(i) or 7.3(b)(i) unless and until the aggregate amount of
such claims in respect of breaches of representations being asserted for
Indemnifiable Losses under Sections 7.3(a)(i) or 7.3(b)(i), as applicable,
exceeds $500,000, in which event the Indemnitee will be entitled to make a
claim against Indemnifying Party to the extent of the full amount of
Indemnifiable Losses.
(c) Notwithstanding any other provision of this Agreement or of
the Related Agreements, the total indemnification obligations of each of Seller
under Section 7.3(a)(i) and Purchaser under Section 7.3(b)(i) will not exceed
the sum of $75,000,000.
7.3 Indemnification. (a) Subject to Sections 7.1, 7.2 and 7.4,
Seller will indemnify, defend and hold harmless Purchaser and its directors,
officers, partners, employees, agents and representatives from and against any
and all Indemnifiable Losses to the extent relating to, resulting from or
arising out of:
(i) Any breach by Seller of any of the representations,
warranties, or covenants of Seller contained in this Agreement;
(ii) Any Retained Liability; and
(iii) The conduct of the Business or any portion thereof, or the use
or ownership of any of the Assets prior to the Closing Date.
(b) Subject to Sections 7.1, 7.2 and 7.4, Purchaser will
indemnify, defend and hold harmless Seller and its directors, officers,
partners, employees, agents and representatives from and against any and all
Indemnifiable Losses to the extent relating to, resulting from or arising out
of:
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(i) Any breach by Purchaser of any of the representations,
warranties or covenants of Purchaser contained in this Agreement;
(ii) Any Assumed Liability;
(iii) The conduct of the Business or any portion thereof or the use
or ownership of any of the Assets after the Closing Date, including claims by
or on behalf of any Employees or Former Employees of Seller arising out of or
relating to such persons' employment or the termination thereof after the
Closing Date or promised employment by Purchaser; provided further, that such
indemnification by Purchaser relative to all Assets containing lasers shall
extend to and include the use of such Assets by subsequent purchasers or
acquirers thereof. Further, Purchaser agrees that it will not implead or bring
any action against Seller, its subsidiaries, affiliates, directors, officers,
partners, employees, agents, representatives, successors or assigns based on
any claim by any person for personal injury that arises out of the ownership,
use or operation of any such Assets containing lasers, except in the case of a
breach of representation or warranty made by Seller in this Agreement. These
provisions relating to Assets containing lasers shall survive the Claim Period
specified in Section 7.1; and
(iv) Any claims by or on behalf of any Employee or Former Employee
of Seller arising out of or relating to Purchaser's improper use of any of the
Employee records transferred to Purchaser pursuant to Section 1.1.7.
(c) The rights of Purchaser under clauses (i) through (iii) of
Section 7.3(a) and of Seller under clauses (i) through (iii) of Section 7.3(b)
are cumulative.
7.4 Defense of Claims. (a) If any Indemnitee receives notice of
the assertion or commencement of any Third Party Claim against such Indemnitee
with respect to which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than 30 calendar days after receipt of such notice of such Third
Party Claim. Such notice will describe the Third Party Claim in reasonable
detail, will include copies of all material written evidence thereof and will
indicate the estimated amount, if reasonably practicable, of the Indemnifiable
Loss that has been or may be sustained by the Indemnitee. The Indemnifying
Party will have the right to participate in or, by giving written notice to the
Indemnitee, to assume, the defense of any Third Party Claim at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel
(reasonably satisfactory to the Indemnitee), and the Indemnitee will cooperate
in good faith in such defense.
(b) If, within 10 calendar days after giving notice of a Third
Party Claim to an Indemnifying Party pursuant to Section 7.4(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such
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Third Party Claim as provided in the last sentence of Section 7.4(a), the
Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof; provided,
however, that if the Indemnifying Party fails to take reasonable steps
necessary to defend diligently such Third Party Claim within 10 calendar days
after receiving written notice from the Indemnitee that the Indemnitee believes
the Indemnifying Party has failed to take such steps or if the Indemnifying
Party has not undertaken fully to indemnify the Indemnitee in respect of all
Indemnifiable Losses relating to the matter, the Indemnitee may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith. Without the prior written
consent of the Indemnitee, the Indemnifying Party will not enter into any
settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. If a firm offer is
made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party will
give written notice to the Indemnitee to that effect. If the Indemnitee fails
to consent to such firm offer within 10 calendar days after its receipt of such
notice, the Indemnitee may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnifying Party as to such
Third Party Claim will not exceed the amount of such settlement offer, plus
costs and expenses paid or incurred by the Indemnitee through the end of such
10 calendar day period.
(c) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 7.4(a) or 7.4(b) will not
affect the rights or obligations of any party hereunder except and only to the
extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise damaged as a result of such
failure.
(d) The Indemnifying Party will have a period of 30 calendar days
within which to respond in writing to any claim by an Indemnitee on account of
an Indemnifiable Loss which does not result from a Third Party Claim (a "Direct
Claim"). If the Indemnifying Party does not so respond within such 30 calendar
day period, the Indemnifying Party will be deemed to have rejected such claim,
in which event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of this
Article VII.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or
pursuant to any claim, recovery, settlement or payment by or against any other
entity, the amount of such reduction, less any costs, expenses, premiums or
taxes incurred in connection therewith will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any Indemnity Payment the
Indemnifying Party will, to
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the extent of such Indemnity Payment, be subrogated to all rights of the
Indemnitee against any third party that is not an Affiliate of the Indemnitee
in respect of the Indemnifiable Loss to which the Indemnity Payment relates;
provided, however, that (i) the Indemnifying Party shall then be in compliance
with its obligations under this Agreement in respect of such Indemnifiable Loss
and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss,
any and all claims of the Indemnifying Party against any such third party on
account of said Indemnity Payment will be subrogated and subordinated in right
of payment to the Indemnitee's rights against such third party. Without
limiting the generality or effect of any other provision hereof, each such
Indemnitee and Indemnifying Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights.
7.5 Exclusive Remedy. The indemnification provisions of this
Article VII shall be the sole and exclusive remedy of a party after the Closing
Date, exercisable in accordance with Section 9.17 below, for any breach of any
of the terms, conditions, warranties or representations herein or any right,
claim or cause of action arising out of the transactions contemplated hereby
except to the extent such claim or cause of action is based on fraud or
fraudulent inducement.
VIII. OTHER POST-CLOSING COVENANTS
8.1 Personnel Matters. (a) Until the second anniversary of the
Closing Date, Seller covenants and agrees that it will not, and that it will
cause each Affiliate of Seller not to, directly or indirectly solicit or offer
employment to any employee of Purchaser or Parent (i) who was an Employee to
whom Purchaser offered employment but who did not become an employee of
Purchaser, or (ii) who is then an employee of Purchaser or Parent; provided,
however, that the foregoing shall not prohibit Seller or its Affiliates from
employing any such employee who contacts Seller or one of its Affiliates by his
or her own initiative without any direct or indirect solicitation by or
encouragement from Seller or such Affiliate; provided further, that the
foregoing shall not prevent any advertisement or general solicitation (or any
hiring therefrom) not specifically directed at such employees.
(b) Until the second anniversary of the Closing Date, Purchaser
and Parent covenant and agree that they will not directly or indirectly solicit
or offer employment to any employee of Seller or of any Affiliate of Seller who
is then an employee of Seller or of any such Affiliate; provided, however, that
the foregoing shall not prohibit Purchaser or Parent from employing any such
employee who contacts Purchaser or Parent by his or her own initiative without
any direct or indirect solicitation by or encouragement from Purchaser or
Parent; provided further, that the foregoing shall not prevent any
advertisement or general solicitation (or any hiring therefrom) not
specifically directed at such employees.
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(c) The parties acknowledge that, after the Closing, Purchaser
will not be required hereunder or otherwise to (i) offer employment to any
Employee, or (ii) make available to or establish any employee benefit plans for
any Employee or Former Employee which were not offered or made available to
such Employee or Former Employee prior to the Closing.
8.2 General Post-Closing Matters.
8.2.1 Post-Closing Notifications. Purchaser and Seller will, and
each will cause their respective Affiliates to, comply with any post-Closing
notification or other requirements, to the extent then applicable to such
party, of any antitrust, trade competition, investment or control, export or
other Law of any Governmental Entity having jurisdiction over the Business.
8.2.2 Names, Trademarks. Subject to the Related Agreements,
Purchaser and its Affiliates will revise any trademarks and Product or service
literature, change signage and stationery and otherwise discontinue use of
tradenames or trademarks of Seller as promptly as practicable after the
Closing; provided, however, that for a period of six (6) months from the
Closing Date, Purchaser may consume stationery and similar supplies on hand as
of the Closing which contain Seller tradenames or trademarks thereon. Without
limiting the generality or effect of the foregoing, Purchaser will, and will
cause its Affiliates to, within said six (6) months from the Closing Date,
discontinue selling, shipping and delivering any assembled Product having any
such tradename or trademark affixed thereto.
8.2.3 Access. (a) On the Closing Date, or as soon thereafter as
practicable, and in no event later than sixty (60) business days after the
Closing Date, Seller will deliver or cause to be delivered to Purchaser except
as otherwise provided herein or agreed in writing, all original agreements,
documents, books, records and files relating to the Business or the Assets
(collectively, "Records") in the possession of Seller to the extent not then
located on the Real Estate or in the possession of Purchaser. Notwithstanding
the foregoing, Purchaser recognizes that certain Records may contain only
incidental information relating to the Business or may primarily relate to
Seller generally or its Affiliates or other businesses of Seller, and that
Seller may retain such Records and deliver to Purchaser appropriately excised
copies of such Records. After the Closing, Purchaser will retain all Records
(except those Records referred to in the preceding sentence) required to be
retained pursuant to obligations imposed by any applicable Law.
(b) After the Closing, upon reasonable notice each of Purchaser
and Seller will give, or cause to be given, to the representatives, employees,
counsel and accountants of the other, access during normal business hours to
Records relating to periods prior to or including the Closing, and will permit
such persons to examine and copy such Records to the extent reasonably
requested by the other party in connection with tax and financial reporting
matters (including without limitation any return or report relating to state or
local real property transfer or gains taxes), audits, Securities and Exchange
Commission filings ("SEC
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Filings"), legal proceedings, governmental investigations and other business
purposes; provided, however, that nothing herein will obligate any party to
take actions that would unreasonably disrupt the normal course of its business
or violate the terms of any Contract to which it is a party or to which it or
any of its assets is subject. Seller and Purchaser will cooperate with each
other in the conduct of any tax audit or similar proceedings involving or
otherwise relating to any of the Assets or the Business (or the income
therefrom or assets thereof) with respect to any tax and each will execute and
deliver such powers of attorney and other documents as are necessary to carry
out the intent of this Section 8.2.3(b). In addition, Seller will cooperate
with Purchaser in the preparation of any financial statement or other like
information contained in any SEC Filing.
8.2.4 Certain Tax Matters. All sales, use, transfer, stamp,
conveyance, value added or other similar taxes, duties, excises or governmental
charges imposed by any taxing jurisdiction, domestic or foreign, and all
recording or filing fees, notarial fees and other similar costs (collectively,
"Transfer Taxes") of Closing with respect to the Transfer of the Assets or
otherwise on account of this Agreement or the transactions contemplated hereby
will be borne by Purchaser, except that Seller will pay the grantor realty
Transfer Tax with respect to the Real Estate. Each party will furnish the
other all necessary exemption certificates and other documents relating to the
collection and payment of the Transfer Taxes. Any property taxes, real or
personal (but excluding Transfer Taxes) shall be prorated between Seller and
Purchaser as of 11:59 a.m. (Eastern Time) on the Closing Date.
8.3 Non-Competition. (a) During the period from the Closing Date
through the fifth anniversary thereof and any extended period pursuant to
Section 8.3(c) below (the "Non-Compete Period"), and subject to Section 8.5
below and the Related Agreements, Seller will not, and will cause each of its
Affiliates not to, directly or indirectly, by or through equity ownership or
otherwise, for itself or any other person or entity (i) engage in the
manufacture or marketing of Products in competition with the Business;
provided, however, that Seller shall not be deemed to be engaged in the
manufacture or marketing of Products to the extent it acquires products from a
third party and incorporates such products into any product it markets, (ii)
communicate with or contact any customers of Purchaser (other than Seller
itself or its Affiliates) for the purpose of soliciting such customer to
purchase Products in competition with the Business, or (iii) initiate contact
with any employee of Purchaser in the Business for the purpose of soliciting,
hiring, attempting to hire or in any manner attempting to induce such employee
to leave the employment of Purchaser to be employed in any capacity in
competition with Purchaser or the Business.
(b) Notwithstanding anything to the contrary herein contained,
this Section 8.3 will not apply in respect of any business acquisition
transaction (whether pursuant to a purchase of assets or another form of
business acquisition transaction) effected by Seller or any of its Affiliates,
or the operation of the business so acquired (whether the same as or different
from the operation of such business prior to the acquisition), provided that
the net sales of Products during the last full fiscal year for such business
prior to the acquisition (or
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partial fiscal year if it has been engaged in such sales for a shorter period)
did not exceed 20% of all net sales of such business for such period (the "20%
Limitation"), except that said net sales may exceed the 20% Limitation so long
as said net sales of Products do not exceed the lesser of 40% of all net sales
of such business for such period or $30,000,000 (the "Threshold Amount"). In
addition, if at any time during the Non-Compete Period net sales of Products
for such acquired business exceed the Threshold Amount, Seller shall divest
such portion of the business relating to the Products and shall grant to
Purchaser a right of first refusal in respect of such divestiture in accordance
with the provisions of Section 8.3(c) below.
(c) Notwithstanding the foregoing provisions of Section 8.3(b),
Seller or any of its Affiliates may effect a business acquisition transaction
where net sales of Products during the last full fiscal year for such business
prior to the acquisition exceed the 20% Limitation or the Threshold Amount so
long as said net sales of Products do not exceed 50% of all net sales of such
business for such period; provided, however, that (i) Seller shall divest (the
"Divestiture") such portion of such business relating to the Products within
one (1) year of said business acquisition transaction and (ii) the Non-Compete
Period shall be extended for a period equal to the number of days such portion
of the business relating to the Products was held by Seller before the
Divestiture. In effecting the Divestiture, Seller agrees to obtain an executed
letter of intent (the "Offer") from any proposed purchaser and immediately to
submit to Purchaser a true and complete copy of the Offer, which shall include
details of the proposed purchase price; provided, however, in the event after
reasonable diligence Seller is unable to obtain an Offer, Seller's obligation
hereunder to obtain an Offer shall cease and in lieu thereof Purchaser shall
have the right (but not the obligation) to acquire such portion of the business
relating to the Products at such business' fair market value. The Offer must
apply only to that portion of the business relating to the Products and may not
include an offer to purchase any of Seller's other property or rights. Within
30 business days after its receipt of the Offer and all other information
requested by Purchaser, Purchaser has the right to notify Seller in writing
that Purchaser desires to purchase from Seller that portion of the business
relating to the Products for the same purchase price and on the same terms and
conditions contained in the Offer, provided that (i) Purchaser may substitute
cash for any form of payment proposed in the Offer, (ii) Purchaser's credit, if
not better than the credit of the proposed purchaser, shall be deemed equal to
the credit of such proposed purchaser, (iii) Purchaser will have not less than
90 days after giving notice of its election to purchase to prepare for closing,
and (iv) Purchaser is entitled to receive, and Seller agrees to make, all
customary representations and warranties given by the seller of the assets of a
business, including, without limitation, representations and warranties as to:
(a) ownership and condition of, and title to, the assets of the business being
purchased, (b) liens and encumbrances relating to the assets of the business
being purchased and (c) validity of the contracts and the liabilities,
contingent or otherwise, of the business being purchased. If Purchaser does
not exercise its right of first refusal, Seller may complete the Divestiture to
such proposed purchaser pursuant to and on the exact terms contained in the
Offer; provided, however, that if the Divestiture to such proposed purchaser is
not completed within 120 days
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after delivery of the Offer to Purchaser, or if there is a material change in
the terms of the Divestiture (which Seller agrees promptly to communicate to
Purchaser in writing), Purchaser will have an additional right of first refusal
during the 30-day period following either the expiration of such 120-day period
or Purchaser's receipt of written notice from Seller identifying the material
change(s) in the terms of the Divestiture, either on the terms originally
offered or the modified terms, at Purchaser's option.
(d) The parties intend that the covenants contained in Section
8.3(a) will be construed as a series of separate covenants, one for each county
and city included within each state or province and, except for geographic
coverage, each such separate covenant will be deemed identical. The parties
acknowledge that the covenants deemed included in Section 8.3(a) are, taken as
a whole, reasonable in their geographic scope and their duration and no party
will raise any issue of the reasonableness of the scope or duration of such
covenants in any proceeding to enforce any such covenants. If, in any judicial
proceeding, a court refuses to enforce any of the separate covenants deemed
included in Section 8.3(a), then the unenforceable covenant will be deemed
eliminated therefrom (but only to the extent determined to be unreasonable) for
the purpose of such proceedings to the extent necessary to permit the remaining
separate covenants to be enforced.
8.4 Transfer of Preferred Stock. Seller covenants that, except to
the extent the restrictions described in Section 4.1.22 related to the
Preferred Stock are waived by Purchaser, Seller shall not transfer the
Preferred Stock represented by any such certificate without complying with the
restrictions on transfer described in such legend. Seller may sell the
Preferred Stock in compliance with Rule 144 promulgated under the Securities
Act without providing Purchaser or any of its representatives an opinion of
counsel regarding such sale and with an opinion of counsel in reliance on any
other exemption.
8.5 Reacquisition Rights. In the event Purchaser proposes to
liquidate the Business pursuant to proceedings under Chapter 7 of the United
States Bankruptcy Code within five (5) years after the Closing Date, Purchaser
shall give written notice ("Purchaser's Notice") of such proposed liquidation
to Seller. Within ten (10) business days after its receipt of Purchaser's
Notice, Seller may notify Purchaser in writing ("Seller's Notice") that Seller
desires to purchase all, but not less than all, the Assets and the Business,
which notice shall state that Seller unconditionally agrees to purchase the
Assets and the Business, for fair market value, at a closing date not less than
30 nor more than 90 days after the date of Seller's Notice, in which event
Purchaser and Seller will proceed with such reacquisition transaction. If
Seller does not deliver Seller's Notice within ten (10) business days after
Seller's receipt of Purchaser's Notice, then Purchaser shall be free to
liquidate the Business pursuant to proceedings under Chapter 7 of the United
States Bankruptcy Code. If Seller delivers Seller's Notice within ten (10)
business days of receipt of Purchaser's Notice but defaults in its obligation
to timely purchase the Assets and the Business in accordance with the second
sentence of this Section 8.5, then Purchaser shall thereafter be released from
its
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obligation to sell the Assets and the Business to Seller, without limiting
Purchaser's rights and remedies, at law or in equity, against Seller in respect
of such default.
8.6 Product Warranty Matters. Seller acknowledges that it has
retained pursuant to Article II liability for certain product warranty matters.
After the Closing, Purchaser will, on Seller's behalf, remedy Product Warranty
Claims (as hereinafter defined) asserted following the Closing Date with
respect to Products produced or sold by Seller or which were held in inventory
prior to the Closing Date. For purposes of this Agreement, Product Warranty
Claims means those claims based solely in contract and only those relating to
products which are claimed by the customer to be defective in materials or
workmanship, to be in noncompliance with specifications or to be in breach of
implied or express warranties, and for which the exclusive remedy is the repair
or replacement of the product or a refund of the purchase price. In
consideration for Purchaser agreeing to remedy such claims, Seller shall
reimburse Purchaser for its direct costs and expenses (excluding any allocation
for overhead) incurred in remedying such Product Warranty Claims.
8.7 Roof Repairs. During the period from the Closing Date through
the fourth anniversary thereof, Seller will reimburse Purchaser for up to $1.0
million of expenses incurred by Purchaser from time to time, in connection with
the repairs or the replacement of the Facility's roof. Purchaser will provide
Seller with prior written notice, include reasonable details, of all such
repairs or replacement required, and reasonable audit rights with respect to
the expenses thereof.
IX. GENERAL PROVISIONS
9.1 Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been dispatched by
a nationally recognized overnight courier service to the appropriate party at
the address specified below:
(a) If to Seller, to:
Lucent Technologies Inc., Microelectronics Group
2 Oak Way
Berkeley Heights, NJ 07922
Facsimile No.: (908) 771-4534
Attention: R. L. Sullivan, Director
Business Development
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with a copy to:
Lucent Technologies Inc., Microelectronics Group
2 Oak Way
Berkeley Heights, NJ 07922
Facsimile No.: (908) 508-8684
Attention: General Attorney
(b) If to Purchaser or Parent, to:
Circo Craft Technologies, Inc.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Facsimile No.: (314) 746-2299
Attention: David M. Sindelar
or
Circo Technologies Group, Inc.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Facsimile No.: (314) 746-2251
Attention: David M. Sindelar
with a copy to each of:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, TX 75201
Facsimile No.: (214) 740-7313
Attention: Lawrence D. Stuart, Jr.
Mills & Partners, Inc.
101 S. Hanley Road
St. Louis, MO 63105
Facsimile No.: (314) 746-2299
Attention: David M. Sindelar
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, TX 75201
Facsimile No.: (214) 746-7777
Attention: David J. Webster
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or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
9.2 Expenses. Except as otherwise expressly provided herein, each
party will pay its respective expenses incurred incidental to this Agreement
and in preparing to consummate and consummating the transactions provided for
herein, whether or not such Agreement and transactions shall be consummated.
Notwithstanding the foregoing, the filing fees incurred in connection with the
filings or registrations with the Department of Justice pursuant to the HSR Act
shall be borne solely by Purchaser.
9.3 Successors and Assigns. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but will not be assignable or delegable by any party
without the prior written consent of the other party, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, Purchaser or Seller,
as the case may be, may assign to Affiliates and any person acquiring all or
substantially all of the assets or stock of Purchaser or Seller, and Purchaser
may make a collateral assignment of its rights under this Agreement to any
institutional lender who provides funds to Purchaser for the acquisition of the
Assets; provided, however, that notwithstanding any such assignment, Purchaser
or Seller, as the case may be, shall remain liable for the performance of all
its obligations under this Agreement. Seller agrees to execute
acknowledgements of such collateral assignments in such forms as Purchaser or
Purchaser's institutional lender(s) may from time to time reasonably request.
Nothing in this Agreement, express or implied, is intended to or shall confer
on any person other than the parties hereto and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
9.4 Waiver. Purchaser and Seller by written notice to the other
may (a) extend the time for performance of any of the obligations of the other
under this Agreement, (b) waive any inaccuracies in the representations or
warranties of the other contained in this Agreement or in any Closing Document,
(c) waive compliance with any of the conditions or covenants of the other
contained in this Agreement, or (d) waive or modify performance of any of the
obligations of the other under this Agreement. Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will
be deemed to constitute a waiver of compliance with any representations,
warranties, conditions or covenants contained in this Agreement and will not
operate or be construed as a waiver of any subsequent breach, whether of a
similar or dissimilar nature.
9.5 Entire Agreement. This Agreement (including the Schedules
hereto) supersedes any other agreement (other than the Related Agreements),
whether written or oral, that may have been made or entered into by any party
or any of their respective Affiliates (or by any director, officer or
representative thereof) relating to the matters contemplated hereby. This
Agreement (together with the Schedules hereto) constitutes the entire agreement
by and among the parties hereto with respect to their subject matter and
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there are no agreements or commitments by or among such parties or their
Affiliates except as expressly set forth herein.
9.6 Amendments, Supplements. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and Seller to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarify the intention of the
parties.
9.7 Rights of the Parties. Except as provided in Article VII or
in Section 9.3, nothing expressed or implied in this Agreement is intended or
will be construed to confer upon or give any person or entity other than the
parties hereto and their respective Affiliates any rights or remedies under or
by reason of this Agreement or any transaction contemplated hereby.
9.8 Further Assurances. From time to time, as and when requested
by either party, the other party will execute and deliver, or cause to be
executed and delivered, all such documents and instruments as may be reasonably
necessary to consummate the transactions contemplated by this Agreement.
9.9 Bulk Sales. Purchaser waives any requirements of Seller in
respect of the provisions of the so-called bulk sales Law of any jurisdiction;
provided, however, that Seller will indemnify, defend and hold harmless
Purchaser and its Affiliates in respect of any Indemnifiable Loss relating to,
resulting from or arising out of such waiver in connection with the
transactions contemplated by this Agreement.
9.10 Transfers. Purchaser and Seller will cooperate and take such
action as may be reasonably requested by the other in order to effect an
orderly Transfer of the Assets and the Business with a minimum of disruption to
the operations and employees of the businesses of Purchaser and Seller.
9.11 Applicable Law. This Agreement and the legal relations among
the parties hereto (except as otherwise provided in the Related Agreements)
will be governed by and construed in accordance with the substantive Laws of
the State of New York, without giving effect to the principles of conflict of
laws thereof.
9.12 Execution in Counterparts. This Agreement may be executed in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same agreement.
9.13 Titles and Headings. Titles and headings to sections herein
are inserted for convenience of reference only, and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
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9.14 Passage of Title and Risk of Loss. Legal title, equitable
title and risk of loss with respect to the Assets will not pass to Purchaser
until such Assets are Transferred at the Closing, which Transfer, once it has
occurred, will be deemed effective for tax, accounting and other computational
purposes as of 12:01 A.M. (Eastern Time) on the Closing Date.
9.15 Finder's Fee, etc. There are no brokers or finders involved
in this Agreement or the related transactions, and each party agrees to
indemnify and hold harmless the other against and in respect of any claim for
brokerage or other commissions or fees relative to this Agreement or to the
transactions contemplated hereby based in any way on agreements, arrangements
or understandings claimed to have been made by Purchaser on the one hand or by
Seller on the other hand with any third party.
9.16 Certain Interpretive Matters and Definitions. (a) Unless the
context otherwise requires, (i) all references to Sections, Articles or
Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii)
each term defined in this Agreement has the meaning assigned to it, (iii) "or"
is disjunctive but not necessarily exclusive, (iv) words in the singular
include the plural and vice versa, (v) the phrases "primarily in the Business",
"primarily of the Business" or "primarily relating to the Business" refer to
assets or rights of Seller predominantly pertaining to the Business and are
meant to exclude assets or rights of any Lucent Company owned, held or acquired
for use predominantly in any business other than the Business, (vi) each
accounting term not otherwise defined in this Agreement has the meaning
assigned to it in accordance with GAAP, and (vii) the term "Affiliate" has the
meaning given that term in Rule 12b-2 of Regulation 12B under the Securities
Exchange Act of 1934, as amended. All references to "$" or dollar amounts will
be to lawful currency of the United States of America.
(b) No provision of this Agreement will be interpreted in favor
of, or against, either of the parties hereto by reason of the extent to which
either such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft hereof or thereof.
9.17 Mediation and Arbitration. If any claim or dispute arises out
of or relates to this Agreement, or its breach, and the parties have not been
successful in resolving such dispute through negotiation the parties agree to
attempt to resolve the dispute through nonbinding mediation by submitting the
dispute to a sole mediator selected by the parties or, at any time at the
option of a party, to mediation by the American Arbitration Association
("AAA"). Each party shall bear its own expenses and an equal share of the
expenses of the mediator and the fees of the AAA. The parties, their
representatives, other participants and the mediator shall hold the existence,
content and result of the mediation in confidence. If such dispute is not
resolved by or either party elects to terminate such mediation, the parties
shall have the right to resort to any remedies permitted by law. All defenses
based on passage of time shall be tolled pending the termination of the
mediation. Nothing in this clause shall be construed to preclude any party
from seeking injunctive relief in order to
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protect its rights pending mediation. A request by a party to a court for such
injunctive relief shall not be deemed a waiver of the obligation to mediate.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LUCENT TECHNOLOGIES INC.
MICROELECTRONICS GROUP
By: /s/
-----------------------------------------
Name: Curtis J. Crawford
---------------------------------------
Title: President
--------------------------------------
CIRCO TECHNOLOGIES GROUP, INC.
By: /s/
-----------------------------------------
Name: David M. Sindelar
---------------------------------------
Title: Executive Vice President and
Chief Financial Officer
--------------------------------------
CIRCO CRAFT TECHNOLOGIES, INC.
By: /s/
-----------------------------------------
Name: David M. Sindelar
---------------------------------------
Title: President and Chief Financial Officer
--------------------------------------
40
<PAGE> 1
EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"),
dated as of April 11, 1997, is entered into by and among VIASYSTEMS GROUP,
INC., a Delaware corporation (the "Company"), HMTF ACQUISITION, L.P., a
Delaware limited partnership ("HMTF"), HMTF U.K. ACQUISITION COMPANY, a
Delaware corporation ("HMTF U.K."), HICKS, MUSE, TATE & FURST EQUITY FUND III,
L.P., a Delaware limited partnership ("Fund III"), and HM3 COINVESTORS, L.P., a
Texas limited partnership ("HM3" and, together with HMTF U.K. and Fund III, the
"Partners").
RECITALS:
WHEREAS, the Company and HMTF deem it advisable and to the
advantage of such entities that HMTF merge with and into the Company upon the
terms and conditions herein provided.
NOW, THEREFORE, the parties do hereby adopt this Merger
Agreement and do hereby agree that HMTF shall merge with and into the Company
on the following terms, conditions, and other provisions:
ARTICLE I
THE MERGER
1.1 Merger. Upon the terms and subject to the conditions
set forth in this Merger Agreement, HMTF shall be merged with and into the
Company (the "Merger") at the Effective Time (as hereinafter defined), with the
Company surviving the Merger (the "Surviving Corporation"). At the Effective
Time, the separate existence of HMTF shall cease and the Company shall continue
as the Surviving Corporation. The Surviving Corporation shall be governed by
the laws of the State of Delaware.
1.2 Effective Time of the Merger. Subject to the
provisions of this Agreement, the Company and HMTF shall cause the Merger to be
consummated by filing a certificate of merger ("Certificate of Merger") with
the Secretary of State of the State of Delaware, as soon as practicable on or
after the date the Closing occurs. The Merger shall become effective upon the
date when the Certificate of Merger is filed with the Secretary of State of
Delaware or at such later time as may be specified in the Certificate of Merger
(the "Effective Time").
<PAGE> 2
1.3 Effects of Merger. (a) The Merger shall have the
effects as set forth in the applicable provisions of the General Corporation
Law of the State of Delaware (the "DGCL") and the Delaware Revised Uniform
Limited Partnership Act (the "DRLPA").
(b) From and after the Effective Time, the Certificate of
Incorporation of the Company shall be the Certificate of Incorporation of the
Surviving Corporation until duly amended in accordance with the terms thereof
and the DGCL.
(b) From and after the Effective Time, the Bylaws of the
Company shall be the Bylaws of the Surviving Corporation until duly amended in
accordance with the terms thereof and the DGCL.
(c) The directors and officers of the Company immediately
prior to the Effective Time shall, from and after the Effective Time, continue
to serve as the directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
ARTICLE II
CONVERSION OF SECURITIES
2.1 General and Limited Partnership Interests of HMTF. At the
Effective Time, by virtue of the Merger and without any action on the part of
the Partners, the general and limited partnership interests of HMTF shall be
converted into the right to receive an aggregate of 1,600,000 shares of Series
C Preferred Stock, par value $.01 per share ("Preferred Stock") of the Company,
to be allocated among the Partners pro rata in accordance with their respective
sharing ratios specified in the Amended and Restated Limited Partnership
Agreement of HMTF dated as of April 4, 1997 (the "Partnership Agreement").
2.2 Capital Stock of the Company. Each share of the Company's
capital stock outstanding as of the Effective Time, shall remain outstanding
and be unaffected by the Merger.
<PAGE> 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of HMTF. HMTF represents and
warrants to the Company as follows:
(a) Organization and Existence. HMTF is a duly organized
and validly existing limited partnership under the laws of the State of
Delaware and has all requisite partnership power and authority to own its
assets and carry on its business as now being conducted and to consummate the
transactions contemplated by this Merger Agreement.
(b) Capitalization of HMTF. The sole general partner of
HMTF is HMTF U.K. and the sole limited partners of the partnership are Fund III
and HM3. There are no outstanding options, warrants, calls, subscriptions,
claims or other rights, agreements or commitments obligating HMTF to issue any
additional partnership interests or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any partnership
interests of HMTF.
(c) Capitalization of PCB Acquisition Limited and PCB
Investments Plc. HMTF is the record and beneficial owner of all of the
outstanding share capital of PCB Acquisition Limited, a United Kingdom limited
corporation ("PCB Acquisition"), and PCB Acquisition and James N. Mills are the
beneficial owners of all of the outstanding share capital of PCB Investments
plc, a United Kingdom public limited company ("PCB Investments"), in each case
free and clear of any and all liens, pledges, charges, restrictions, options,
rights of first offer or refusal, security interests, or other encumbrances of
any character whatsoever, whether written or oral and whether or not relating
to the extension of credit or the borrowing of money ("Encumbrances"), other
than Encumbrances placed on such shares pursuant to security documents entered
into pursuant to the credit agreement dated as of March 2, 1997, among PCB
Acquisition, PCB Investments, Chase Manhattan International Limited, as
administrative agent and collateral agent, The Chase Manhattan Bank, acting
through its London branch as issuing lender and the other lenders party
thereto. To HMTF's knowledge, there are no outstanding options, warrants,
calls, subscriptions, rights, claims or other rights, agreements or commitments
obligating either PCB Acquisition or PCB Investments to issue any additional
shares of capital stock or any other securities convertible into, exchangeable
for or evidencing the right to subscribe for any shares of such capital stock.
3
<PAGE> 4
(d) Authority. HMTF has all requisite partnership power
and authority to enter into this Merger Agreement and perform its obligations
hereunder. The execution, delivery and performance of this Merger Agreement
have been duly authorized by all necessary partnership action on the part of
HMTF, and this Merger Agreement has been duly executed and delivered by HMTF.
This Merger Agreement has been duly and validly executed and delivered by HMTF
and constitutes the legal, valid and binding obligation of HMTF, enforceable
against HMTF in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general applicability affecting the rights of creditors and to
general principles of equity.
(c) No Conflict. The execution, delivery and performance
by HMTF of this Merger Agreement does not and will not (a) violate or
contravene in any material respect or be in conflict in any material respect
with (i) any provision of the Certificate of Limited Partnership of HMTF or the
Partnership Agreement, (ii) any provision of any law, rule or regulation
applicable to HMTF, (iii) any order, judgment or decree of any court or other
agency applicable to HMTF, (b) violate, result in a breach of or constitute a
default under any term of any material mortgage, indenture, contract or
agreement to which HMTF is a party or by which it or any of its respective
properties is bound, or (c) result in the creation of any Encumbrance on any of
the properties or assets of HMTF.
3.2 Representations and Warranties of the Partners. Each of the
Partners hereby represents (severally as to itself only, and not jointly) to
the Company as follows:
(a) No Intent to Distribute. The shares of Preferred
Stock to be acquired by it pursuant to the Merger are being acquired for its
own account and without a view to the distribution or resale of such securities
or any interest therein in violation of the Securities Act of 1933, as amended
(the "Securities Act"), or any similar federal statute, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder,
all as the same shall be in effect at any time of determination; provided that
the Company acknowledges that HMTF U.K. may, after the Merger, distribute the
shares of Preferred Stock to be received by it to Fund III (its sole
stockholder).
(b) Accredited Investor. Such Partner is an "Accredited
Investor" as such term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
(c) Experience. Such Partner has such experience in
business and financial matters as to be fully capable of evaluating the risks
and merits of an investment in the shares of Preferred Stock, and it's
financial position is such that it is able to bear the risk of such investment,
including the risk of possible loss of its entire investment.
4
<PAGE> 5
(d) No Registration. Such Partner acknowledges that the
shares of Preferred Stock to be issued pursuant hereto have not been registered
under the Securities Act and understands that such shares must be held
indefinitely unless they are subsequently registered under the Securities Act
or such sale is permitted pursuant to an available exemption from such
registration requirement.
3.3 Representations and Warranties of the Company. The Company
hereby represents and warrants to HMTF and the Partners as follows:
(a) Corporate Existence. The Company is duly organized
and validly existing under the laws of the State of Delaware and has all
requisite corporate power and authority to own its assets and carry on its
business as now being conducted and to consummate the transactions contemplated
by this Merger Agreement.
(b) Capitalization. The duly authorized capital stock of
the Company consists of (i) 30,000,000 shares of Preferred Stock, par value
$.01 per share ("Preferred Stock"), of which (a) 8,000,000 shares have been
designated Series A Preferred Stock, of which 1,800,000 shares are issued and
outstanding, (b) 6,000,000 shares have been designated Series B Preferred
Stock, of which 1,200,000 shares are issued and outstanding and (c) 8,000,000
shares have been designated Series C Preferred Stock, of which 1,600,000 shares
will initially be outstanding after giving effect to the Merger, (ii)
90,000,000 shares of common stock, par value $.01 per share (the "Common
Stock"), of which 30,200,004 shares are issued and outstanding, and (iii)
10,000,000 shares of Class A Common Stock, par value $.01 per share ("Class A
Common Stock"), of which 4,098,333 shares are issued and outstanding. Except
for the Class A Common Stock, employee stock options outstanding on the date
hereof, and warrants to purchase an aggregate of 1,745,167 shares of Common
Stock to be issued pursuant to the Warrant Agreement dated as of the date
hereof between the Company and ChaseMellon Shareholder Services, L.L.C., as
warrant agent, there are no options, warrants, calls, subscriptions,
conversion or other rights, agreements or commitments obligating the Company to
issue any additional shares of capital stock or any other securities
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of capital stock of the Company. When issued in accordance with the
provisions of this Merger Agreement, the shares of Preferred Stock to be issued
in the Merger will be duly authorized, validly issued, fully paid and
non-assessable and will be free and clear of any and all Encumbrances.
(c) Corporate Authorization. The Company has all
requisite corporate power and authority to enter into this Merger Agreement,
issue the shares of Common Stock to be issued pursuant hereto, and perform its
obligations hereunder. The execution, delivery
5
<PAGE> 6
and performance of this Merger Agreement have been duly authorized by all
necessary corporate action on the part of the Company. The Merger Agreement
has been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms subject, as to enforceability, to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other laws of
general applicability affecting the rights of creditors and to general
principles of equity.
(d) No Conflict. The execution, delivery and performance
by the Company of this Merger Agreement does not and will not (a) violate or
contravene in any material respect or be in conflict in any material respect
with (i) any provision of the certificate of incorporation or bylaws of the
Company, (ii) any provision of any law, rule or regulation applicable to the
Company, (iii) any order, judgment or decree of any court or other agency
applicable to the Company, (b) violate, result in a breach of or constitute a
default under any term of any material mortgage, indenture, contract or
agreement to which the Company is a party or by which it or any of its
properties is bound, or (c) result in the creation of any Encumbrance on any of
the properties or assets of the Company.
ARTICLE IV
MISCELLANEOUS
4.1 Governing Law. This Merger Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware.
4.2 Abandonment. At any time before the Effective Time, this
Merger Agreement may be terminated and the Merger contemplated hereby may be
abandoned by the board of directors of the Company or HMTF, as the general
partner of HMTF, or both, notwithstanding approval of this Merger Agreement by
the stockholders of the Company or the Partners.
4.3 Amendment. At any time after the approval of the Partners,
this Merger Agreement may be amended in any manner (except that any of the
principal terms may not be amended without the approval of the Partners), as
may be determined in the judgment of the board of directors of the Company or
HMTF to be necessary, desirable, or expedient in order to clarify the intention
of the parties hereto or to effect or facilitate the purpose and intent of this
Merger Agreement.
6
<PAGE> 7
4.4 Counterparts. This Merger Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute, collectively, one and the same instrument.
4.5 Approval of the Merger Agreement and the Merger by the
Partners. By execution and delivery hereof, the Partners, constituting all of
the general and limited partners of HMTF, hereby consent to and approve the
Merger Agreement and the Merger in accordance with the Partnership Agreement
and the DRLPA.
7
<PAGE> 8
IN WITNESS WHEREOF, this Merger Agreement, having first been
duly approved by the board of directors of the Company and the Partners of
HMTF, is hereby executed on behalf of the Company and HMTF by the respective
duly authorized officers of the Company and by HMTF U.K., the general partner
of HMTF.
VIASYSTEMS GROUP, INC.,
a Delaware corporation
By: /s/ David M. Sindelar
---------------------------------
Name: David M. Sindelar
Title: Senior Vice President and
Chief Financial Officer
HMTF ACQUISITION, L.P.,
a Delaware limited partnership
By: HMTF U.K. ACQUISITION COMPANY,
as General Partner
By: /s/ Daniel S. Dross
-------------------------
Daniel S. Dross, Vice
President
8
<PAGE> 9
HICKS, MUSE, TATE & FURST EQUITY FUND III,
L.P., a Delaware limited partnership
By: HM3/GP Partners III, L.P., its General
Partner
By: Hicks, Muse GP Partners III, L.P., its
General Partner
By: Hicks, Muse Fund III Incorporated, its
General Partner
By: /s/ Daniel S. Dross
---------------------------------
Daniel S. Dross, Vice President
HM3 COINVESTORS, L.P., a Texas limited
partnership
By: Hicks, Muse GP Partners III, L.P., its
General Partner
By: Hicks, Muse Fund III Incorporated, its
General Partner
By: /s/ Daniel S. Dross
-------------------------------------
Daniel S. Dross, Vice President
9
<PAGE> 10
CERTIFICATE OF ASSISTANT SECRETARY
OF
VIASYSTEMS GROUP, INC.
The undersigned, Kelly E. Wetzler, hereby certifies that she
is the duly elected and presently incumbent Assistant Secretary of Viasystems
Group, Inc., a Delaware corporation (the "Company"), and hereby further
certifies as follows:
The Agreement and Plan of Merger (the "Agreement") to which
this Certificate of Assistant Secretary is attached was executed by a duly
authorized officer of the Company, and was duly adopted by the board of
directors of the Company with approval of the stockholders of the Company in
accordance with the first sentence of Section 251(f) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned does hereby execute this
Certificate of Secretary.
Dated: April 11, 1997 /s/ Kelly E. Wetzler
--------------------------------------
Kelly E. Wetzler, Assistant Secretary
10
<PAGE> 1
EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"),
dated as of June 6, 1997, is entered into by and between VIASYSTEMS GROUP,
INC., a Delaware corporation (the "Company") and CHIPS HOLDINGS, INC., a
Delaware Corporation ("Holdings").
RECITALS:
WHEREAS, the Company and Holdings deem it advisable and to the
advantage of such entities that Holdings merge with and into the Company (the
"Merger") upon the terms and conditions herein provided in a transaction
intended to qualify as a "reorganization" within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, the parties do hereby adopt this Merger Agreement
and do hereby agree that Holdings shall merge with and into the Company on the
following terms, conditions, and other provisions:
ARTICLE I
THE MERGER
1.1 Merger. Upon the terms and subject to the conditions set
forth in this Merger Agreement, Holdings shall be merged with and into the
Company at the Effective Time (as hereinafter defined), with the Company
surviving the Merger (the "Surviving Corporation"). At the Effective Time, the
separate existence of Holdings shall cease and the Company shall continue as
the Surviving Corporation. The Surviving Corporation shall be governed by the
laws of the State of Delaware.
1.2 Effective Time of the Merger. Subject to the provisions
of this Agreement, the Company and Holdings shall cause the Merger to be
consummated by filing a certificate of merger ("Certificate of Merger") with
the Secretary of State of the State of Delaware, as soon as practicable on or
after the date the Closing occurs. The Merger shall become effective upon the
date when the Certificate of Merger is filed with the Secretary of State of
Delaware or at such later time as may be specified in the Certificate of Merger
(the "Effective Time").
<PAGE> 2
1.3 Effects of Merger. (a) The Merger shall have the effects
as set forth in the applicable provisions of the General Corporation Law of the
State of Delaware (the "DGCL").
(b) Subject to clause (i) below, from and after the Effective
Time, the Certificate of Incorporation of the Company (the "Certificate of
Incorporation") shall be the Certificate of Incorporation of the Surviving
Corporation until duly amended in accordance with the terms thereof and the
DGCL.
(i) At the Effective Time of the Merger, the first paragraph
of Article Fourth of the Certificate of Incorporation of the Company shall be
amended to read in its entirety as follows:
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is
500,000,000 shares consisting of (a) 30,000,000 shares of a class
designated as Preferred Stock, par value $.01 per share
("Preferred Stock"), of which 8,000,000 shares have been
designated as Series A Preferred Stock (the "Series A Preferred
Stock"), 6,000,000 shares have been designated as Series B
Preferred Stock (the "Series B Preferred Stock"), and 8,000,000
shares have been designated as Series C Preferred Stock, (b)
423,000,000 shares of a class designated Common Stock, par value
$.01 per share ("Common Stock"), and (c) 47,000,000 shares of a
class designated Class A Common Stock, par value $.01 per share
("Class A Common Stock").
(c) From and after the Effective Time, the Bylaws of the
Company shall be the Bylaws of the Surviving Corporation until duly amended in
accordance with the terms thereof and the DGCL.
(d) The directors and officers of the Company immediately
prior to the Effective Time shall, from and after the Effective Time, continue
to serve as the directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
<PAGE> 3
ARTICLE II
CONVERSION OF SECURITIES
2.1 Common Stock of Holdings. At the Effective Time, by virtue of the
Merger and without any action on the part of the stockholders of Company or the
stockholders of Holdings, the common stock of Holdings shall be converted into
the right to receive an aggregate of 140,000,000 shares of Common Stock of the
Company, to be allocated among the stockholders of Holdings pro rata in
accordance with their respective ownership of Holdings Common Stock.
2.2 Conversion of Series A and Series C Preferred Stock of the
Company. Concurrent with the Merger, the Series A Preferred Stock, par value
$.01 per share, and Series C Preferred Stock, par value $.01 per share, of the
Company (collectively, the "HM Preferred Stock") shall be converted into the
right to receive shares of the Company's Common Stock valued at $1.00 pro rata
in accordance with the initial liquidation preference of $25.00 per share set
forth in the Amended and Restated Certificate of Incorporation and Certificate
of Designation relating to the Series A Preferred Stock and the Series C
Preferred Stock, respectively, in the aggregate amount of $85,000,000, without
regard to any accrued and unpaid dividends.
2.3 Capital Stock of the Company. Except as provided in Section 2.2,
each share of the Company's capital stock outstanding as of the Effective Time,
shall remain outstanding and shall be unaffected by the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Holdings. Holdings represents
and warrants to the Company as follows:
(a) Organization and Existence. Holdings is a duly organized
and validly existing corporation under the laws of the State of Delaware and
has all requisite corporate power and authority to own its assets and to carry
on its business as now being conducted and to consummate the transactions
contemplated by this Merger Agreement.
(b) Capitalization of Holdings. The stockholders of Holdings
are Hicks, Muse, Tate & Furst Equity Fund III, L.P., a Delaware limited
partnership, and HM3
3
<PAGE> 4
Coinvestors, L.P., a Texas limited partnership. There are no outstanding
options, warrants, calls, subscriptions, claims or other rights, agreements or
commitments obligating Holdings to issue any additional capital stock or any
other securities convertible into, exchangeable for or evidencing the right to
subscribe for any shares of the capital stock of Holdings.
(c) Authority. Holdings has all requisite corporate power and
authority to enter into this Merger Agreement and perform its obligations
hereunder. The execution, delivery and performance of this Merger Agreement
have been duly authorized by all necessary corporate action on the part of
Holdings, and this Merger Agreement has been duly executed and delivered by
Holdings. This Merger Agreement has been duly and validly executed and
delivered by Holdings and constitutes the legal, valid and binding obligation
of Holdings, enforceable against Holdings in accordance with its terms subject,
as to enforceability, to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general applicability affecting
the rights of creditors and to general principles of equity.
(d) No Conflict. The execution, delivery and performance by
Holdings of this Merger Agreement does not and will not (a) violate or
contravene in any material respect or be in conflict in any material respect
with (i) any provision of the Certificate of Incorporation of Holdings or the
Bylaws of Holdings, (ii) any provision of any law, rule or regulation
applicable to Holdings, (iii) any order, judgment or decree of any court or
other agency applicable to Holdings, (b) violate, result in a breach of or
constitute a default under any term of any material mortgage, indenture,
contract or agreement to which Holdings is a party or by which it or any of its
respective properties is bound, or (c) result in the creation of any liens,
pledges, charges, restrictions, options, rights of first offer or refusal,
security interests, or other encumbrances of any character whatsoever, whether
written or oral and whether or not relating to the extension of credit or the
borrowing of money ("Encumbrances") on any of the properties or assets of
Holdings.
3.2 Representations and Warranties of the Company. The Company
hereby represents and warrants to Holdings as follows:
(a) Corporate Existence. The Company is duly organized and
validly existing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its assets and to carry on its business as
now being conducted and to consummate the transactions contemplated by this
Merger Agreement.
(b) Capitalization. The duly authorized capital stock of the
Company consists of (i) 30,000,000 shares of Preferred Stock, par value $.01
per share ("Preferred
4
<PAGE> 5
Stock"), of which (a) 8,000,000 shares have been designated Series A Preferred
Stock, (b) 6,000,000 shares have been designated Series B Preferred Stock, of
which 1,200,000 shares are issued and outstanding and (c) 8,000,000 shares have
been designated Series C Preferred Stock, (ii) 423,000,000 shares of common
stock, par value $.01 per share (the "Common Stock"), of which 255,000,004
shares will be issued and outstanding after giving effect to the Merger and
(iii) 47,000,000 shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock"), of which 34,835,832 shares will be issued and
outstanding after giving effect to the Merger. Except for the Class A Common
Stock, employee stock options outstanding on the date hereof, and warrants to
purchase an aggregate of 1,745,167 shares of Common Stock to be issued pursuant
to the Warrant Agreement dated as of the date hereof between the Company and
Chase Mellon Shareholder Services, L.L.C. (which warrants will be extinguished
upon the consummation of the Merger and the repayment of certain senior credit
facilities), as warrant agent, there are no options, warrants, calls,
subscriptions, conversion or other rights, agreements or commitments obligating
the Company to issue any additional shares of capital stock or any other
securities convertible into, exchangeable for or evidencing the right to
subscribe for any shares of capital stock of the Company. When issued in
accordance with the provisions of this Merger Agreement, the shares of Common
Stock to be issued in the Merger will be duly authorized, validly issued, fully
paid and non-assessable and will be free and clear of any and all Encumbrances.
(c) Corporate Authorization. The Company has all requisite
corporate power and authority to enter into this Merger Agreement, issue the
shares of Common Stock to be issued pursuant hereto, and perform its
obligations hereunder. The execution, delivery and performance of this Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company. The Merger Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general applicability affecting
the rights of creditors and to general principles of equity.
(d) No Conflict. The execution, delivery and performance by
the Company of this Merger Agreement does not and will not (a) violate or
contravene in any material respect or be in conflict in any material respect
with (i) any provision of the certificate of incorporation or bylaws of the
Company, (ii) any provision of any law, rule or regulation applicable to the
Company, (iii) any order, judgment or decree of any court or other agency
applicable to the Company, (b) violate, result in a breach of or constitute a
default under any term of any material mortgage, indenture, contract or
agreement to which
5
<PAGE> 6
the Company is a party or by which it or any of its properties is bound, or (c)
result in the creation of any Encumbrance on any of the properties or assets of
the Company.
ARTICLE IV
MISCELLANEOUS
4.1 Governing Law. This Merger Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
4.2 Abandonment. At any time before the Effective Time, this Merger
Agreement may be terminated and the Merger contemplated hereby may be abandoned
by the board of directors of the Company, or the board of directors of
Holdings, or both, notwithstanding approval of this Merger Agreement by the
stockholders of the Company and/or the stockholders of Holdings.
4.3 Amendment. At any time after obtaining the approval of the
stockholders of the Company or the stockholders of Holdings, this Merger
Agreement may be amended in any manner (except that any of the principal terms
may not be amended without the approval of the stockholders of the Company or
the stockholders of Holdings), as may be determined in the judgment of the
board of directors of the Company or the board of directors of Holdings to be
necessary, desirable, or expedient in order to clarify the intention of the
parties hereto or to effect or facilitate the purpose and intent of this Merger
Agreement.
4.4 Counterparts. This Merger Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute, collectively, one and the same instrument.
4.5 Tax-Free Reorganization. The Merger is intended to qualify as a
"reorganization" for purposes of Section 368(a)(1)(A) of the Code. The parties
shall file all tax returns consistent with such treatment and shall comply with
the reporting and recordkeeping requirements of Treasury Regulation section
1.368-3.
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<PAGE> 7
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by the board of directors of the Company, the board of directors of
Holdings, the stockholders of Holdings, and the stockholders of the Company, is
hereby executed on behalf of the Company and Holdings by the respective duly
authorized officers of both the Company and Holdings.
VIASYSTEMS GROUP, INC.,
a Delaware corporation
By: /s/ David J. Webster
------------------------------
Name: David J. Webster
Title: Senior Vice President
CHIPS HOLDINGS, INC.,
a Delaware corporation
By: /s/ David J. Webster
------------------------------
Name: David J. Webster
Title: Senior Vice President
7
<PAGE> 8
CERTIFICATE OF ASSISTANT SECRETARY
OF
VIASYSTEMS GROUP, INC.
The undersigned, Ellen L. Lipsitz, hereby certifies that she is
the duly elected and presently incumbent Assistant Secretary of Viasystems
Group, Inc., a Delaware corporation (the "Company"), and hereby further
certifies as follows:
The Agreement and Plan of Merger (the "Agreement") to which this
Certificate of Assistant Secretary is attached was executed by a duly
authorized officer of the Company, and was duly adopted by the board of
directors of the Company with approval of the stockholders of the Company in
accordance with the first sentence of Section 251(f) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned does hereby execute this
Certificate of Secretary.
Dated: June 6, 1997 /s/ Ellen L. Lipsitz
-------------------------------------
Ellen L. Lipsitz, Assistant Secretary
8
<PAGE> 9
CERTIFICATE OF ASSISTANT SECRETARY
OF
CHIPS HOLDINGS, INC.
The undersigned, Ellen L. Lipsitz, hereby certifies that she is
the duly elected and presently incumbent Assistant Secretary of Chips Holdings,
Inc., a Delaware corporation (the "Holdings"), and hereby further certifies as
follows:
The Agreement and Plan of Merger (the "Agreement") to which this
Certificate of Assistant Secretary is attached was executed by a duly
authorized officer of the Holdings, and was duly adopted by the board of
directors of the Holdings with approval of the stockholders of the Holdings in
accordance with the first sentence of Section 251(f) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned does hereby execute this
Certificate of Secretary.
Dated: June 6, 1997 /s/ Ellen L. Lipsitz
-------------------------------------
Ellen L. Lipsitz, Assistant Secretary
9
<PAGE> 1
EXHIBIT 2.5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"),
dated as of June 6, 1997, is entered into by and between VIASYSTEMS, INC., a
Delaware corporation (the "Company") and CHIPS ACQUISITION, INC., a Delaware
Corporation ("Chips").
RECITALS:
WHEREAS, the Company and Chips deem it advisable and to the
advantage of such entities that Chips merge with and into the Company (the
"Merger") upon the terms and conditions herein provided in a transaction
intended to qualify as a "reorganization" within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, immediately prior to the Merger, Viasystems Group,
Inc. ("Group") will be the sole stockholder of each of the Company and Chips.
NOW, THEREFORE, the parties do hereby adopt this Merger
Agreement and do hereby agree that Chips shall merge with and into the Company
on the following terms, conditions, and other provisions:
ARTICLE I
THE MERGER
1.1 Merger. Upon the terms and subject to the conditions
set forth in this Merger Agreement, Chips shall be merged with and into the
Company at the Effective Time (as hereinafter defined), with the Company
surviving the Merger (the "Surviving Corporation"). At the Effective Time, the
separate existence of Chips shall cease and the Company shall continue as the
Surviving Corporation. The Surviving Corporation shall be governed by the laws
of the State of Delaware.
1.2 Effective Time of the Merger. Subject to the
provisions of this Agreement, the Company and Chips shall cause the Merger to
be consummated by filing a certificate of merger ("Certificate of Merger") with
the Secretary of State of the State of Delaware, as soon as practicable on or
after the date the Closing occurs. The Merger shall
<PAGE> 2
become effective upon the date when the Certificate of Merger is filed with the
Secretary of State of Delaware or at such later time as may be specified in the
Certificate of Merger (the "Effective Time").
1.3 Effects of Merger. (a) The Merger shall have the
effects as set forth in the applicable provisions of the General Corporation
Law of the State of Delaware (the "DGCL").
(b) From and after the Effective Time, the Certificate of
Incorporation of the Company (the "Certificate of Incorporation") shall be the
Certificate of Incorporation of the Surviving Corporation until duly amended in
accordance with the terms thereof and the DGCL.
(c) From and after the Effective Time, the Bylaws of the
Company shall be the Bylaws of the Surviving Corporation until duly amended in
accordance with the terms thereof and the DGCL.
(d) The directors and officers of the Company immediately
prior to the Effective Time shall, from and after the Effective Time, continue
to serve as the directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
ARTICLE II
CAPITAL STOCK
2.1 Cancellation of Chips Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the stockholder of
Chips, all of the capital stock of Chips shall be cancelled with no
consideration being delivered in connection with the cancellation thereof.
2.2 Capital Stock of the Company. Each share of the Company's
capital stock outstanding as of the Effective Time, shall remain outstanding as
one share of identical capital stock of the Surviving Corporation and otherwise
shall be unaffected by the Merger.
<PAGE> 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Chips. Chips represents and
warrants to the Company as follows:
(a) Organization and Existence. Chips is a duly
organized and validly existing corporation under the laws of the State of
Delaware and has all requisite corporate power and authority to own its assets
and to carry on its business as now being conducted and to consummate the
transactions contemplated by this Merger Agreement.
(b) Capitalization of Chips. The sole stockholder of
Chips is Group. There are no outstanding options, warrants, calls,
subscriptions, claims or other rights, agreements or commitments obligating
Chips to issue any additional capital stock or any other securities convertible
into, exchangeable for or evidencing the right to subscribe for any shares of
the Capital Stock of Chips.
(c) Authority. Chips has all requisite Corporate power
and authority to enter into this Merger Agreement and perform its obligations
hereunder. The execution, delivery and performance of this Merger Agreement
have been duly authorized by all necessary corporate action on the part of
Chips, and this Merger Agreement has been duly executed and delivered by Chips.
This Merger Agreement has been duly and validly executed and delivered by Chips
and constitutes the legal, valid and binding obligation of Chips, enforceable
against Chips in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general applicability affecting the rights of creditors and to
general principles of equity.
(d) No Conflict. The execution, delivery and performance
by Chips of this Merger Agreement does not and will not (a) violate or
contravene in any material respect or be in conflict in any material respect
with (i) any provision of the Certificate of Incorporation of Chips or the
Bylaws of Chips, (ii) any provision of any law, rule or regulation applicable
to Chips, (iii) any order, judgment or decree of any court or other agency
applicable to Chips, (b) violate, result in a breach of or constitute a default
under any term of any material mortgage, indenture, contract or agreement to
which Chips is a party or by which it or any of its respective properties is
bound, or (c) result in the creation of any liens, pledges, charges,
restrictions, options, rights of first offer or refusal, security interests, or
other encumbrances of any character whatsoever, whether written or oral and
whether or not
3
<PAGE> 4
relating to the extension of credit or the borrowing of money ("Encumbrances")
on any of the properties or assets of Chips.
3.2 Representations and Warranties of the Company. The Company
hereby represents and warrants to Chips as follows:
(a) Corporate Existence. The Company is duly organized
and validly existing under the laws of the State of Delaware and has all
requisite corporate power and authority to own its assets and to carry on its
business as now being conducted and to consummate the transactions contemplated
by this Merger Agreement.
(b) Capitalization. The duly authorized capital stock of
the Company consists of 1,000 shares of Common Stock, par value $.01 per share
("Common Stock") of which 1,000 shares are issued to Group and are outstanding.
There are no options, warrants, calls, subscriptions, conversion or other
rights, agreements or commitments obligating the Company to issue any
additional shares of capital stock or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of capital
stock of the Company.
(c) Corporate Authorization. The Company has all
requisite corporate power and authority to enter into this Merger Agreement,
issue the shares of Common Stock to be issued pursuant hereto, and perform its
obligations hereunder. The execution, delivery and performance of this Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company. The Merger Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general applicability affecting
the rights of creditors and to general principles of equity.
(d) No Conflict. The execution, delivery and performance
by the Company of this Merger Agreement does not and will not (a) violate or
contravene in any material respect or be in conflict in any material respect
with (i) any provision of the certificate of incorporation or bylaws of the
Company, (ii) any provision of any law, rule or regulation applicable to the
Company, (iii) any order, judgment or decree of any court or other agency
applicable to the Company, (b) violate, result in a breach of or constitute a
default under any term of any material mortgage, indenture, contract or
agreement to which the Company is a party or by which it or any of its
properties is bound, or (c) result in the creation of any Encumbrance on any of
the properties or assets of the Company.
4
<PAGE> 5
ARTICLE IV
MISCELLANEOUS
4.1 Governing Law. This Merger Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware.
4.2 Abandonment. At any time before the Effective Time, this
Merger Agreement may be terminated and the Merger contemplated hereby may be
abandoned by the board of directors of the Company, or the board of directors
of Chips, or both, notwithstanding approval of this Merger Agreement by Group
in its capacity as the sole stockholder of the Company and Chips (the
"Stockholder").
4.3 Amendment. At any time after obtaining the approval of the
Stockholder, this Merger Agreement may be amended in any manner (except that
any of the principal terms may not be amended without the approval of the
Stockholder), as may be determined in the judgment of the board of directors of
the Company or the board of directors of Chips to be necessary, desirable, or
expedient in order to clarify the intention of the parties hereto or to effect
or facilitate the purpose and intent of this Merger Agreement.
4.4 Counterparts. This Merger Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute, collectively, one and the same instrument.
4.5 Tax-Free Reorganization. The Merger is intended to qualify as
a "reorganization" for purposes of Section 368(a)(1)(A) of the Code. The
parties shall file all tax returns consistent with such treatment and shall
comply with the reporting and recordkeeping requirements of Treasury Regulation
section 1.368-3.
5
<PAGE> 6
IN WITNESS WHEREOF, this Merger Agreement, having first been
duly approved by the board of directors of the Company, the board of directors
of Chips, and the Stockholder, is hereby executed on behalf of the Company and
Chips by the respective duly authorized officers of both the Company and Chips.
VIASYSTEMS, INC.,
a Delaware corporation
By: /s/ David J. Webster
--------------------------------------
Name: David J. Webster
Title: Senior Vice President
CHIPS ACQUISITION, INC.,
a Delaware corporation
By: /s/ David J. Webster
--------------------------------------
Name: David J. Webster
Title: Senior Vice President
6
<PAGE> 7
CERTIFICATE OF ASSISTANT SECRETARY
OF
VIASYSTEMS, INC.
The undersigned, Ellen L. Lipsitz, hereby certifies that he or
she is the duly elected and presently incumbent Assistant Secretary of
Viasystems, Inc., a Delaware corporation (the "Company"), and hereby further
certifies as follows:
The Agreement and Plan of Merger (the "Agreement") to which
this Certificate of Assistant Secretary is attached was executed by a duly
authorized officer of the Company, and was duly adopted by the board of
directors of the Company with approval of the stockholders of the Company in
accordance with the first sentence of Section 251(f) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned does hereby execute this
Certificate of Secretary.
Dated: June 6, 1997 /s/ Ellen L. Lipsitz
-------------------------------------
Ellen L. Lipsitz, Assistant Secretary
7
<PAGE> 8
CERTIFICATE OF ASSISTANT SECRETARY
OF
CHIPS ACQUISITION, INC.
The undersigned, Ellen L. Lipsitz, hereby certifies that he or
she is the duly elected and presently incumbent Assistant Secretary of Chips
Acquisition, Inc., a Delaware corporation (the "Chips"), and hereby further
certifies as follows:
The Agreement and Plan of Merger (the "Agreement") to which
this Certificate of Assistant Secretary is attached was executed by a duly
authorized officer of the Chips, and was duly adopted by the board of directors
of the Chips with approval of the stockholders of the Chips in accordance with
the first sentence of Section 251(f) of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the undersigned does hereby execute this
Certificate of Secretary.
Dated: June 6, 1997 /s/ Ellen L. Lipsitz
-------------------------------------
Ellen L. Lipsitz, Assistant Secretary
8
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
VIASYSTEMS, INC.
- --------------------------------------------------------------------------------
I, the undersigned natural person acting as an incorporator of a
corporation (hereinafter called the "Corporation") under the General
Corporation Law of the State of Delaware, do hereby adopt the following
Certificate of Incorporation for the Corporation:
FIRST: The name of the Corporation is Viasystems, Inc.
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of the registered agent of
the Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to
engage in any and all lawful acts and activity for which corporations may be
organized under the General Corporation Law of Delaware. The Corporation will
have perpetual existence.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,000 shares, par value $.01 per share,
designated Common Stock.
FIFTH: The name of the incorporator of the Corporation is Jeffrey B.
Hitt, and the mailing address of such incorporator is 100 Crescent Court, Suite
1300, Dallas, Texas 75201-6950.
SIXTH: The number of directors constituting the initial board of
directors is one, and the name and mailing address of each person who is to
serve as director until the first annual meeting of stockholders or until his
successor is elected and qualified is:
David M. Sindelar 101 South Hanley Road, Suite 400
St. Louis, Missouri 63105
<PAGE> 2
SEVENTH: Directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
EIGHTH: The directors of the Corporation shall have the power to
adopt, amend, and repeal the bylaws of the Corporation.
NINTH: No contract or transaction between the Corporation and one or
more of its directors, officers, or stockholders or between the Corporation and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the Delaware General Corporation Law, as the
same exists or may hereafter be amended. Such right shall be a contract right
and as such shall run to the benefit of any director or officer who is elected
and accepts the position of director or officer of the Corporation or elects to
continue to serve as a director or officer of the Corporation while this
Article Tenth is in effect. Any repeal or amendment of this Article Tenth
shall be prospective only and shall not limit the
<PAGE> 3
rights of any such director or officer or the obligations of the Corporation
with respect to any claim arising from or related to the services of such
director or officer in any of the foregoing capacities prior to any such repeal
or amendment to this Article Tenth. Such right shall include the right to be
paid by the Corporation expenses incurred in defending any such proceeding in
advance of its final disposition to the maximum extent permitted under the
Delaware General Corporation Law, as the same exists or may hereafter be
amended. If a claim for indemnification or advancement of expenses hereunder
is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense are not permitted under the Delaware General Corporation Law, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors or any committee
thereof, independent legal counsel, or stockholders) to have made its
determination prior to the commencement of such action that indemnification of,
or advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible shall
be a defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any person having
a right of indemnification under the foregoing provisions, such right shall
inure to the benefit of his or her heirs, executors, administrators, and
personal representatives. The rights conferred above shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, by-law, resolution of stockholders or directors, agreement, or
otherwise.
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an action,
suit, or proceeding, and any inquiry or investigation that could lead to such
an action, suit, or proceeding.
ELEVENTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve
3
<PAGE> 4
intentional misconduct or knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. Any repeal or amendment of
this Article Eleventh by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation arising from an act or omission
occurring prior to the time of such repeal or amendment. In addition to the
circumstances in which a director of the Corporation is not personally liable
as set forth in the foregoing provisions of this Article Eleventh, a director
shall not be liable to the Corporation or its stockholders to such further
extent as permitted by any law hereafter enacted, including without limitation
any subsequent amendment to the Delaware General Corporation Law.
TWELFTH: The Corporation expressly elects not to be governed by
Section 203 of the General Corporation Law of Delaware.
I, the undersigned, for the purpose of forming the Corporation under
the laws of the State of Delaware, do make, file, and record this Certificate
of Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand on this 2nd
day of April, 1997.
/s/ JEFFREY B. HITT
-----------------------------
Jeffrey B. Hitt
4
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
VIASYSTEMS, INC.
A Delaware Corporation
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE: OFFICES
<S> <C> <C>
1.1 Registered Office and Agent . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . 2
2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Voting List . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Required Vote; Withdrawal of Quorum . . . . . . . . . . . . 4
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . . . . 4
2.9 Record Date . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . 6
2.11 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE THREE: DIRECTORS
3.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Number; Qualification; Election; Term . . . . . . . . . . . 7
3.3 Change in Number . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Meetings of Directors . . . . . . . . . . . . . . . . . . . 8
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Election of Officers . . . . . . . . . . . . . . . . . . . . 9
3.9 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Special Meetings . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Presumption of Assent . . . . . . . . . . . . . . . . . . . 10
3.15 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Number; Qualification; Term . . . . . . . . . . . . . . . . 11
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Committee Changes . . . . . . . . . . . . . . . . . . . . . 11
4.5 Alternate Members of Committees . . . . . . . . . . . . . . 11
4.6 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . 12
4.7 Special Meetings . . . . . . . . . . . . . . . . . . . . . . 12
4.8 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . 12
4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Responsibility . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE FIVE: NOTICE
5.1 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office . . . . . . . . . . . . . . . 13
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . 14
6.7 President . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . 15
6.9 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . 15
6.11 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.12 Assistant Secretaries . . . . . . . . . . . . . . . . . . . 16
</TABLE>
ii
<PAGE> 4
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
<TABLE>
<S> <C> <C>
7.1 Certificates for Shares . . . . . . . . . . . . . . . . . . . 16
7.2 Replacement of Lost or Destroyed Certificates . . . . . . . . 17
7.3 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . 17
7.4 Registered Stockholders . . . . . . . . . . . . . . . . . . . 17
7.5 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 Securities of Other Corporations . . . . . . . . . . . . . . . 19
8.8 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . 19
8.9 Action Without a Meeting . . . . . . . . . . . . . . . . . . . 20
8.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . 21
8.11 Mortgages, etc. . . . . . . . . . . . . . . . . . . . . . . . 21
8.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.13 References . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.14 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
iii
<PAGE> 5
BYLAWS
OF
VIASYSTEMS, INC.
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of Viasystems, Inc., a Delaware corporation (the
"Corporation"). In the event of a direct conflict between the provisions of
these bylaws and the mandatory provisions of the Delaware General Corporation
Law or the provisions of the certificate of incorporation of the Corporation,
such provisions of the Delaware General Corporation Law or the certificate of
incorporation of the Corporation, as the case may be, will be controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and
registered agent of the Corporation shall be as designated from time to time by
the appropriate filing by the Corporation in the office of the Secretary of
State of the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
<PAGE> 6
2.2 Special Meeting. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the request
in writing of the stockholders of record of not less than ten percent of all
shares entitled to vote at such meeting or as otherwise provided by the
certificate of incorporation of the Corporation. A special meeting shall be
held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice of
such meeting or in a duly executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be
held at any place within or without the State of Delaware designated by the
board of directors. A special meeting of stockholders may be held at any place
within or without the State of Delaware designated in the notice of the meeting
or a duly executed waiver of notice of such meeting. Meetings of stockholders
shall be held at the principal office of the Corporation unless another place
is designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and
time of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or person(s) calling the meeting, to each stockholder of record
entitled to vote at such meeting. If such notice is to be sent by mail, it
shall be directed to such stockholder at his address as it appears on the
records of the Corporation, unless he shall have filed with the Secretary of
the Corporation a written request that notices to him be mailed to some other
address, in which case it shall be directed to him at such other address.
Notice of any meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy and shall not,
at the beginning of such meeting, object to the transaction of any business
because the meeting is not lawfully called or convened, or who shall, either
before or after the meeting, submit a signed waiver of notice, in person or by
proxy.
2.5 Voting List. At least ten days before each meeting of
stockholders, the Secretary or other officer of the Corporation who has charge
of the Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten days prior to such meeting, such list shall be kept on file
at a place within the city where the meeting is to be held, which place shall
be specified in the notice of meeting or a duly executed waiver of
<PAGE> 7
notice of such meeting or, if not so specified, at the place where the meeting
is to be held and shall be open to examination by any stockholder during
ordinary business hours. Such list shall be produced at such meeting and kept
at the meeting at all times during such meeting and may be inspected by any
stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these by-laws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders,
the stockholders entitled to vote thereat who are present, in person or by
proxy, or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other
than announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present
at any meeting, the vote of the holders of at least a majority of the
outstanding shares entitled to vote who are present, in person or by proxy,
shall decide any question brought before such meeting, unless the question is
one on which, by express provision of statute, the certificate of incorporation
of the Corporation, or these bylaws, a different vote is required, in which
case such express provision shall govern and control the decision of such
question. The stockholders present at a duly constituted meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in
the certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each
such proxy shall be filed with the Secretary of the Corporation before or at
the time of the meeting. No proxy shall be valid after three years from the
date of its execution, unless otherwise provided in the proxy. If no date is
stated in a proxy, such proxy shall be presumed to have been executed on the
date of the meeting at which it is to be voted. Each proxy shall be revocable
unless
<PAGE> 8
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power or unless otherwise made
irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination
of stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law or these bylaws, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office in the State of Delaware, principal place of business, or such
<PAGE> 9
officer or agent shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the board of directors
and prior action by the board of directors is required by law or these bylaws,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
day on which the board of directors adopts the resolution taking such prior
action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office
has been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non- acting officer under these bylaws or by some person
appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail
to appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies and shall receive votes, ballots, or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots, or consents, determine the
results, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting, the
inspectors shall make a report in writing of any challenge, request, or matter
determined by them and shall execute a certificate of any fact found by them.
No director or candidate for the office of director shall act as an inspector
of an election of directors. Inspectors need not be stockholders.
<PAGE> 10
ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation
shall be managed by the board of directors. Subject to the restrictions
imposed by law, the certificate of incorporation of the Corporation, or these
bylaws, the board of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of
directors which shall constitute the entire board of directors shall be not
less than one. The first board of directors shall consist of the number of
directors named in the certificate of incorporation of the Corporation or, if
no directors are so named, shall consist of the number of directors elected by
the incorporator(s) at an organizational meeting or by unanimous written
consent in lieu thereof. Thereafter, within the limits above specified, the
number of directors which shall constitute the entire board of directors shall
be determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the certificate
of incorporation of the Corporation, or these bylaws, the directors shall be
elected at an annual meeting of stockholders at which a quorum is present.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors. Each director so chosen shall hold office until the first annual
meeting of stockholders held after his election and until his successor is
elected and qualified or, if earlier, until his death, resignation, or removal
from office. None of the directors need be a stockholder of the Corporation or
a resident of the State of Delaware. Each director must have attained the age
of majority.
3.3 Change in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
incorporation of the Corporation or these by-laws, at any meeting of
stockholders called expressly for that purpose, any director or the entire
board of directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares then entitled to vote on the election of
directors; provided, however, that so long as stockholders have the right to
cumulate votes in the election of directors pursuant to the certificate of
incorporation of the Corporation, if less than the entire board of directors is
to be removed, no one of the directors may be removed if the votes cast against
his removal would be sufficient to elect him if then cumulatively voted at an
election of the entire board of directors.
3.5 Vacancies. Vacancies and newly-created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then
<PAGE> 11
in office, though less than a quorum, or by the sole remaining director, and
each director so chosen shall hold office until the first annual meeting of
stockholders held after his election and until his successor is elected and
qualified or, if earlier, until his death, resignation, or removal from office.
If there are no directors in office, an election of directors may be held in
the manner provided by statute. If, at the time of filling any vacancy or any
newly-created directorship, the directors then in office shall constitute less
than a majority of the whole board of directors (as constituted immediately
prior to any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or
newly-created directorships or to replace the directors chosen by the directors
then in office. Except as otherwise provided in these bylaws, when one or more
directors shall resign from the board of directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have the power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
bylaws with respect to the filling of other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings
and may have an office and keep the books of the Corporation, except as
otherwise provided by statute, in such place or places within or without the
State of Delaware as the board of directors may from time to time determine or
as shall be specified in the notice of such meeting or duly executed waiver of
notice of such meeting.
3.7 First Meeting. Each newly elected board of directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of stockholders, and no notice of such meeting shall be
necessary.
3.8 Election of Officers. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall be
present, the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors
shall be held at such times and places as shall be designated from time to time
by resolution of the board of directors. Notice of such regular meetings shall
not be required.
3.10 Special Meetings. Special meetings of the board of directors
shall be held whenever called by the Chairman of the Board, the President, or
any director.
<PAGE> 12
3.11 Notice. The Secretary shall give notice of each special
meeting to each director at least 24 hours before the meeting. Notice of any
such meeting need not be given to any director who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of notice
to him. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board of
directors, a majority of the directors fixed in the manner provided in these
bylaws shall constitute a quorum for the transaction of business. If at any
meeting of the board of directors there be less than a quorum present, a
majority of those present or any director solely present may adjourn the
meeting from time to time without further notice. Unless the act of a greater
number is required by law, the certificate of incorporation of the Corporation,
or these bylaws, the act of a majority of the directors present at a meeting at
which a quorum is in attendance shall be the act of the board of directors. At
any time that the certificate of incorporation of the Corporation provides that
directors elected by the holders of a class or series of stock shall have more
or less than one vote per director on any matter, every reference in these
bylaws to a majority or other proportion of directors shall refer to a majority
or other proportion of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business
shall be transacted in such order as from time to time the board of directors
may determine. The Chairman of the Board, if such office has been filled, and,
if not or if the Chairman of the Board is absent or otherwise unable to act,
the President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of
the Corporation shall act as the secretary of each meeting of the board of
directors unless the board of directors appoints another person to act as
secretary of the meeting. The board of directors shall keep regular minutes of
its proceedings which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is
present at the meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by certified or registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
<PAGE> 13
3.15 Compensation. The board of directors shall have the authority
to fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution
adopted by a majority of the entire board of directors, designate one or more
committees.
4.2 Number; Qualification; Term. Each committee shall consist of
one or more directors appointed by resolution adopted by a majority of the
entire board of directors. The number of committee members may be increased or
decreased from time to time by resolution adopted by a majority of the entire
board of directors. Each committee member shall serve as such until the
earliest of (i) the expiration of his term as director, (ii) his resignation as
a committee member or as a director, or (iii) his removal as a committee member
or as a director.
4.3 Authority. Each committee, to the extent expressly provided
in the resolution establishing such committee, shall have and may exercise all
of the authority of the board of directors in the management of the business
and property of the Corporation except to the extent expressly restricted by
law, the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee.
4.5 Alternate Members of Committees. The board of directors may
designate one or more directors as alternate members of any committee. Any
such alternate member may replace any absent or disqualified member at any
meeting of the committee. If no alternate committee members have been so
appointed to a committee or each such alternate committee member is absent or
disqualified, the member or members of such committee present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or disqualified member.
<PAGE> 14
4.6 Regular Meetings. Regular meetings of any committee may be
held without notice at such time and place as may be designated from time to
time by the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be
held whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee
member at least two days before such special meeting. Neither the business to
be transacted at, nor the purpose of, any special meeting of any committee need
be specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a
majority of the number of members designated by the board of directors shall
constitute a quorum for the transaction of business. If a quorum is not
present at a meeting of any committee, a majority of the members present may
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present. The act of a majority
of the members present at any meeting at which a quorum is in attendance shall
be the act of a committee, unless the act of a greater number is required by
law, the certificate of incorporation of the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its
proceedings to be prepared and shall report the same to the board of directors
upon the request of the board of directors. The minutes of the proceedings of
each committee shall be delivered to the Secretary of the Corporation for
placement in the minute books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the
board of directors, be allowed a fixed sum and expenses of attendance, if any,
for attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such
director by law.
<PAGE> 15
ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation
of the Corporation, or these bylaws, notice is required to be given to any
committee member, director, or stockholder and no provision is made as to how
such notice shall be given, personal notice shall not be required and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director, or stockholder at his address as it appears on the
books or (in the case of a stockholder) the stock transfer records of the
Corporation, or (b) by any other method permitted by law (including but not
limited to overnight courier service, telegram, telex, or telefax). Any notice
required or permitted to be given by mail shall be deemed to be delivered and
given at the time when the same is deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice
required or permitted to be given by telegram, telex, or telefax shall be
deemed to be delivered and given at the time transmitted with all charges
prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the
Corporation shall be a President, a Secretary, and such other officers as the
board of directors may from time to time elect or appoint, including a Chairman
of the Board, one or more Vice Presidents (with each Vice President to have
such descriptive title, if any, as the board of directors shall determine), and
a Treasurer. Each officer shall hold office until his successor shall have
been duly elected and shall have qualified, until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided. Any two
or more offices may be held by the same person. None of the officers need be a
stockholder or a director of the Corporation or a resident of the State of
Delaware.
<PAGE> 16
6.2 Removal. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors whenever in its
judgment the best interest of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the
Corporation (by death, resignation, removal, or otherwise) may be filled by the
board of directors.
6.4 Authority. Officers shall have such authority and perform
such duties in the management of the Corporation as are provided in these
bylaws or as may be determined by resolution of the board of directors not
inconsistent with these bylaws.
6.5 Compensation. The compensation, if any, of officers and
agents shall be fixed from time to time by the board of directors; provided,
however, that the board of directors may delegate the power to determine the
compensation of any officer and agent (other than the officer to whom such
power is delegated) to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected
by the board of directors, shall have such powers and duties as may be
prescribed by the board of directors. Such officer shall preside at all
meetings of the stockholders and of the board of directors. Such officer may
sign all certificates for shares of stock of the Corporation.
6.7 President. The President shall be the chief executive officer
of the Corporation and, subject to the board of directors, he shall have
general executive charge, management, and control of the properties and
operations of the Corporation in the ordinary course of its business, with all
such powers with respect to such properties and operations as may be reasonably
incident to such responsibilities. If the board of directors has not elected a
Chairman of the Board or in the absence or inability to act of the Chairman of
the Board, the President shall exercise all of the powers and discharge all of
the duties of the Chairman of the Board. As between the Corporation and third
parties, any action taken by the President in the performance of the duties of
the Chairman of the Board shall be conclusive evidence that there is no
Chairman of the Board or that the Chairman of the Board is absent or unable to
act.
6.8 Vice Presidents. Each Vice President shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President, and (in order of their seniority as determined by
the board of directors or, in the absence of such determination, as determined
by the length of time they have held the office of Vice President) shall
exercise the powers of the President during that officer's absence or inability
to act. As between the Corporation and third parties, any action taken by a
Vice President in the
<PAGE> 17
performance of the duties of the President shall be conclusive evidence of the
absence or inability to act of the President at the time such action was taken.
6.9 Treasurer. The Treasurer shall have custody of the
Corporation's funds and securities, shall keep full and accurate account of
receipts and disbursements, shall deposit all monies and valuable effects in
the name and to the credit of the Corporation in such depository or
depositories as may be designated by the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the Chairman
of the Board, or the President.
6.10 Assistant Treasurers. Each Assistant Treasurer shall have
such powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Treasurers (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Treasurer) shall exercise the powers of the
Treasurer during that officer's absence or inability to act.
6.11 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board or the President, in the name of the Corporation, all contracts of the
Corporation and affix the seal of the Corporation thereto. He may sign with
the Chairman of the Board or the President all certificates for shares of stock
of the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which
shall at all reasonable times be open to inspection by any director upon
application at the office of the Corporation during business hours. He shall
in general perform all duties incident to the office of the Secretary, subject
to the control of the board of directors, the Chairman of the Board, and the
President.
6.12 Assistant Secretaries. Each Assistant Secretary shall have
such powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
<PAGE> 18
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of
the Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or
the President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all
signatures on the certificate may be a facsimile and may be sealed with the
seal of the Corporation or a facsimile thereof. If any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been
placed upon, a certificate has ceased to be such officer, transfer agent, or
registrar before such certificate is issued, such certificate may be issued by
the Corporation with the same effect as if he were such officer, transfer
agent, or registrar at the date of issue. The certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued and shall exhibit the holder's name and the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
a certificate or certificates theretofore issued by the Corporation and alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates representing shares to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond with a
surety or sureties satisfactory to the Corporation in such sum as it may direct
as indemnity against any claim, or expense resulting from a claim, that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall
be transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the
<PAGE> 19
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and
authority to provide that certificates representing shares of stock bear such
legends as the board of directors deems appropriate to assure that the
Corporation does not become liable for violations of federal or state
securities laws or other applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate
of incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out
of funds of the Corporation legally available therefor such reserve or reserves
as the directors from time to time, in their discretion, consider proper to
provide for contingencies, to equalize dividends, or to repair or maintain any
property of the Corporation, or for such other purpose as the board of
directors shall consider beneficial to the Corporation, and the board of
directors may modify or abolish any such reserve in the manner in which it was
created.
8.3 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings of
its stockholders and board of directors and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be
fixed by the board of directors; provided, that if such fiscal year is not
fixed by the board of directors and the selection of the fiscal year is not
expressly deferred by the board of directors, the fiscal year shall be the
calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time
to time may be approved by the board of directors.
<PAGE> 20
8.6 Resignations. Any director, committee member, or officer may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the Chairman of the Board, the
President, or the Secretary. Such resignation shall take effect at the time
specified therein or, if no time is specified therein, immediately upon its
receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board,
the President, or any Vice President of the Corporation shall have the power
and authority to transfer, endorse for transfer, vote, consent, or take any
other action with respect to any securities of another issuer which may be held
or owned by the Corporation and to make, execute, and deliver any waiver,
proxy, or consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or
through a proxy), members of the board of directors, and members of a committee
of the board of directors may participate in and hold a meeting of such
stockholders, board of directors, or committee by means of a conference
telephone or similar communications equipment by means of which persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in
the certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which the holders of all shares entitled to vote thereon were present and
voted and shall be delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in
the manner required by this Section 8.9(a) to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which
<PAGE> 21
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office, principal place of business, or such officer
or agent shall be by hand or by certified or registered mail, return receipt
requested.
(b) Unless otherwise restricted by the certificate of
incorporation of the Corporation or by these bylaws, any action required or
permitted to be taken at a meeting of the board of directors, or of any
committee of the board of directors, may be taken without a meeting if a
consent or consents in writing, setting forth the action so taken, shall be
signed by all the directors or all the committee members, as the case may be,
entitled to vote with respect to the subject matter thereof, and such consent
shall have the same force and effect as a vote of such directors or committee
members, as the case may be, and may be stated as such in any certificate or
document filed with the Secretary of State of the State of Delaware or in any
certificate delivered to any person. Such consent or consents shall be filed
with the minutes of proceedings of the board or committee, as the case may be.
8.10 Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust,
mortgage, or other instrument executed by the Corporation through its duly
authorized officer or officers, the attestation to such execution by the
Secretary of the Corporation shall not be necessary to constitute such deed,
deed of trust, mortgage, or other instrument a valid and binding obligation
against the Corporation unless the resolutions, if any, of the board of
directors authorizing such execution expressly state that such attestation is
necessary.
8.12 Headings. The headings used in these bylaws have been
inserted for administrative convenience only and do not constitute matter to be
construed in interpretation.
8.13 References. Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. These bylaws may be altered, amended, or repealed
or new bylaws may be adopted by the stockholders or by the board of directors
at any regular meeting of the stockholders or the board of directors or at any
special meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of such special meeting.
<PAGE> 22
The undersigned, the Secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by unanimous consent by the directors of
the Corporation as of April 4, 1997.
/s/ W. THOMAS MCGHEE
----------------------------------
W. Thomas McGhee, Secretary
<PAGE> 1
EXHIBIT 4.1
============================================================
VIASYSTEMS, INC.
9 3/4% Senior Subordinated Notes due 2007
=====================
INDENTURE
Dated as of June 6, 1997
====================
THE BANK OF NEW YORK,
as Trustee
=============================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.8; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.5
(b) .............................. 11.3
(c) .............................. 11.3
313(a) .............................. 7.6
(b)(1) .............................. N.A.
(b)(2) .............................. 7.6
(c) .............................. 7.6
(d) .............................. 7.6
314(a) .............................. 4.2
4.10; 12.2
(b) .............................. N.A.
(c)(1) .............................. 12.4
(c)(2) .............................. 12.4
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 12.5
(f) .............................. 4.9
315(a) .............................. 7.1
(b) .............................. 7.5; 12.2
(c) .............................. 7.1
(d) .............................. 7.1
(e) .............................. 6.11
316(a)(last sentence) .............................. 12.6
(a)(1)(A) .............................. 6.5
(a)(1)(B) .............................. 6.4
(a)(2) .............................. N.A.
(b) .............................. 6.7
317(a)(1) .............................. 6.8
(a)(2) .............................. 6.9
(b) .............................. 2.4
318(a) .............................. 12.1
</TABLE>
N.A. means Not Applicable.
____________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
Definitions and Incorporation by Reference . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.3. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . 20
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
The Securities . . . . . . . . . . . . . . . . 21
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.4. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.9. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE III
Redemption . . . . . . . . . . . . . . . . . 33
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
Covenants . . . . . . . . . . . . . . . . . . 35
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.2. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.3. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.4. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 4.5. Limitation on Restrictions on Distributions from Restricted Subsidiaries . . . 40
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock . . . . . . . . . . . . . . 41
SECTION 4.7. Limitation on Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.8. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.9. Limitation on Capital Stock of Restricted Subsidiaries . . . . . . . . . . . . 45
SECTION 4.10. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.11. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V
Successor Company . . . . . . . . . . . . . . . . 46
SECTION 5.1. When Company May Merge or Transfer Assets . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI
Defaults and Remedies . . . . . . . . . . . . . . . 47
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.7. Rights of Holders to Receive Payment. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.8. Collection Suit by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.9. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
Trustee . . . . . . . . . . . . . . . . . . . 51
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.3. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.4. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.5. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . 56
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VIII
Discharge of Indenture; Defeasance . . . . . . . . . . 56
SECTION 8.1. Discharge of Liability on Securities; Defeasance. . . . . . . . . . . . . . 56
SECTION 8.2. Conditions to Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 8.3. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 8.4. Repayment to Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 8.5. Indemnity for U.S. Government Obligations . . . . . . . . . . . . . . . . . 58
SECTION 8.6. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX
Amendments. . . . . . . . . . . . . . . . . 59
SECTION 9.1. Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.4. Revocation and Effect of Consents and Waivers . . . . . . . . . . . . . . . 61
SECTION 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . 61
SECTION 9.6. Trustee To Sign Amendments. . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE X
Subordination . . . . . . . . . . . . . . . . 62
SECTION 10.1. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.2. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . 62
SECTION 10.3. Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.4. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . 63
SECTION 10.5. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.7. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.8. Subordination May Not Be Impaired by Company. . . . . . . . . . . . . . . . 64
SECTION 10.9. Rights of Trustee and Paying Agent. . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.10. Distribution or Notice to Representative. . . . . . . . . . . . . . . . . . 64
SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right To
Accelerate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.13. Trustee Entitled To Rely. . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness. . . . . . . . . . 65
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Indebtedness
on Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XI
Miscellaneous . . . . . . . . . . . . . . . . 66
SECTION 11.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.3. Communication by Holders with other Holders. . . . . . . . . . . . . . . . . 67
SECTION 11.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . 67
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 11.5. Statements Required in Certificate or Opinion. . . . . . . . . . . . . . . . 67
SECTION 11.6. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar . . . . . . . . . . . . . . . . 68
SECTION 11.8. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.9. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.13. Variable Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.14. Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.15. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . 69
EXHIBIT A Form of the Initial Note
EXHIBIT B Form of the Exchange Note
EXHIBIT C Form of the Transferee Letter of Representation
</TABLE>
- iv -
<PAGE> 7
INDENTURE dated as of June 6, 1997, among VIASYSTEMS, INC., a
Delaware corporation (the "Company"), and The Bank of New York, a New York
banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's 9
3/4% Senior Subordinated Notes due 2007 (the "Initial Notes") and, if and when
issued in exchange for Initial Notes as provided in the Registration Rights
Agreement (as hereinafter defined), the Company's 9 3/4% Senior Subordinated
Notes due 2007 (the "Exchange Notes" and, together with the Initial Notes, the
"Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Additional Assets" means: (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or a Restricted Subsidiary of
the Company; (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary of the Company; or (iv) Permitted
Investments of the type and in the amounts described in clause (viii) of the
definition thereof; provided, however, that, in the case of clauses (ii) and
(iii) of this definition, such Restricted Subsidiary is primarily engaged in a
Related Business.
"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 the purposes of this
definition, "control," when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1)
104.875% of the principal amount of such Security plus (2) all required
interest payments due on such Security through June 1, 2002, computed using a
discount rate equal to the Treasury Rate plus 100 basis points, over (B) the
principal amount of such Security.
"Asset Disposition" means any sale, lease, transfer, issuance
or other disposition (or series of related sales, leases, transfers, issuances
or dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other
<PAGE> 8
2
than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) a
disposition of inventory in the ordinary course of business, (iii) a
disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of the business of the Company and its Restricted
Subsidiaries and that is disposed of in each case in the ordinary course of
business, (iv) dispositions of property for net proceeds which, when taken
collectively with the net proceeds of any other such dispositions under this
clause (iv) that were consummated since the beginning of the calendar year in
which such disposition is consummated, do not exceed 1.50% of the consolidated
book value of the Company's assets as of the most recent date prior to such
disposition for which a consolidated balance sheet of the Company has been
regularly prepared, (v) transactions permitted under Section 5.1, (vi)
transactions permitted under Section 4.4, and (vii) any disposition that
constitutes a Change of Control.
"Asset Swap" means the execution of a definitive agreement,
subject only to customary closing conditions that the Company in good faith
believes will be satisfied, for a substantially concurrent purchase and sale,
or exchange, of Productive Assets between the Company or any of its Restricted
Subsidiaries and another Person or group of affiliated Persons; provided,
however, that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall be deemed
to be a new Asset Swap.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption multiplied by the amount of such payment by (ii) the sum of all such
payments.
"Bank Indebtedness" means any and all amounts, whether
outstanding on the Issue Date or thereafter incurred, payable or guaranteed by
the Company under or in respect of the Credit Agreement or any Interest Rate
Agreement or Currency Agreement with a holder of Bank Indebtedness and any
related notes, collateral documents, letters of credit and guarantees,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization
relating to the Company whether or not a claim for post filing interest is
allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.
"Bisto" means Bisto Funding, Inc., a Delaware corporation
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors.
<PAGE> 9
3
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP, and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date such lease may be terminated without
penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company and its Subsidiaries to
any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group") (whether or not otherwise in
compliance with the provisions of this Indenture), other than to
Permitted Holders; or
(ii) a majority of the Board of Directors shall consist of
Persons who are not Continuing Directors; or
(iii) the acquisition by any Person or Group (other than the
Permitted Holders or any direct or indirect Subsidiary of any
Permitted Holder) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of the Company.
"Chips" means Interconnection Systems (Holdings) Limited and
its Subsidiaries.
"Chips Holdings" means Chips Holdings, Inc.
"Chips Letter of Credit" means an irrevocable direct pay
letter of credit issued by Chase Manhattan Bank Delaware, or any successor
issuer, to support the payment of principal of and up to 6.22% interest on the
Chips Loan Notes, as amended, extended, renewed, replaced or otherwise modified
from time to time.
"Chips Loan Notes" means $437,500,000 of loan notes due March
31, 2003, issued by Chips Holdings in connection with the acquisition of Chips.
"Chips Reimbursement Obligations" means the obligations of the
Company to (a) reimburse the issuer of the Chips Letter of Credit for (i) up to
$319,250,000
<PAGE> 10
4
of drawings on the Chips Letter of Credit in respect of principal on the Chips
Loan Notes and (ii) up to $27,212,500 of drawings on the Chips Letter of Credit
in respect of interest on the Chips Loan Notes, less any portion of such
reimbursement obligation paid by Bisto and (b) to pay letter of credit fees and
commissions on (x) the entire amount referred to in clause (a) above and (y)
$118,250,000 of the Chips Letter of Credit, to the extent not paid by Bisto.
"Circo Craft" means Circo Craft Co., Inc., and its
Subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Viasystems, Inc. until a successor replaces it
and, thereafter, means the successor.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus without duplication, the following to the
extent deducted in calculating such Consolidated Net Income: (i) income tax
expense, (ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense, (v) exchange or translation losses on foreign currencies,
and (vi) all other non-cash items reducing Consolidated Net Income (excluding
any non-cash item to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
Securities and less, to the extent added in calculating Consolidated Net
Income, (x) exchange or translation gains on foreign currencies, and (y)
non-cash items (excluding such non-cash items to the extent they represent an
accrual for cash receipts reasonably expected to be received prior to the
Stated Maturity of the Securities), in each case for such period.
Notwithstanding the foregoing, the income tax expense, depreciation expense and
amortization expense of a Subsidiary of the Company shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available
to (ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (1) if the Company or any of its Restricted Subsidiaries has
Incurred any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (A) such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(provided that if such Indebtedness is Incurred under a revolving credit
facility (or similar arrangement or under any predecessor revolving credit or
similar arrangement) only that portion of such Indebtedness that constitutes
the one year projected minimum balance of such Indebtedness (as determined in
good faith by senior management of the Company and assuming a constant level of
sales) shall be deemed outstanding for purposes of this calculation) and (B)
the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had
<PAGE> 11
5
occurred on the first day of such period, (2) if since the beginning of such
period any Indebtedness of the Company or any of its Restricted Subsidiaries
has been repaid, repurchased, defeased or otherwise discharged (other than
Indebtedness under a revolving credit or similar arrangement unless such
revolving credit Indebtedness has been permanently repaid and has not been
replaced), Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Indebtedness had been repaid,
repurchased, defeased or otherwise discharged on the first day of such period,
(3) if since the beginning of such period the Company or any of its Restricted
Subsidiaries shall have made any Asset Disposition or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Asset
Disposition, Consolidated Cash Flow for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for
such period shall be (i) reduced by an amount equal to the Consolidated
Interest Expense attributable to any Indebtedness of the Company or any of its
Restricted Subsidiaries repaid, repurchased, defeased or otherwise discharged
with respect to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital
Stock of any Restricted Subsidiary of the Company is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale) and (ii) increased by interest income attributable to the assets which
are the subject of such Asset Disposition for such period, (4) if since the
beginning of such period the Company or any of its Restricted Subsidiaries (by
merger or otherwise) shall have made an Investment in any Restricted Subsidiary
of the Company (or any Person which becomes a Restricted Subsidiary of the
Company) or an acquisition of assets, including any Investment in a Restricted
Subsidiary of the Company or any acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, or if
the transaction giving rise to such calculation is a transaction subject to
Section 5.1, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness and the use of the proceeds therefrom) as if
such Investment or acquisition occurred on the first day of such period and (5)
if since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary of the Company or was merged with or into the Company or
any Restricted Subsidiary of the Company since the beginning of such period)
shall have made any Asset Disposition, Investment or acquisition of assets that
would have required an adjustment pursuant to clause (3) or (4) above if made
by the Company or a Restricted Subsidiary of the Company during such period,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company. If any Indebtedness bears a floating rate of interest and is
being given pro
<PAGE> 12
6
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months). Notwithstanding anything herein to the contrary,
if at the time the calculation of the Consolidated Coverage Ratio is to be
made, the Company does not have available consolidated financial statements
reflecting the ownership by the Company of each of Circo Craft, Viasystems
Technologies (or the assets acquired by it in the Lucent Transaction), Forward
Group and Chips for a period of at least four full fiscal quarters, all
calculations required by the Consolidated Coverage Ratio shall be prepared on a
pro forma basis, as though each such transaction (to the extent not otherwise
reflected in the consolidated financial statements of the Company) had occurred
on the first day of the four fiscal quarter period for which such calculation
is being made.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Subsidiaries, plus, to
the extent not included in such interest expense, (i) interest expense
attributable to capital leases, (ii) amortization of debt discount, (iii)
capitalized interest, (iv) non-cash interest expense, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) interest actually paid by the Company or
any such Restricted Subsidiary under any Guarantee of Indebtedness or other
obligation of any other Person, (vii) net payments (whether positive or
negative) pursuant to Interest Rate Agreements, (viii) the cash contributions
to any employee stock ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest or fees to any
Person (other than the Company) in connection with Indebtedness Incurred by
such plan or trust and (ix) cash and Disqualified Stock dividends in respect of
all Preferred Stock of Restricted Subsidiaries and Disqualified Stock of the
Company held by Persons other than the Company or a Wholly-Owned Subsidiary and
less (a) to the extent included in such interest expense, the amortization of
capitalized debt issuance costs and debt discount solely to the extent relating
to the issuance and sale of Indebtedness together with any equity security as
part of an investment unit and (b) interest income. Notwithstanding the
foregoing, the Consolidated Interest Expense with respect to any Restricted
Subsidiary of the Company, that was not a Wholly-Owned Subsidiary, shall be
included only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its consolidated Restricted Subsidiaries;
provided, however, that there shall not be included in such Consolidated Net
Income: (i) any net income (loss) of any Person acquired by the Company or any
of its Restricted Subsidiaries in a pooling of interests transaction for any
period prior to the date of such acquisition; (ii) any net income of any
Restricted Subsidiary of the Company if such Restricted Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly or indirectly,
to the Company (other than restrictions in effect on the Issue Date with
respect to a Restricted Subsidiary of the Company and other than restrictions
that are created or exist in compliance with Section 4.5 (excluding clause (g)
thereof from the operation of this parenthetical); (iii) any gain or loss
realized upon the sale
<PAGE> 13
7
or other disposition of any assets of the Company or its consolidated
Restricted Subsidiaries (including pursuant to any Sale/Leaseback Transaction)
which are not sold or otherwise disposed of in the ordinary course of business
and any gain or loss realized upon the sale or other disposition of any Capital
Stock of any Person; (iv) any extraordinary gain or loss; (v) the cumulative
effect of a change in accounting principles; (vi) restructuring charges or
writeoffs recorded within the one year period following the Issue Date in an
aggregate amount not to exceed $50 million; (vii) charges relating to the
writeoff of acquired in-process research and development expenses and other
intangibles in connection with the application of the purchase method of
accounting to the net assets of a Person acquired by the Company and its
Restricted Subsidiaries and charges related to writeoff of intangible assets;
(viii) the net income of any Person, other than a Restricted Subsidiary, except
to the extent of the lesser of (A) dividends or distributions paid to the
Company or any of its Restricted Subsidiaries by such Person and (B) the net
income of such Person (but in no event less than zero), and the net loss of
such Person (other than an Unrestricted Subsidiary) shall be included only to
the extent of the aggregate Investment of the Company or any of its Restricted
Subsidiaries in such Person and (ix) any non-cash expenses attributable to
grants or exercises of employee stock options. Notwithstanding the foregoing,
for the purpose of Section 4.4 only, there shall be excluded from Consolidated
Net Income any dividends, repayments of loans or advances or other transfers of
assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary
to the extent such dividends, repayments or transfers increase the amount of
Restricted Payments permitted under Section 4.4 pursuant to clause (a)(3)(E)
thereof.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending prior to the
taking of any action for the purpose of which the determination is being made
and for which financial statements are available (but in no event ending more
than 180 days prior to the taking of such action), as (i) the par or stated
value of all outstanding Capital Stock of the Company plus (ii) paid-in capital
or capital surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Continuing Director" means, as of the date of determination,
any Person who (i) was a member of the Board of Directors on the Issue Date,
(ii) was nominated for election or elected to the Board of Directors of the
Company with the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election, or (iii) is a representative of a Permitted Holder.
"Credit Agreement" means (i) the Second Amended and Restated
Credit Agreement, dated as of June 5, 1997, among Viasystems Group, as
Guarantor, the Company, as US Borrower, Circo Craft Co., Inc., PCB Investments
PLC, Forward Group PLC, Chips Acquisition Limited, Chips and the other Foreign
Subsidiary Borrowers (as defined therein) from time to time parties thereto,
The Chase Manhattan Bank of Canada, Chase Manhattan International Limited and
the other Foreign Agents (as defined therein) from time to time appointed
thereunder, The Chase Manhattan Bank, as Administrative
<PAGE> 14
8
Agent (as defined therein), and the lenders from time to time parties thereto
as the same may be amended, supplemented or otherwise modified from time to
time including amendments, supplements or modifications relating to the
addition or elimination of Subsidiaries of the Company as borrowers or other
credit parties thereunder, and (ii) any renewal, extension, refunding,
restructuring, replacement or refinancing thereof (whether with the original
Administrative Agent, Foreign Agent(s) and Issuing Lender (as defined therein),
and lenders or another administrative agent or agents or one or more other
lenders and whether provided under the original Credit Agreement or one or more
other credit or other agreements or indentures).
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors and assigns, or such other depository
institution hereinafter appointed by the Company.
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to lend
up to, at least $25 million and is specifically designated by the Company in
the instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or upon
the happening of any event (i) matures (other than as a result of a Change of
Control) or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding capital stock which is convertible or exchangeable solely at
the option of the Company or a Restricted Subsidiary) or (iii) is redeemable at
the option of the holder thereof (other than as a result of a Change of
Control, in whole or in part, in each case on or prior to the Stated Maturity
of the Securities, provided, that only the portion of Capital Stock which so
matures or is mandatorily redeemable, is so convertible or exchangeable or is
so redeemable at the option of the holder thereof prior to such Stated Maturity
shall be deemed to be Disqualified Stock.
"Equity Offering" means an offering for cash by Holding or the
Company of its common stock, or options, warrants or rights with respect to its
common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 15
9
"Financial Advisory Agreement" means the Financial Advisory
Agreement between Hicks Muse Partners and the Company as in effect on the Issue
Date.
"Foreign Subsidiaries" means a Restricted Subsidiary not
organized or existing under the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof.
"Forward Group" means Forward Group PLC and its Subsidiaries.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
the Commission or in such other statements by such other entity as approved by
a significant segment of the accounting profession. All ratios and
computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hicks Muse" means Hicks, Muse, Tate & Furst, Incorporated.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holding" means Viasystems Group, Inc., a Delaware
corporation, the owner of all the outstanding Capital Stock of the Company on
the Issue Date, and its successors and assigns.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of indebtedness of
<PAGE> 16
10
such Person for borrowed money, (ii) the principal of and premium (if any) in
respect of obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person in respect of
letters of credit or other similar instruments (including reimbursement
obligations with respect thereto) (other than obligations with respect to
letters of credit securing obligations (other than obligations described in
clauses (i), (ii) and (v)) entered into in the ordinary course of business of
such Person to the extent that such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than the
third business day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit), (iv) all obligations
of such Person to pay the deferred and unpaid purchase price of property or
services (except trade payables and accrued expenses incurred in the ordinary
course of business), which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto
or the completion of such services, (v) all Capitalized Lease Obligations and
all Attributable Indebtedness of such Person, (vi) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person, (vii) all Indebtedness of other Persons
to the extent Guaranteed by such Person, (viii) the amount of all obligations
of such Person with respect to the redemption, repayment or other repurchase of
any Disqualified Stock or, with respect to any Restricted Subsidiary of the
Company, any Preferred Stock of such Restricted Subsidiary to the extent such
obligation arises on or before the Stated Maturity of the Securities (but
excluding, in each case, any accrued dividends) and (ix) to the extent not
otherwise included in this definition, obligations under Currency Agreements
and Interest Rate Agreements. The amount of Indebtedness of any Person at any
date shall be the outstanding principal amount of all unconditional obligations
as described above, as such amount would be reflected on a balance sheet
prepared in accordance with GAAP, and the maximum liability of such Person,
upon the occurrence of the contingency giving rise to the obligation, of any
contingent obligations described above at such date.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit represented
by a bank deposit other than a time deposit) or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by such Person. For purposes of Section 4.4, (i) "Investment" shall include
the portion (proportionate to the Company's equity interest in a Restricted
Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market
value of the net assets of such Restricted Subsidiary of the Company at the
time that such Restricted Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Unrestricted Subsidiary as
a Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market
<PAGE> 17
11
value of the net assets of such Subsidiary at the time that such Subsidiary is
so re-designated a Restricted Subsidiary; and (ii) any property transferred to
or from an Unrestricted Subsidiary shall be valued at its fair market value at
the time of such transfer, in each case as determined in good faith by the
Board of Directors and evidenced by a resolution of such Board of Directors
certified in an Officers' Certificate to the Trustee.
"Issue Date" means the date on which the Initial Notes are
originally issued.
"Legal Holiday" has the meaning ascribed in Section 11.8.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Lucent Transaction" means the acquisition by Holding of
substantially all of the assets of the Interconnection Technologies Unit of the
Microelectronics Group of Lucent Technologies in December 1996.
"Mills & Partners" means Mills & Partners, Inc.
"Monitoring and Oversight Agreement" means the Monitoring and
Oversight Agreement between Hicks Muse Partners and the Company as in effect on
the Issue Date.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets subject to such Asset
Disposition) therefrom, in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all
Federal, state, foreign and local taxes required to be paid or accrued as a
liability under GAAP in connection with such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other payments
required to be made to any Person owning a beneficial interest in assets
subject to sale or minority interest holders in Subsidiaries or joint ventures
as a result of such Asset Disposition, (iv) the deduction of appropriate
amounts to be provided by the seller as a reserve, in accordance with GAAP,
against any liabilities
<PAGE> 18
12
associated with the assets disposed of in such Asset Disposition and retained
by the Company or any Restricted Subsidiary of the Company after such Asset
Disposition and (v) any portion of the purchase price from an Asset Disposition
placed in escrow (whether as a reserve for adjustment of the purchase price,
for satisfaction of indemnities in respect of such Asset Disposition or
otherwise in connection with such Asset Disposition); provided, however, that
upon the termination of such escrow, Net Available Cash shall be increased by
any portion of funds therein released to the Company or any Restricted
Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any Restricted Subsidiary (a) provides any guarantee or credit
support of any kind (including any undertaking, guarantee, indemnity, agreement
or instrument that would constitute Indebtedness) or (b) is directly or
indirectly liable (as a guarantor or otherwise) and (ii) 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 Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"Offering Memorandum" means the Offering Memorandum dated June
2, 1997 relating to the Initial Notes; provided that after the issuance of
Exchange Notes, all references herein to "Offering Memorandum" shall be deemed
references to the prospectus relating to the Exchange Notes.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company, as applicable.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means Hicks Muse, Mills & Partners, or any
of their Affiliates, officers or directors.
"Permitted Indebtedness" means (i) Indebtedness of the Company
owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a
Restricted Subsidiary owing to and held by the Company or any Wholly-Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly-Owned
Subsidiary ceasing to be a Wholly-Owned Subsidiary or any subsequent
<PAGE> 19
13
transfer of any such Indebtedness (except to the Company or a Wholly-Owned
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof; (ii) Indebtedness represented by (x) the
Securities, (y) any Indebtedness (other than the Indebtedness described in
clauses (i), (ii) and (iv) of Section 4.3(b) and other than Indebtedness
Incurred pursuant to clause (i) above or clauses (iv), (v), (vi) or (vii)
below) outstanding on the Issue Date and (z) any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (ii) or
Incurred pursuant to Section 4.3(a); (iii) (A) Indebtedness of a Restricted
Subsidiary Incurred and outstanding on the date on which such Restricted
Subsidiary was acquired by the Company or its Restricted Subsidiaries (other
than Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Restricted Subsidiary
became a Subsidiary or was otherwise acquired by the Company); provided,
however, that at the time such Restricted Subsidiary is acquired by the
Company, the Company would have been able to Incur $1.00 of additional
Indebtedness pursuant to Section 4.3(a) after giving effect to the Incurrence
of such Indebtedness pursuant to this clause (iii) and (B) Refinancing
Indebtedness Incurred by the Company or a Restricted Subsidiary in respect of
Indebtedness Incurred by such Restricted Subsidiary pursuant to this clause
(iii); (iv) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company or any of its
Restricted Subsidiaries to their customers in the ordinary course of their
business, (B) in respect of performance bonds or similar obligations of the
Company or any of its Restricted Subsidiaries for or in connection with
pledges, deposits or payments made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations, (C)
arising from Guarantees to suppliers, lessors, licensees, contractors,
franchisees or customers of obligations (other than Indebtedness) Incurred in
the ordinary course of business and (D) under Currency Agreements and Interest
Rate Agreements; provided, however, that in the case of Currency Agreements and
Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements
are entered into for bona fide hedging purposes of the Company or its
Restricted Subsidiaries (as determined in good faith by the Board of Directors
or senior management of the Company) and correspond in terms of notional
amount, duration, currencies and interest rates, as applicable, to Indebtedness
of the Company or its Restricted Subsidiaries Incurred without violation of
this Indenture or to business transactions of the Company or its Restricted
Subsidiaries on customary terms entered into in the ordinary course of
business; (v) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in each case Incurred in connection with the disposition of
any business assets or Restricted Subsidiary of the Company (other than
Guarantees of Indebtedness or other obligations Incurred by any Person
acquiring all or any portion of such business assets or Restricted Subsidiary
of the Company for the purpose of financing such acquisition) in a principal
amount not to exceed the gross proceeds actually received by the Company or any
of its Restricted Subsidiaries in connection with such disposition; provided,
however, that the principal amount of any Indebtedness Incurred pursuant to
this clause (v), when taken together with all Indebtedness Incurred pursuant to
this clause (v) and then outstanding, shall not exceed $20.0 million; (vi)
Indebtedness
<PAGE> 20
14
consisting of (A) Guarantees by the Company or a Restricted Subsidiary of
Indebtedness Incurred by a Wholly-Owned Subsidiary without violation of this
Indenture and (B) Guarantees by a Restricted Subsidiary of Senior Indebtedness
Incurred by the Company without violation of this Indenture (so long as such
Restricted Subsidiary could have Incurred such Indebtedness directly without
violation of this Indenture); (vii) Indebtedness arising from agreements with
governmental agencies of any foreign country, or political subdivision or
agency thereof, relating to the construction of plants and the purchase and
installation (including related training costs) of equipment to be used in a
Related Business; provided that such Indebtedness (i) has a maturity in excess
of ten years and 91 days and (ii) in the aggregate does not exceed $50.0
million; and (viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business, provided that such
Indebtedness is extinguished promptly in accordance with customary practices.
"Permitted Investment" means an Investment by the Company or
any of its Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the
Company; provided, however, that the primary business of such Wholly-Owned
Subsidiary is a Related Business; (ii) another Person if as a result of such
Investment such other Person becomes a Wholly-Owned Subsidiary of the Company
or is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Wholly-Owned Subsidiary of
the Company; provided, however, that in each case such Person's primary
business is a Related Business; (iii) Temporary Cash Investments; (iv)
receivables owing to the Company or any of its Restricted Subsidiaries, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business; (vi) loans or advances to
employees for purposes of purchasing the Company's common stock in an aggregate
amount outstanding at any one time not to exceed $10 million and other loans
and advances to employees made in the ordinary course of business consistent
with past practices of the Company or such Restricted Subsidiary; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any of its Restricted
Subsidiaries or in satisfaction of judgments or claims; (viii) a Person engaged
in a Related Business or a loan or advance to the Company the proceeds of which
are used solely to make an Investment in a Person engaged in a Related Business
or a Guarantee by the Company of Indebtedness of any Person in which such
Investment has been made; provided, however, that no Permitted Investments may
be made pursuant to this clause (viii) to the extent the amount thereof would,
when taken together with all other Permitted Investments made pursuant to this
clause (viii), exceed $50 million in the aggregate (plus, to the extent not
previously reinvested, any return of capital realized on Permitted Investments
made pursuant to this clause (viii), or any release or other cancellation of
any Guarantee constituting such Permitted Investment); (ix) Persons to the
extent such Investment is received by the Company or any Restricted Subsidiary
as consideration for Asset Dispositions effected in compliance with Section
4.6; (x) prepayments and other credits to suppliers made in the ordinary course
of business consistent with the past practices of the Company and its
Restricted Subsidiaries; (xi) payments in respect of the Chips Reimbursement
Obligations, as
<PAGE> 21
15
in effect on the Issue Date; and (xii) Investments in connection with pledges,
deposits, payments or performance bonds made or given in the ordinary course of
business in connection with or to secure statutory, regulatory or similar
obligations, including obligations under health, safety or environmental
obligations.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Exchange Securities" shall be defined in the
Registration Rights Agreement.
"Productive Assets" means assets of a kind used or usable by
the Company and its Restricted Subsidiaries in the Company's business or any
Related Business.
A "Public Market" exists at any time with respect to the
common stock of Holding or the Company if (a) the common stock of Holding or
the Company, as the case may be, is then registered with the SEC pursuant to
Section 12(b) or 12(g) of the Exchange Act and traded either on a national
securities exchange or in the National Association of Securities Dealers
Automated Quotation System and (b) at least 15% of the total issued and
outstanding common stock of Holding or the Company, as the case may be, has
been distributed prior to such time by means of an effective registration
statement under the Securities Act.
"QIB" means any "qualified institutional buyer" (as defined
under the Securities Act).
"Redemption Date" means the date specified by the Company in a
notice delivered pursuant to Section 3.3 as the date on which the Company has
elected to redeem all of the Securities pursuant to paragraph 5 of the
Securities after the occurrence of a Change of Control.
"Refinancing Indebtedness" means Indebtedness that is incurred
to refund, refinance, replace, renew, repay or extend (including pursuant to
any defeasance or discharge mechanism) (collectively, "refinance") any
Indebtedness existing on the date of the Indenture or Incurred in compliance
with the Indenture (including Indebtedness of the Company that refinances
Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Restricted Subsidiary)
including Indebtedness that refinances Refinancing Indebtedness; provided,
however, that (i) the Refinancing Indebtedness has a Stated Maturity no earlier
than the earlier of (A) the ninety-first
<PAGE> 22
16
day after the Stated Maturity of the Securities and (B) the Stated Maturity of
the Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an
Average Life at the time such Refinancing Indebtedness is Incurred that is
equal to or greater than the lesser of (A) the Average Life of the Securities
and (B) the Average Life of the Indebtedness being refinanced, and (iii) such
Refinancing Indebtedness is Incurred in an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price) that is equal to
(or 101% of, in the case of a refinancing of the Securities in connection with
a Change of Control) or less than the sum of the aggregate principal amount (or
if issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced, plus applicable premium and
reasonable costs paid in connection with such refinancing.
"Registered Exchange Offer" shall have the meaning set forth
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Exchange and
Registration Rights Agreement, dated June 6, 1997, among the Company, Chase
Securities Inc., Natwest Capital Markets Limited and Schroeder Wertheim & Co.
Incorporated.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries on the Issue Date, as reasonably determined by the
Board of Directors.
"Representative" means any trustee, agent or representative
(if any) of an issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depositary), or any successor Person
thereto and shall initially be the Trustee.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
<PAGE> 23
17
"Senior Indebtedness" means whether outstanding on the Issue
Date or thereafter issued, the Bank Indebtedness and all other Indebtedness of
the Company, including interest and fees thereon, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that the obligations in respect of such Indebtedness are not
superior in right of payment to the Securities; provided, however, that Senior
Indebtedness shall not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), or (4) any
Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness
and any Subordinated Indebtedness.
"Senior Subordinated Indebtedness" means the Securities and
any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness.
"Shelf Registration Statement" has the meaning ascribed
thereto in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Subordinated Indebtedness" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) 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 (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations of the United States of America or any
agency thereof or obligations
<PAGE> 24
18
Guaranteed by the United States of America or any agency thereof, (ii)
Investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued by
a bank or trust company which is organized under the laws of the United States
of America, any state thereof or any foreign country recognized by the United
States of America having capital, surplus and undivided profits aggregating in
excess of $250.0 million (or the foreign currency equivalent thereof) and whose
long-term debt, or whose parent holding company's long-term debt, is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act), (iii) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (i) above
entered into with a bank meeting the qualifications described in clause (ii)
above, (iv) Investments in commercial paper, maturing not more than 180 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Company) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Group, (v) Investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States
of America, or by any political subdivision or taxing authority thereof, and
rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc. and (vi) Investments in mutual funds whose investment
guidelines restrict substantially all of such funds' investments to those
satisfying the provisions of clauses (i) through (v) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture.
"Transactions" means (i) the acquisition by Holding of Circo
Craft in October 1996, (ii) the Lucent Transaction, (iii) the acquisition by
Holding of the Forward Group in April 1997 and (iv) the acquisition by Holding
of Chips Holding.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to June 1, 2002; provided, however, that if the
period from the Redemption Date to June 1, 2002 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are given,
except that if the period from the Redemption Date to June 1, 2002 is less
<PAGE> 25
19
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness
of, or owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total consolidated assets of $10,000 or less or (B) if such
Subsidiary has consolidated assets greater than $10,000, then such designation
would be permitted under Section 4.4. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.3(a) and (y) no Default shall
have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Viasystems Technologies" means Viasystems Technologies Corp.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, at least 99% of the Capital Stock of which (other than directors'
qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary;
provided, however, the Forward Group
<PAGE> 26
20
shall be deemed to be a Wholly-Owned Subsidiary of the Company for all purposes
of the Indenture unless the sale or issuance of more than 1% of the Capital
Stock thereof to a person other than another Wholly-Owned Subsidiary of the
Company occurs.
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . 4.7
"Agent Member" . . . . . . . . . . . . . . . . . . . . 2.1
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . 6.1
"Blockage Notice" . . . . . . . . . . . . . . . . . . 10.3
"covenant defeasance option" . . . . . . . . . . . . . 8.1(b)
"Custodian" . . . . . . . . . . . . . . . . . . . . . 6.1
"Definitive Securities" . . . . . . . . . . . . . . . 2.1
"Event of Default" . . . . . . . . . . . . . . . . . . 6.1
"Global Security" . . . . . . . . . . . . . . . . . . 2.1(b)
"legal defeasance option" . . . . . . . . . . . . . . 8.1(b)
"Non-Global Purchaser" . . . . . . . . . . . . . . . . 2.1
"Offer" . . . . . . . . . . . . . . . . . . . . . . . 4.6
"pay the Securities" . . . . . . . . . . . . . . . . . 10.3
"Paying Agent" . . . . . . . . . . . . . . . . . . . . 2.3
"Payment Blockage Period" . . . . . . . . . . . . . . 10.3
"Registrar" . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payment" . . . . . . . . . . . . . . . . . 4.4
"Rule 144A" . . . . . . . . . . . . . . . . . . . . . 2.1(b)
"Successor Company" . . . . . . . . . . . . . . . . . 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which
are incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee"
means the Trustee.
<PAGE> 27
21
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or
other discount security at any date shall be the principal amount
thereof that would be shown on a balance sheet of the issuer dated
such date prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be
(i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with
respect to such Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.1. Form and Dating. (a) The Initial Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit B, which is hereby incorporated
by reference and expressly made a part of this Indenture. The Private Exchange
Securities shall be in the Form of Exhibit A, but shall bear the CUSIP Number
as the Exchange Notes. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage, in addition to
those set forth on Exhibits A and B.
<PAGE> 28
22
The Company and the Trustee shall approve the forms of the Securities and any
notation, endorsement or legend on them. Each Security shall be dated the date
of its authentication. The terms of the Securities set forth in Exhibit A and
Exhibit B are part of the terms of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to be bound by such terms.
(b) Global Securities. The Initial Notes are being
offered and sold by the Company pursuant to a Purchase Agreement, dated June 2,
1997, among the Company, Chase Securities Inc., Natwest Capital Markets Limited
and Schroeder Wertheim & Co. Incorporated (the "Purchase Agreement").
Initial Notes shall be issued initially in the form of one or
more permanent global Securities in definitive, fully registered form without
interest coupons with the Global Securities Legend and Restricted Securities
Legend set forth in Exhibit A hereto (each, a "Global Security"), which shall
be deposited on behalf of the purchasers of the Initial Notes represented
thereby with the Trustee, at its New York office, as custodian for the
Depositary, and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Securities
may from time to time be increased or decreased by endorsements made on such
Global Securities by the Trustee and the Depositary or its nominee as
hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall
apply only to Global Securities deposited with the Trustee, as custodian for
the Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(d) Certificated Securities. Except as provided in
Section 2.6, owners of beneficial interests in Global Securities will not be
entitled to receive certificated Securities ("Definitive Securities").
Definitive Securities will bear the Restricted Securities Legend set forth on
Exhibit A unless removed in accordance with Section 2.6(f) hereof.
SECTION 2.2. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature. If
an Officer whose signature is on a Security no longer holds that office at the
time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
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23
A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee
on a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
The Trustee shall authenticate and make available for
delivery: (1) Initial Notes for original issue in an aggregate principal amount
of $400 million and (2) Exchange Notes for issue only in a Registered Exchange
Offer pursuant to the Registration Rights Agreement, and only in exchange for
Initial Notes of an equal principal amount, and (3) Private Exchange
Securities, and only in exchange for Initial Notes of an equal principle amount
pursuant to the Registration Rights Agreement in each case upon a written order
of the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. Such order shall specify
the amount of the Securities to be authenticated and the date on which the
original issue of Securities is to be authenticated and whether the Securities
are to be Initial Notes or Exchange Notes. The aggregate principal amount of
Securities outstanding at any time may not exceed $400 million except as
provided in Section 2.7.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent.
SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.7. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer
agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at
least 10:00 a.m (New York City time) on the date on which any principal of or
interest on any Security
<PAGE> 30
24
is due and payable, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal or interest when due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that
such Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by such Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying
Agent (other than the Trustee) to pay all money held by it to the Trustee and
to account for any funds disbursed by such Paying Agent. Upon complying with
this Section, the Paying Agent (if other than the Company or a Subsidiary)
shall have no further liability for the money delivered to the Trustee. Upon
any bankruptcy, reorganization or similar proceeding with respect to the
Company, the Trustee shall serve as Paying Agent for the Securities.
SECTION 2.5. Securityholder 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 Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing 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
Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented by a Holder to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that:
(i) such Definitive Securities shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-registrar, duly
executed by such Holder or his attorney duly authorized in writing;
and
(ii) if such Definitive Securities are Transfer Restricted
Securities, such Definitive Securities shall also be accompanied by
the following additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are
being delivered to the Registrar by a Holder for registration
in the name of such Holder, without
<PAGE> 31
25
transfer, a certification from such Holder to that effect (in
the form set forth on the reverse of the Security); or
(B) if such Transfer Restricted Securities are
being transferred (x) to the Company or to a QIB in accordance
with Rule 144A under the Securities Act or (y) pursuant to an
effective registration statement under the Securities Act, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are
being transferred (w) pursuant to an exemption from
registration in accordance with Rule 144 or Regulation S under
the Securities Act; or (x) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Securities Act that is acquiring the security
for its own account, or for the account of such an
institutional accredited investor, in each case in a minimum
principal amount of the Securities of $250,000 for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the
Securities Act; or (y) in reliance on another exemption from
the registration requirements of the Securities Act: (i) a
certification to that effect from such Holder (in the form set
forth on the reverse of the Security), (ii) if the Company or
the Trustee so requests, an Opinion of Counsel reasonably
acceptable to the Company and to the Trustee to the effect
that such transfer is in compliance with the Securities Act
and (iii) in the case of clause (x), a signed letter from the
transferee substantially in the form of Exhibit C hereto.
(b) Restrictions on Transfer of a Definitive Security for
a Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse
of the Security, to the effect that such Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act or an institutional "accredited investor" within the meaning of
Rule 501(a)(1),(2),(3) or (7) under the Securities Act; and
(ii) written instructions from the Holder thereof
directing the Trustee to make, or to direct the Securities Custodian
to make, an endorsement on the Global Security to reflect an increase
in the aggregate principal amount of the Securities represented by the
Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global
<PAGE> 32
26
Securities are then outstanding, the Company shall issue and the Trustee shall
authenticate, upon written order of the Company in the form of an Officers'
Certificate, a new Global Security in the appropriate principal amount. The
Trustee shall deliver copies of each certification and instruction received by
it pursuant to clauses (i) and (ii) above to the Depositary and, upon receipt
thereof, the Depositary shall make appropriate adjustments to its books and
records to reflect exchange of such Definitive Security for an interest in the
Global Security in accordance with Section 2.6(c).
(c) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary or the Trustee, as the custodian for
the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor.
(ii) A Global Security deposited with the Depositary or
with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof only if such transfer complies
with this Section 2.6 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a "clearing agency" registered under the
Exchange Act and a successor depositary is not appointed by the Company within
90 days of such notice, (ii) the Company, at its option, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Securities or
(iii) an Event of Default has occurred and is continuing and the Registrar has
received a request from the Depositary or the Trustee to issue Definitive
Securities.
(iii) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered by the
Depositary to the Trustee to be so transferred, in whole or from time to time
in part, without charge, and the Company shall sign and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Each Definitive Security delivered in exchange for
any portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and shall be registered in such names as the
Depositary shall direct. Any Definitive Security delivered in exchange for an
interest in the Global Security shall, except as otherwise provided in Section
2.6(f), bear the Restricted Securities Legend set forth in Exhibit A hereto.
(iv) The registered Holder of a Global Security may grant
proxies and otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under this Indenture or the Securities.
(v) In the event of the occurrence of any of the events
specified in Section 2.6(b)(ii), the Company will promptly make available to
the Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
<PAGE> 33
27
(d) Restriction on Transfer of a Beneficial Interest in a
Global Security for a Definitive Security.
(i) Any person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security of the same aggregate principal amount; provided
that such request is accompanied by the information specified below.
Upon receipt by the Trustee of written instructions (or such other
form of instructions as is customary for the Depositary) from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security and, in the case of a Transfer
Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as
being the owner of a beneficial interest in a Global Security,
a certification from such Person to that effect (in the form
set forth on the reverse of the Security); or
(B) if such beneficial interest is being
transferred (x) to a QIB in accordance with Rule 144A under
the Securities Act or (y) pursuant to an effective
registration statement under the Securities Act, a
certification from such person to that effect (in the form set
forth on the reverse of the Security); or
(C) if such beneficial interest is being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act; or (x) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring the security for its own
account, or for the account of such an institutional
accredited investor, in each case in a minimum principal
amount of the Securities of $250,000 for investment purposes
and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act; or
(y) in reliance on another exemption from the registration
requirements of the Securities Act: (i) a certification to
that effect from the transferee (in the form set forth on the
reverse of the Security), (ii) if the Company or the Trustee
so requests, an Opinion of Counsel reasonably acceptable to
the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act, and (iii)
in the case of clause (x), a signed letter from the transferee
in the form of Exhibit C hereto;
then the Securities Custodian, at the direction of the Trustee, will
cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Securities Custodian, the
aggregate principal amount of the Global Security to be reduced
accordingly and, following such reduction, the Company will execute
and the Trustee will authenticate and deliver to the transferee one or
more Definitive Securities in accordance with clause (ii) below.
<PAGE> 34
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(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section
2.6(d) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee in writing. The Trustee shall deliver such Definitive
Securities to the Persons in whose names such Securities are so
registered in accordance with the instructions of the Depositary.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (b) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) Legend.
(i) Except as permitted by the following paragraph (ii)
each Security certificate evidencing Global Securities and Definitive
Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO
<PAGE> 35
29
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND IN THE CASE OF THE FOREGOING CLAUSES (D), (E) AND
(F), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR OR THE TRANSFEREE ON BEHALF OF THE TRANSFEROR TO
THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legend set forth in paragraph (i) above and rescind any
restriction on the transfer of such Security; and
(B) in the case of any such Transfer Restricted
Security represented by a Global Security, such Transfer
Restricted Security shall not be required to bear the legend
set forth in paragraph (i) above, although it shall continue
to be subject to the provisions of Section 2.6(d) hereof;
provided, however, that with respect to any request for an
exchange of a Transfer Restricted Security that is represented
by a Global Security for a Definitive Security that does not
bear the legend set forth in paragraph (i) above, which
request is made in reliance upon Rule 144, the Holder thereof
shall certify in writing to the
<PAGE> 36
30
Trustee that such request is being made pursuant to Rule 144
(such certification to be as set forth on the reverse of the
Security).
(g) Cancellation or Adjustment of Global Security. At
such time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned to the Depositary for cancellation or
retained and canceled by the Trustee. At any time prior to such cancellation,
if any beneficial interest in a Global Security is exchanged for Definitive
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
endorsement shall be made on such Global Security by the Securities Custodian
to reflect such reduction.
(h) Obligations with Respect to Transfers and Exchanges
of Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall, subject to the other terms and conditions of this
Article II, execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other
than any such transfer taxes or similar governmental charges payable
upon exchange or transfer pursuant to Sections 4.6, 4.8 or 9.5 or
pursuant to paragraph 5 of the Securities).
(iii) The Registrar or co-registrar shall not be required
to register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article III,
except the unredeemed portion of any Definitive Security being
redeemed in part, or (b) any Security for a period beginning (1) 15
Business Days before the mailing of a notice of an offer to repurchase
or redeem Securities and ending at the close of business on the day of
such mailing or (2) 15 Business Days before an interest payment date
and ending on such interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same
<PAGE> 37
31
benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
(i) No Obligation of the Trustee. (i) The Trustee shall
have no responsibility or obligation to any beneficial owner of a Global
Security, a member of, or a participant in, the Depositary or other Person with
respect to the accuracy of the records of the Depositary or its nominee or of
any participant or member thereof, with respect to any ownership interest in
the Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption) or the payment of any amount or delivery
of any Securities (or other security or property) under or with respect to such
Securities. All notices and communications to be given to the Holders and all
payments to be made to Holders in respect of the Securities shall be given or
made only to or upon the order of the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary.
The Trustee may rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by, the terms of this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 2.7. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
<PAGE> 38
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If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities. After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at any office or agency
maintained by the Company for that purpose and such exchange shall be without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute, and the Trustee shall
authenticate and make available for delivery in exchange therefor, one or more
definitive Securities representing an equal principal amount of Securities.
Until so exchanged, the Holder of temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as a holder of Definitive
Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and return to the Company all Securities surrendered for
registration of transfer, exchange, payment or cancellation and deliver a
certificate of such destruction to the Company. The Company may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in
a payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who
are Securityholders on a subsequent special record date. The Company shall fix
or cause to be fixed (or upon the Company's failure to do so the Trustee shall
fix) any such special record date and payment date to the reasonable
satisfaction of the Trustee which specified record date shall not be less than
10 days prior to the payment date for such defaulted interest and shall
promptly mail or cause to be mailed to each Securityholder a notice that states
the special record date, the payment date and the amount of defaulted interest
to be paid. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Security and the date of the
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proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when so deposited to be held in trust for the benefit of the Person
entitled to such defaulted interest as provided in this Section.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply
with the conditions herein. If fewer than all the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and set forth in the related notice given to the Trustee, which record
date shall be not less than 15 days after the date of such notice.
SECTION 3.2. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.
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SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to
be redeemed, the identification and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on
Securities (or portion thereof) called for redemption ceases to accrue
on and after the redemption date;
(7) the CUSIP number, if any, printed on the Securities
being redeemed; and
(8) 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 Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date;
provided that if the redemption date is after a regular record date and on or
prior to the interest payment date, the accrued interest shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. By at least 10:00
a.m. (New York City time) on the date on which any principal of or interest on
any Security is due and payable, the Company shall deposit with the Paying
Agent (or, if the Company or a
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Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which are owned by the Company or a Subsidiary
and have been delivered by the Company or such Subsidiary to the Trustee for
cancellation.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such redemption price, interest
on the Securities to be redeemed will cease to accrue on and after the
applicable redemption date, whether or not such Securities are presented for
payment.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of
a Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in a principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.1. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal and interest then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal or interest payments hereunder.
SECTION 4.2. SEC Reports. So long as any of the Securities
are outstanding, the Company will provide to the Holders and file with the
Commission, to the extent such submissions are accepted for filing by the
Commission, copies of the annual reports and of the information, documents and
other reports that the Company would have been required to file with the
Commission pursuant to Sections 13 or 15(d) of the Exchange Act regardless of
whether the Company is then obligated to file such reports within 15 days after
it would have been required to file such reports with the SEC. Upon
qualification of
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this Indenture under the TIA, the Company shall also comply with the other
provisions of TIA 314(a).
SECTION 4.3. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, Incur
any Indebtedness; provided, however, that the Company and any of its Restricted
Subsidiaries may Incur Indebtedness if on the date thereof the Consolidated
Coverage Ratio would be greater than 2.00:1.00, if such Indebtedness is
Incurred on or prior to December 31, 1999, and 2.25:1.00, if such Indebtedness
is Incurred thereafter.
(b) Notwithstanding Section 4.3(a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness: (i) Indebtedness
Incurred pursuant to (A) the Credit Agreement (including, without limitation,
any renewal, extension, refunding, restructuring, replacement or refinancing
thereof referred to in clause (ii) of the definition thereof) or (B) any other
agreements or indentures governing Senior Indebtedness; provided, however, that
the aggregate principal amount of all Indebtedness Incurred pursuant to this
clause (i) does not exceed $710 million at any time outstanding, less the
aggregate principal amount thereof repaid with the net proceeds of Asset
Dispositions (to the extent, in the case of a repayment of revolving credit
Indebtedness, the commitment to advance the loans repaid has been terminated);
(ii) Indebtedness represented by Capitalized 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 used in a Related Business or Incurred to Refinance any
such purchase price or cost of construction or improvement, in each case
Incurred no later than 365 days after the date of such acquisition or the date
of completion of such construction or improvement; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this Section
4.3(b)(ii) shall not exceed $25.0 million at any time outstanding; (iii)
Permitted Indebtedness; and (iv) Indebtedness (other than Indebtedness
described in clauses (i) - (iii)) in a principal amount which, when taken
together with the principal amount of all other Indebtedness Incurred pursuant
to this Section 4.3(b)(iv) and then outstanding, will not exceed $75.0 million
(it being understood that any Indebtedness Incurred under this Section
4.3(b)(iv) shall cease to be deemed Incurred or outstanding for purposes of
this Section 4.3(b)(iv) (but shall be deemed to be Incurred for purposes of
Section 4.3(a)) from and after the first date on which the Company or its
Restricted Subsidiaries could have Incurred such Indebtedness under Section
4.3(a) without reliance upon this Section 4.3(b)(iv)).
(c) The Company shall not Incur any Secured Indebtedness
which is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with such
Secured Indebtedness for so long as such Secured Indebtedness is secured by a
Lien.
(d) The Company shall not permit any Unrestricted
Subsidiary to Incur any Indebtedness other than Non-Recourse Debt; provided,
however, if any such Indebtedness ceases to be Non-Recourse Debt, such event
shall be deemed to constitute an Incurrence of Indebtedness by the Company or a
Restricted Subsidiary.
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(e) The Company shall not Incur any Indebtedness if such
Indebtedness is subordinate or junior in right of payment to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
contractually subordinated in right of payment to Senior Subordinated
Indebtedness.
(f) For purposes of determining compliance with any U.S.
dollar-denominated restriction on the Incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was Incurred, in the case of term debt, or
first committed, in the case of revolving credit debt; provided that (x) the
U.S. dollar-equivalent principal amount of any such Indebtedness outstanding
or committed on the Issue Date shall be calculated based on the relevant
currency exchange rate in effect on March 31, 1997, and (y) if such
Indebtedness is Incurred to refinance other indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable U.S.
dollar-denominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced. The principal
amount of any Indebtedness incurred to refinance other Indebtedness, if
incurred in a different currency from the Indebtedness being refinanced, shall
be calculated based on the currency exchange rate applicable to the currencies
in which such respective Indebtedness is denominated that is in effect on the
date of such refinancing.
SECTION 4.4. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to (i) declare or pay any dividend or make any
distribution on or in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) except (A) dividends or distributions payable in its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock (other than Disqualified Stock), and (B)
dividends or distributions payable to the Company or a Restricted Subsidiary of
the Company (and, if such Restricted Subsidiary is not a Wholly-Owned
Subsidiary, to its other holders of Capital Stock on a pro rata basis), (ii)
purchase, redeem, retire or otherwise acquire for value any Capital Stock of
the Company held by Persons other than a Restricted Subsidiary of the Company
or any Capital Stock of a Restricted Subsidiary of the Company held by Persons
other than the Company or another Restricted Subsidiary of the Company (in
either case, other than in exchange for its Capital Stock (other than
Disqualified Stock) or to the extent that after giving effect to such purchase,
redemption, retirement or acquisition, such Restricted Subsidiary would become
a Wholly Owned Subsidiary), (iii) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated Indebtedness
(other than the purchase, repurchase or other acquisition of Subordinated
Indebtedness purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of
the date of purchase, repurchase or acquisition) or (iv) make any Investment
(other than a Permitted Investment) in any Person (any such
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dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to in clauses (i)
through (iv) as a "Restricted Payment"), if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); or (2) the Company is
not able to incur an additional $1.00 of Indebtedness pursuant to Section
4.3(a); or (3) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Issue Date would exceed
the sum of: (A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the Issue Date to the end of the most
recent fiscal quarter ending prior to the date of such Restricted Payment as to
which financial results are available (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit); (B) the aggregate net proceeds
received by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) or other capital contributions subsequent to the Issue Date
(other than net proceeds received from an issuance or sale of such Capital
Stock to a Subsidiary of the Company or an employee stock ownership plan or
similar trust); provided, however, that the value of any non-cash net proceeds
(which in each case shall be assets of the type used in a Related Business or
Capital Stock of a Person engaged in a Related Business) shall be as determined
by the Board of Directors in good faith, except that in the event the value of
any non cash net proceeds shall be $25 million or more, the value shall be as
determined in writing by an independent investment banking firm of nationally
recognized standing; (C) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Capital Stock (other than Disqualified
Stock) to an employee stock ownership plan or similar trust subsequent to the
Issue Date; provided, however, that if such plan or trust Incurs any
Indebtedness owed to or Guaranteed by the Company or any of its Restricted
Subsidiaries to finance the acquisition of such Capital Stock, such aggregate
amount shall be limited to such Net Cash Proceeds less such Indebtedness
Incurred to or Guaranteed by the Company or any of its Restricted Subsidiaries
and any increase in the Consolidated Net Worth of the Company resulting from
principal repayments made by such plan or trust with respect to Indebtedness
Incurred by it to finance the purchase of such Capital Stock; (D) the amount by
which Indebtedness of the Company is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Restricted Subsidiary of the
Company) subsequent to the Issue Date of any Indebtedness of the Company for
Capital Stock (other than Disqualified Stock) of the Company (less the amount
of any cash, or other property, distributed by the Company upon such conversion
or exchange); (E) the amount equal to the net reduction in Investments (other
than Permitted Investments) made by the Company or any of its Restricted
Subsidiaries in any Person resulting from (i) repurchases or redemptions of
such Investments by such Person, proceeds realized upon the sale of such
Investment to an unaffiliated purchaser, and repayments of loans or advances or
other transfers of assets by such Person to the Company or any Restricted
Subsidiary of the Company or (ii) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the Company or any
Restricted Subsidiary in such Unrestricted Subsidiary, which amount was
included in the calculation of the amount of Restricted Payments; provided,
however, that no amount shall be included under this clause (E) of this Section
4.4(a) to the extent it is already included in Consolidated Net Income; (F) the
aggregate Net Cash Proceeds received by a Person in consideration for the
issuance of
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such Person's Capital Stock (other than Disqualified Stock) which are held by
such Person at the time such Person is merged with and into the Company in
accordance with Section 5.1 subsequent to the Issue Date; provided, however,
that concurrently with or immediately following such merger the Company uses an
amount equal to such Net Cash Proceeds to redeem or repurchase the Company's
Capital Stock; and (G) $5 million.
(b) The provisions of Section 4.4(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or Subordinated Indebtedness of
the Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee
stock ownership plan or similar trust); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from clause (3) (B) of Section 4.4(a); (ii) any purchase or redemption
of Subordinated Indebtedness of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Indebtedness of
the Company; provided, however, that such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments; (iii) any
purchase or redemption of Subordinated Indebtedness from Net Available Cash to
the extent permitted under Section 4.6; provided, however, that such purchase
or redemption shall be excluded in the calculation of the amount of Restricted
Payments; (iv) dividends paid within 60 days after the date of declaration if
at such date of declaration such dividend would have complied with the
requirements of Section 4.4(a); (v) payments of dividends on the Company's
common stock (or payments to Holding to pay dividends on its common stock)
after an initial public offering of common stock of the Company or of Holding,
as the case may be, in an annual amount not to exceed 6% of the gross proceeds
(before deducting underwriting discounts and commissions and other fees and
expenses of the offering) received by the Company from shares of common stock
sold for the account of the Company (and not for the account of any
stockholder) in such initial public offering or, in the case of an initial
public offering by Holding, 6% per annum of the amount contributed to the
common or non-redeemable preferred equity of the Company by Holding from the
Net Cash Proceeds of an initial public offering of common stock by Holding;
(vi) payments by the Company to repurchase (or to enable Holding to repurchase)
Capital Stock or other securities of the Company or Holding from members of
management of the Company in an aggregate amount not to exceed $15 million;
(vii) payments to enable the Company to redeem or repurchase (or to enable
Holding to repurchase) stock purchase or similar rights granted by the Company
or Holding with respect to its Capital Stock in an aggregate amount not to
exceed $1 million; (viii) payments, not to exceed $200,000 in the aggregate, to
enable the Company or Holding to make cash payments to holders of its Capital
Stock in lieu of the issuance of fractional shares of its Capital Stock; (ix)
payments made pursuant to any merger, consolidation or sale of assets effected
in accordance with Section 5.1; provided, however, that no such payment may be
made pursuant to this clause (ix) unless, after giving effect to such
transaction (and the incurrence of any Indebtedness in connection therewith and
the use of the proceeds thereof), the Company would be able to Incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.3 such that, after Incurring that $1.00 of additional Indebtedness,
the Consolidated Coverage Ratio would be greater than 3.5:1.00; and (x)
payments by the
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Company to fund (A) out of pocket expenses of Holding for administrative, legal
and accounting services provided by third parties, or to pay franchise fees and
similar costs, but not to exceed an aggregate amount of $1 million per annum,
and (B) taxes of Holding; provided, however, that in the case of clauses (v),
(vi), (vii), (viii) and (ix) no Default or Event of Default shall have occurred
or be continuing at the time of such payment or as a result thereof; provided
further, however, that for purposes of determining the aggregate amount
expended for Restricted Payments in accordance with clause (3) of Section
4.4(a), only the amounts expended under clauses (iv) through (ix) shall be
included.
SECTION 4.5. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, create or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any such Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligation owed to the Company, (ii)
make any loans or advances to the Company or (iii) transfer any of its property
or assets to the Company; except: (a) any encumbrance or restriction pursuant
to an agreement in effect at or entered into on the Issue Date, including the
Credit Agreement; (b) any encumbrance or restriction with respect to such a
Restricted Subsidiary pursuant to an agreement relating to any Indebtedness or
Preferred Stock issued by such Restricted Subsidiary on or prior to the date on
which such Restricted Subsidiary was acquired by the Company and outstanding on
such date (other than Indebtedness or Preferred Stock issued as consideration
in, or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary of the Company or was
acquired by the Company); (c) any encumbrance or restriction with respect to
such a Restricted Subsidiary pursuant to an agreement evidencing Indebtedness
Incurred without violation of this Indenture or effecting a refinancing of
Indebtedness issued pursuant to an agreement referred to in clauses (a) or (b)
or this clause (c) or contained in any amendment to an agreement referred to in
clauses (a) or (b) or this clause (c); provided, however, that the encumbrances
and restrictions with respect to such Restricted Subsidiary contained in any of
such agreement, refinancing agreement or amendment, taken as a whole, are not
materially less favorable to the Holders, as determined in good faith by the
senior management of the Company or Board of Directors, than encumbrances and
restrictions with respect to such Restricted Subsidiary contained in agreements
in effect at, or entered into on, the Issue Date; (d) in the case of clause
(iii) of this Section 4.5, any encumbrance or restriction (A) that restricts in
a customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset, (B) by virtue of any transfer of, agreement to transfer, option or right
with respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by this Indenture, (C) that is
included in a licensing agreement to the extent such restrictions limit the
transfer of the property subject to such licensing agreement or (D) arising or
agreed to in the ordinary course of business and that does not, individually or
in the aggregate, detract from the value of property or assets of the Company
or any of its Subsidiaries in any manner material to the Company or any such
Restricted Subsidiary as determined in good faith by senior management of the
Company; (e) in the case of clause (iii) of this Section 4.5, restrictions
contained in security agreements, mortgages or similar documents securing
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Indebtedness of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security agreements; (f)
any restriction with respect to such a Restricted Subsidiary imposed pursuant
to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; (g) encumbrances or
restrictions with respect to Indebtedness of Foreign Subsidiaries; provided
that (i) such encumbrances or restrictions do not limit in any manner the
ability of the Restricted Subsidiaries of the Company in existence on the Issue
Date from performing any of the acts referred to in clauses (i) through (iii)
of this Section 4.5 and (ii) the aggregate principal amount of the Indebtedness
of the Foreign Subsidiaries of the Company which includes such an encumbrance
or restriction does not exceed $50.0 million; and (h) encumbrances or
restrictions arising or existing by reason of applicable law.
SECTION 4.6. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good
faith by the Company's senior management or the Board of Directors (including
as to the value of all non-cash consideration), of the shares and assets
subject to such Asset Disposition, (ii) at least 75% of the consideration
thereof received by the Company or such Restricted Subsidiary is in the form of
cash or cash equivalents and (iii) an amount equal to 100% of the Net Available
Cash from such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be) (A) first, to the extent the Company or any
Restricted Subsidiary elects (or is required by the terms of any Senior
Indebtedness), to prepay, repay or purchase (x) Senior Indebtedness or (y)
Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary (in each
case other than Indebtedness owed to the Company) within 180 days from the
later of the date of such Asset Disposition or the receipt of such Net
Available Cash; (B) second, within one year from the receipt of such Net
Available Cash, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), at the Company's election either (x)
to the investment in or acquisition of Additional Assets or (y) to prepay,
repay or purchase (1) Senior Indebtedness or (2) Indebtedness (other than
Preferred Stock) of a Wholly-Owned Subsidiary (in each case other than
Indebtedness owed to the Company); and (C) third, within 45 days after the
later of the application of Net Available Cash in accordance with clauses (A)
and (B) and the date that is one year from the receipt of such Net Available
Cash, to the extent of the balance of such Net Available Cash after application
in accordance with clauses (A) and (B), to make an offer to purchase Securities
and other Senior Subordinated Indebtedness, to the extent required pursuant to
the terms thereof, pro rata at 100% of the tendered principal amount thereof
(or 100% of the accreted value of such other Senior Subordinated Indebtedness
so tendered, if such Senior Subordinated Indebtedness was issued at a discount)
plus accrued and unpaid interest, if any, thereon to the date of purchase. The
balance of such Net Available Cash after application in accordance with clauses
(A), (B) and (C) may be used by the Company in any manner not otherwise
prohibited under this Indenture. Notwithstanding anything herein to the
contrary, in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A), (B) or (C) above, the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the
related loan commitment (if any)
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to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions, the
Company and its Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance herewith except to the extent that the aggregate
Net Available Cash from all Asset Dispositions which are not applied in
accordance with this Section 4.6 at any time exceed $15 million. The Company
shall not be required to make an offer for Securities pursuant to this Section
4.6 if the Net Available Cash available therefor (after application of the
proceeds as provided in clauses (A) and (B)) is less than $25 million for any
particular Asset Disposition (which lesser amounts shall be carried forward for
purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
For the purposes of this Section 4.6, the following will be
deemed to be cash: (x) the assumption by the transferee of Senior Indebtedness
of the Company or Indebtedness of any Restricted Subsidiary of the Company and
the release of the Company or such Restricted Subsidiary from all liability on
such Senior Indebtedness or Indebtedness in connection with such Asset
Disposition (in which case the Company shall, without further action, be deemed
to have applied such assumed Indebtedness in accordance with clause (A) of the
preceding paragraph) and (y) securities received by the Company or any
Restricted Subsidiary of the Company from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries shall be permitted to consummate an Asset Swap if (i) immediately
after giving effect to such Asset Swap, no Default or Event of Default shall
have occurred or be continuing, (ii) in the event such Asset Swap involves an
aggregate amount in excess of $10 million, the terms of such Asset Swap have
been approved by a majority of the members of the Board of Directors, and (iii)
in the event such Asset Swap involves an aggregate amount in excess of $50
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Asset Swap
is fair to the Company or such Restricted Subsidiary, as the case may be, from
a financial point of view.
(b) In the event of an Asset Disposition that requires
the purchase of Securities pursuant to Section 4.6(a)(iii)(C), the Company will
be required to purchase Securities tendered pursuant to an offer by the Company
for the Securities (the "Offer") at a purchase price of 100% of their principal
amount plus accrued and unpaid interest, if any, to the purchase date in
accordance with the procedures (including prorating in the event of
oversubscription as well as proration required as a result of tenders of other
Senior Subordinated Indebtedness) set forth in Section 4.6(c). If the
aggregate purchase price of the Securities tendered pursuant to the Offer is
less than the Net Available Cash allotted to the purchase of the Securities,
the Company may use the remaining Net Available Cash for any purpose not
prohibited by this Indenture. Upon the consummation of the purchase of
Securities properly tendered in response to such offer to purchase, the amount
of Net Available Cash subject to future offers to purchase shall be deemed to
be reset to zero.
(c) (1) Promptly, and in any event within 10 days after the
Company is required to make an Offer, the Company shall deliver to the Trustee
and send, by first-class
<PAGE> 49
43
mail to each Holder, a written notice stating that the Holder may elect to have
his Securities purchased by the Company either in whole or in part (subject to
prorating as hereinafter described in the event the Offer is oversubscribed) in
integral multiples of $1,000 of principal amount, at the applicable purchase
price. The notice shall specify a purchase date not less than 30 days nor more
than 60 days after the date of such notice (the "Purchase Date").
(2) Not later than the date upon which such written notice of
an Offer is delivered to the Trustee and the Holders, the Company shall deliver
to the Trustee an Officers' Certificate setting forth (i) the amount of the
Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash from
the Asset Dispositions as a result of which such Offer is being made and (iii)
the compliance of such allocation with the provisions of Section 4.6(a). Upon
the expiration of the period (the "Offer Period") for which the Offer remains
open, the Company shall deliver to the Trustee for cancellation the Securities
or portions thereof which have been properly tendered to and are to be accepted
by the Company. The Trustee shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price of the
Securities tendered by such Holder to the extent such funds are available to
the Trustee.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice prior to the expiration of
the Offer Period. Each Holder will be entitled to withdraw its election if the
Trustee or the Company receives, not later than one Business Day prior to the
expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter from such Holder setting forth the name of such Holder, the principal
amount of the Security or Securities which were delivered for purchase by such
Holder and a statement that such Holder is withdrawing his election to have
such Security or Securities purchased. If at the expiration of the Offer
Period the aggregate principal amount of Securities surrendered by Holders
exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000,
or integral multiples thereof, shall be purchased). Holders whose Securities
are purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered.
(d) The Company will comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.6. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.6,
the Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this Indenture by
virtue thereof.
SECTION 4.7. Limitation on Affiliate Transactions. (a) The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into or conduct any transaction (including the
purchase, sale, lease or exchange of any property
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44
or the rendering of any service) with any Affiliate of the Company other than a
Wholly-Owned Subsidiary (an "Affiliate Transaction") unless: (i) the terms of
such Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate; (ii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $5 million, the terms of such transaction have
been approved by a majority of the members of the Board of Directors and by a
majority of the disinterested members of such Board of Directors, if any (and
such majority or majorities, as the case may be, determines that such Affiliate
Transaction satisfies the criteria in clause (i) above); and (iii) in the event
such Affiliate Transaction involves an aggregate amount in excess of $15
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.
(b) The provisions of Section 4.7(a) shall not prohibit (i) any
Restricted Payment permitted to be made pursuant to Section 4.4, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii)
loans or advances to employees in the ordinary course of business of the
Company or any of its Restricted Subsidiaries, (iv) any transaction between
Wholly-Owned Subsidiaries, (v) indemnification agreements with, and the payment
of fees and indemnities to, directors, officers and employees of the Company
and its Restricted Subsidiaries, in each case in the ordinary course of
business, (vi) transactions pursuant to agreements as in existence on the Issue
Date, (vii) any employment, non-competition or confidentiality agreements
entered into by the Company or any of its Restricted Subsidiaries with its
employees in the ordinary course of business, (viii) payments made in
connection with the Transactions, including fees to Hicks Muse, (ix) the
issuance of Capital Stock of the Company (other than Disqualified Stock), (x)
any obligations of the Company pursuant to the Monitoring and Oversight
Agreement and the Financial Advisory Agreement, and (xi) transactions pursuant
to supply or similar agreements entered into in the ordinary course of business
on customary terms that are not less favorable to the Company than those that
would have been obtained in a comparable transaction with an unrelated Person,
as determined in good faith by senior management of the Company.
SECTION 4.8. Change of Control. (a) Upon the occurrence of
a Change of Control, each Holder shall have the right to require that the
Company repurchase all or any part of such Holder's Securities at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive accrued and unpaid
interest on the relevant interest payment date in respect of the then
outstanding Securities), such repurchase to be made in accordance with Section
4.8(b).
(b) Within 30 days following any Change of Control,
unless the Company has mailed a redemption notice with respect to all the
outstanding Securities in connection
<PAGE> 51
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with such Change of Control, the Company shall mail a notice to each Holder
with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on a record
date to receive accrued and unpaid interest on the relevant interest
payment date in respect of the then outstanding Securities);
(2) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Company, consistent with
this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Each Holder will be entitled to withdraw its
election if the Company receives, not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter from such
Holder setting forth the name of such Holder, the principal amount of the
Security or Securities which were delivered for purchase by such Holder and a
statement that such Holder is withdrawing his election to have such Security or
Securities purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.8. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.8,
the Company shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under this Indenture
by virtue thereof.
SECTION 4.9. Limitation on Capital Stock of Restricted
Subsidiaries. The Company will not permit any of its Restricted Subsidiaries
to issue any Capital Stock (other than Preferred Stock) to any Person (other
than to the Company or a Wholly-Owned Subsidiary or permit any Person (other
than the Company or a Wholly-Owned Subsidiary) to own any Capital Stock (other
than Preferred Stock) of a Restricted Subsidiary of the Company, if in either
case as a result thereof such Restricted Subsidiary would no longer be a
Restricted Subsidiary of the Company; provided, however, that this Section 4.9
shall not prohibit (x) the Company or any of its Restricted Subsidiaries from
selling, leasing or otherwise disposing of all of the Capital Stock of any
Restricted Subsidiary or (y) the
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designation of a Restricted Subsidiary as an Unrestricted Subsidiary in
compliance with this Indenture.
SECTION 4.10. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default or Event of Default and whether or not the
signers know of any Default or Event of Default that occurred during such
period. If they do, the certificate shall describe the Default or Event of
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section
314(a)(4).
SECTION 4.11. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.1. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer
or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership, trust or
limited liability company organized and existing under the laws of the
United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary of the Successor Company as a
result of such transaction as having been Incurred by the Successor
Company or such Restricted Subsidiary at the time of such
transaction), no Default or Event of Default shall have occurred and
be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 4.3(a); and
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(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, transfer or lease and such supplemental
indenture (if any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but in the case of a lease of all or substantially all its assets,
the Company shall not be released from the obligation to pay the principal of
and interest on the Securities.
Notwithstanding clauses (ii) and (iii) of the first sentence
of this Section 5.1: (1) any Restricted Subsidiary of the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company; and (2) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction to realize tax or other benefits.
ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article X, and such default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, whether or not such payment shall be
prohibited by Article X;
(3) the Company fails to comply with Section 5.1;
(4) the Company fails to comply with Section 4.2, 4.3, 4.4,
4.5, 4.6, 4.7, 4.8 or 4.9 (in each case other than a failure to
repurchase Securities when required pursuant to Section 4.6 or 4.8,
which failure shall constitute an Event of Default under Section
6.1(2)) and such failure continues for 30 days after the notice
specified below;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in (1),
(2), (3) or (4) above) and such failure continues for 60 days after
the notice specified below;
(6) Indebtedness of the Company or any Restricted Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such unpaid or accelerated
<PAGE> 54
48
Indebtedness exceeds $20.0 million or its foreign currency equivalent
at the time and such default shall not have been cured, including by
way of repayment, or such acceleration rescinded within a 10 day
period;
(7) the Company or a Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess
of $20.0 million or its foreign currency equivalent at the time (to
the extent not covered by insurance) is entered against the Company or
any Significant Subsidiary and such judgment or decree remains
undischarged or unstayed for a period of 60 days after such judgment
becomes final and non-appealable.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
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The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or
(5) of this Section 6.1 will not constitute an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in said clause (4) or (5) after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clauses (4), (5), (6), or (9) of this Section
6.1.
SECTION 6.2. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in outstanding principal amount of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
and unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall, subject to Section 10.4, be
immediately due and payable. If an Event of Default specified in Section
6.1(7) or (8) with respect to the Company occurs, the principal of and accrued
and unpaid interest on all the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders. The Holders of a majority in principal
amount of the Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or Event
of Default or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder 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. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
<PAGE> 56
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SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences except (i) a
Default or Event of Default in the payment of the principal of or interest on a
Security or (ii) a Default or Event of Default in respect of a provision that
under Section 9.2 cannot be amended without the consent of each Securityholder
affected. When a Default or Event of Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.1, that the Trustee determines is unduly prejudicial
to the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
SECTION 6.6. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal
amount of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or
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51
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee
may 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 and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries
or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make 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 it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article VI, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness to the extent
required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
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 Trustee, a court in its
discretion may require the filing by any party
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52
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding
principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) 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 liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(d) 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) 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.
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53
(f) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely on
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.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through 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 which it believes to be authorized or
within its rights or powers; provided, however, that the Trustee's conduct does
not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its
selection, and the advice or opinion of counsel with respect to legal matters
relating to this Indenture and the Securities shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
SECTION 7.3. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture
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54
or in any document issued in connection with the sale of the Securities or in
the Securities other than the Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail to each Securityholder 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 or interest on any
Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, a committee of its board of
directors or a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports required
by TIA Section 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.7. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation for its services as the
parties shall agree in writing from time to time. 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 upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection,
costs of preparing and reviewing reports, certificates and other documents,
costs of preparation and mailing of notices to Securityholders and reasonable
costs of counsel retained by the Trustee in connection with the delivery of an
Opinion of Counsel or otherwise, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee against any
and all loss, liability or expense (including reasonable attorneys' fees and
expenses) incurred by it in connection with the administration of this trust
and the performance of its duties hereunder, including the costs and expenses
of enforcing this Indenture (including this Section 7.7) and of defending
itself against any claims (whether asserted by any Securityholder, the Company
or otherwise). 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 may have separate counsel and the Company
shall pay the fees and expenses of such counsel. The Company need not
reimburse any
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55
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(7) or (8)
with respect to the Company, the expenses are intended to constitute expenses
of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint 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 Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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56
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.7 shall continue for
the benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $100 million as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with 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.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.7) for
cancellation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article III hereof and the Company irrevocably deposits with the
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57
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities (other than Securities replaced pursuant to Section 2.7), including
interest thereon to maturity or such redemption date, and if in either case the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 8.1(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on
demand of the Company (accompanied by an Officers' Certificate and an Opinion
of Counsel stating that all conditions precedent specified herein relating to
the satisfaction and discharge of this Indenture have been complied with) and
at the cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 5.1(iii) and 5.1(iv) and the
operation of Sections 6.1(4), 6.1(5), 6.1(6), 6.1(7) (but only with respect to
a Significant Subsidiary), 6.1(8) (but only with respect to a Significant
Subsidiary) and 6.1(9) ("covenant defeasance option"). The Company may
exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option, payment of the Securities
may not be accelerated because of an Event of Default specified in Sections
6.1(4), 6.1(5), 6.1(6), 6.1(7) (but only with respect to a Significant
Subsidiary), 6.1(8) (but only with respect to a Significant Subsidiary) and
6.1(9) or because of the failure of the Company to comply with Section 5.1(iii)
and Section 5.1(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and
(b), the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8,
8.4, 8.5 and 8.6 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
SECTION 8.2. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of
principal of and interest on the Securities to maturity or redemption,
as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
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58
(3) the Company shall have delivered to the Trustee an
Opinion of Counsel, subject to certain customary qualifications, to
the effect that (i) the funds so deposited will not be subject to any
rights of any other holders of Indebtedness of the Company, and (ii)
the funds so deposited will not be subject to avoidance under
applicable Bankruptcy Law;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) 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 Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such 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;
(7) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Securityholders 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; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities
and this Indenture as contemplated by this Article VIII have been
complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article III.
SECTION 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with
this Indenture to the payment of principal of and interest on the Securities.
Money and securities so held in trust are not subject to Article X.
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SECTION 8.4. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money or securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
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60
(4) to make any change in Article X that would limit or
terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Article X;
(5) to add guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the
rights of any Securityholder; or
(9) to provide for the issuance of the Exchange Notes, which
will have terms substantially identical in all material respects to
the Initial Notes (except that the transfer restrictions contained in
the Initial Notes will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Notes, as
a single issue of securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent) consent
to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.2. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. However, without the consent
of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
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61
(4) reduce the premium payable upon the redemption or
repurchase of any Security or change the time at which any Security
may or shall be redeemed or repurchased in accordance with this
Indenture;
(5) make any Security payable in money other than that stated
in the Security;
(6) modify or affect in any manner adverse to the Holders the
terms and conditions of the obligation of the Company for the due and
punctual payment of the principal of or interest on Securities; or
(7) make any change in Section 6.4 or 6.7 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent) consent
to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not `impair or affect the validity of an amendment under
this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective.
After an amendment or waiver becomes effective, it shall bind every
Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after
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such record date. No such consent shall become valid or effective more than
120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.6. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment of all
Senior Indebtedness and that the subordination is for the benefit of and
enforceable by the holders of Senior Indebtedness. The Securities shall in all
respects rank pari passu with all other Senior Subordinated Indebtedness of the
Company and only Indebtedness of the Company which is Senior Indebtedness will
rank senior to the Securities in accordance with the provisions set forth
herein. All provisions of this Article X shall be subject to Section 10.12.
SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or their respective properties:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of all Senior Indebtedness of the
Company before Securityholders shall be entitled to receive any
payment of principal of or interest on or other amounts with respect
to the Securities from the Company; and
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(2) until the Senior Indebtedness of the Company is paid in
full, any payment or distribution to which Securityholders would be
entitled but for this Article X shall be made to holders of Senior
Indebtedness of payments or distributions made by the Company, as
their respective interests may appear.
SECTION 10.3. Default on Senior Indebtedness. The Company
shall not pay the principal of, premium (if any) or interest on or other
amounts with respect to the Securities or make any deposit pursuant to Section
8.1 or repurchase, redeem or otherwise retire any Securities, ("pay the
Securities") if (i) any Senior Indebtedness of the Company is not paid when due
or (ii) any other default on Senior Indebtedness of the Company occurs and the
maturity of such Senior Indebtedness of the Company is accelerated in
accordance with its terms unless, in either case, (x) the default has been
cured or waived and any such acceleration has been rescinded or (y) such Senior
Indebtedness of the Company has been paid in full; provided, however, that the
Company may pay the Securities, without regard to the foregoing if the Company
and the Trustee receive written notice approving such payment from the
Representative of the Senior Indebtedness of the Company with respect to which
either of the events set forth in clause (i) or (ii) of this sentence has
occurred or is continuing. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as
may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company may not pay the Securities (except in (i)
Capital Stock (other than Disqualified Stock) issued by the Company to pay
interest on the Securities or issued in exchange for the Securities, (ii) in
securities substantially identical to the Securities issued by the Company in
payment of interest thereon or (iii) in securities issued by the Company which
are subordinated to Senior Indebtedness at least to the same extent as the
Securities and having an Average Life at least equal to the remaining Average
Life of the Securities) for a period (a "Payment Blockage Period") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
(a "Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is no longer continuing or
(iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions of the immediately preceding sentence, unless
the holders of such Designated Senior Indebtedness or the Representative of
such holders shall have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the Securities, after the end
of such Payment Blockage Period. Not more than one Blockage Notice may be
given in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness during such period; provided,
that if a Blockage Notice is given by holders of Designated Senior Indebtedness
other than the Bank Indebtedness, the Representative of the Bank Indebtedness
may deliver a subsequent Blockage Notice during such 360-day period, but the
total duration of all Payment Blockage Periods during such 360-day period shall
not exceed 179 days.
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SECTION 10.4. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company and the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representatives) of the acceleration. If any
Designated Senior Indebtedness is outstanding, the Company shall not pay the
Securities until five Business Days after the holder or Representative of such
Designated Senior Indebtedness receives notice of such acceleration and,
thereafter, may pay the Securities, only if this Article 10 otherwise permits
payments at that time.
SECTION 10.5. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and promptly pay it
over to them as their respective interests may appear.
SECTION 10.6. Subrogation. After all Senior Indebtedness is
paid in full and until the Securities are paid in full, Securityholders shall
be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under
this Article X to holders of Senior Indebtedness which otherwise would have
been made to Securityholders is not, as between the Company and
Securityholders, a payment by the Company of Senior Indebtedness.
SECTION 10.7. Relative Rights. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness. Nothing
in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness to receive distributions
otherwise payable to Securityholders.
SECTION 10.8. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness to enforce the subordination of
the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by the failure of any of them to comply with
this Indenture.
SECTION 10.9. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.3, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article X. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness may give the
notice; provided, however, that, if an issue of Senior Indebtedness has a
Representative, only the Representative may give the notice.
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The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.7.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article X Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment in respect of the
Securities, by reason of any provision in this Article X shall not be construed
as preventing the occurrence of a Default or Event of Default. Nothing in this
Article X shall have any effect on the right of the Securityholders or the
Trustee to accelerate the maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from money
or the proceeds of U.S. Government Obligations held in trust under Article VIII
by the Trustee for the payment of principal of and interest on the Securities
shall not be subordinated to the prior payment of any Senior Indebtedness or
subject to the restrictions set forth in this Article X, and none of the
Securityholders shall be obligated to pay over any such amount to the Company,
any holder of Senior Indebtedness of the Company, or any other creditor of the
Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other Indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article X. In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article X, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of
<PAGE> 72
66
Sections 7.1 and 7.2 shall be applicable to all actions or omissions of actions
by the Trustee pursuant to this Article X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness as provided in this Article X and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if
it shall mistakenly pay over or distribute to Securityholders or the Company or
any other Person, money or assets to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Indebtedness on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder
of any Senior Indebtedness, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and
continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
ARTICLE XI
Miscellaneous
SECTION 11.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the provision required
by the TIA shall control.
SECTION 11.2. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Viasystems, Inc.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Attention: James N. Mills
<PAGE> 73
67
With a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, TX 75201
Attention: Lawrence D. Stuart, Jr.
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if
so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
<PAGE> 74
68
(1) a statement that the individual making such certificate
or opinion has read such covenant or condition;
(2) 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;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities 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 disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.8. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a regular record
date is a Legal Holiday, the record date shall not be affected.
SECTION 11.9. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York 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.
SECTION 11.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be
part of the consideration for the issue of the Securities.
<PAGE> 75
69
SECTION 11.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple 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. One signed copy is enough
to prove this Indenture.
SECTION 11.13. Variable Provisions. The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect
to any Global Securities.
SECTION 11.14. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and
conditions of the Registration Rights Agreement and shall pay all reasonable
costs and expenses (including attorneys' fees for the Company, the Trustee and
the Holders) incurred in connection therewith, including, but not limited to,
costs and expenses of qualification of the Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel
or other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 11.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE> 76
70
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
VIASYSTEMS, INC.
By: /s/ DAVID J. WEBSTER
------------------------------------
Name: David J. Webster
Title: Senior Vice President
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
------------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE> 77
EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG
<PAGE> 78
2
AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSES (D), (E) AND (F), A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR OR THE
TRANSFEREE ON BEHALF OF THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
<PAGE> 79
No. [ ] Principal Amount $[ ]
--- --------------
CUSIP NO.
-----------
9 3/4% Senior Subordinated Note due 2007
Viasystems, Inc., a Delaware corporation promises to pay to
[___________], or registered assigns, the principal sum of [__________________]
Dollars June 1, 2007.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: VIASYSTEMS, INC.
By:
------------------------------------
Senior Vice President
By:
------------------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By
------------------------------
Authorized Signatory June 6, 1997
<PAGE> 80
[FORM OF REVERSE SIDE OF INITIAL NOTE]
9 3/4% Senior Subordinated Note due 2007
1. Interest
Viasystems, Inc., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company") promises to pay interest on the principal
amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and
December 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no
interest has been paid, from June 6, 1997. The Company shall pay interest on
overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
By at least 10:00 a.m. (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The
Company will pay interest (except defaulted interest) to the Persons who are
registered Holders of Securities at the close of business on the May 15 or
November 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal
and interest by check payable in such money. It may mail an interest check to
a Holder's registered address.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of June 6, 1997 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company and the
Trustee. The terms of the Securities
<PAGE> 81
2
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb)
as in effect on the date of the Indenture (the "Act"). Capitalized terms used
herein and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Securityholders
are referred to the Indenture and the Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $400.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the Initial
Notes referred to in the Indenture. The Securities include the Initial Notes
and any Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Subsidiaries, the
purchase or redemption of Capital Stock of the Company and Capital Stock of
such Subsidiaries, certain purchases or redemptions of Subordinated
Indebtedness, the sale or transfer of assets and Capital Stock of Subsidiaries,
the issuance or sale of Capital Stock of Subsidiaries, the business activities
and investments of the Company and its Subsidiaries and transactions with
Affiliates. In addition, the Indenture limits the ability of the Company and
its Subsidiaries to restrict distributions and dividends from Subsidiaries.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will
not be redeemable at the option of the Company prior to June 1, 2002. On and
after such date, the Securities will be redeemable, at the Company's option, in
whole or in part, at any time upon not less than 30 nor more than 60 days'
prior notice mailed by first-class mail to each Holder's registered address, at
the following redemption prices (expressed as percentages of principal amount)
plus accrued and unpaid interest to the redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
- ---- ----------------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . 104.875%
2003 . . . . . . . . . . . . . . . . . . . . . . . . 103.250%
2004 . . . . . . . . . . . . . . . . . . . . . . . . 101.625%
2005 and thereafter . . . . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to June 1, 2000, the Company may redeem in the aggregate up to
$140.0 million principal amount of the Securities with the Net Cash Proceeds of
one or more Equity Offerings by the Company
<PAGE> 82
3
or Holding (to the extent, in the case of Holding, the Net Cash Proceeds
thereof are contributed to the common or non-redeemable preferred equity
capital of the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.75% plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date in respect of then
outstanding Securities); provided, however, that at least $200 million of the
Securities remain outstanding after each such redemption.
At any time on or prior to June 1, 2002, the Securities may
also be redeemed in whole, but not in part, at the option of the Company upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days' prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of and accrued but unpaid interest to, the date
of redemption (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date in respect
of then outstanding Securities).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
<PAGE> 83
4
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) for a period beginning 15 days before a selection of Securities
to be redeemed and ending on the date of such selection or (ii) any Securities
for a period beginning 15 days before an interest payment date and ending on
such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company, or to comply with any
request of the SEC in connection with
<PAGE> 84
5
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
for 30 days in payment of interest on the Securities; (ii) default in payment
of principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon required repurchase, upon declaration or
otherwise; (iii) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other indebtedness of the Company or its
Subsidiaries if the amount accelerated (or so unpaid) exceeds $20.0 million and
such acceleration or failure to pay is not rescinded or cured, including by way
of repayment, within a 10 day period; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary; and (vi)
certain final, non-appealable judgments or decrees for the payment of money in
excess of $20.0 million. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities
may declare all the Securities to be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Securities being due and payable immediately upon the occurrence of such
Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of
any continuing Default or Event of Default (except a Default or Event of
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
<PAGE> 85
6
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. 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 Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York 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.
The Company will furnish to any
Securityholder upon written request and without charge to the
Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made
to:
Viasystems, Inc.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Attention of General Counsel
<PAGE> 86
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
- -------------------------------------------------------------------------------
Date: Your Signature:
-------------------- ---------------------
Signature Guarantee:
------------------------------
(Signature must be guaranteed)
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [ ] acquired for the undersigned's own account, without transfer; or
2 [ ] transferred to the Company; or
3 [ ] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
4 [ ] transferred pursuant to an effective registration statement
under the Securities Act; or
<PAGE> 87
2
5 [ ] transferred pursuant to and in compliance with Regulation S under
the Securities Act of 1933; or
6 [ ] transferred to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933), that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter appears as Exhibit C to the Indenture); or
7 [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Securities, in their sole discretion, such legal
opinions, certifications and other information as the Trustee or the Company
may reasonably request to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
------------------------------
Signature
Signature Guarantee:
- ------------------------------ ------------------------------
(Signature must be guaranteed) Signature
- ----------------------------------------------------------------------
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE> 88
3
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized signatory
Date of Principal Amount of Principal Amount of following such of Trustee or
Exchange this Global Security this Global Security decrease or increase Securities Custodian
</TABLE>
<PAGE> 89
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: Your Signature
---------- ----------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
--------------------------------------
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE> 90
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
No. [_____] Principal Amount $[____________]
CUSIP NO. _____________
9 3/4% Senior Subordinated Notes due 2007
Viasystems, Inc., a Delaware corporation, promises to pay to
[______________], or registered assigns, the principal sum of [_______________]
Dollars on June 1, 2007.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the
other side of this Security.
VIASYSTEMS, INC.
By:
-----------------------------------
Senior Vice President
By:
-----------------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:
--------------------------
Authorized Signatory Date:
<PAGE> 91
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
9 3/4% Senior Subordinated Note due 2007
1. Interest
Viasystems, Inc., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company") promises to pay interest on the principal
amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and
December 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no
interest has been paid, from June 6, 1997. The Company shall pay interest on
overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment
By at least 10:00 a.m. (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The
Company will pay interest (except defaulted interest) to the Persons who are
registered Holders of the Securities at the close of business on the May 15 or
November 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal
and interest by check payable in such money. It may mail an interest check to
a Holder's registered address.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice to any Securityholder. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of June 6, 1997 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the
<PAGE> 92
2
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on
the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $300.0 million aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the
Exchange Notes referred to in the Indenture. The Securities include the
Initial Notes and any Exchange Notes issued in exchange for the Initial Notes
pursuant to the Indenture and the Registration Rights Agreement. The Initial
Notes and the Exchange Notes are treated as a single class of securities under
the Indenture. The Indenture imposes certain limitations on the Incurrence of
Indebtedness by the Company and its Subsidiaries, the payment of dividends and
other distributions on the Capital Stock of the Company and certain of its
Subsidiaries, the purchase or redemption of Capital Stock of the Company and
Capital Stock of such Subsidiaries, certain purchases or redemptions of
Subordinated Indebtedness, the sale or transfer of assets and Capital Stock of
Subsidiaries, the issuance or sale of Capital Stock of Subsidiaries, the
business activities and investments of the Company and its Subsidiaries and
transactions with Affiliates. In addition, the Indenture limits the ability of
the Company and its Subsidiaries to restrict distributions and dividends from
Subsidiaries.
5. Optional Redemption
Except as set forth in this paragraph 5, the Securities will
not be redeemable at the option of the Company prior to June 1, 2002. On and
after such date, the Securities will be redeemable, at the Company's option, in
whole or in part, at any time upon not less than 30 nor more than 60 days'
prior notice mailed by first-class mail to each Holder's registered address, at
the following redemption prices (expressed as percentages of principal amount)
plus accrued and unpaid interest to the redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
- ---- ----------------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . 104.875%
2003 . . . . . . . . . . . . . . . . . . . . . . . . 103.250%
2004 . . . . . . . . . . . . . . . . . . . . . . . . 101.625%
2005 and thereafter . . . . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to June 1, 2000, the Company may redeem in the aggregate up to
$140.0 million principal amount of the Securities with the Net Cash Proceeds of
one or more Equity Offerings by the Company or Holding (to the extent, in the
case of Holding, the Net Cash Proceeds thereof
<PAGE> 93
3
are contributed to the common or non-redeemable preferred equity capital of the
Company) so long as there is a Public Market at the time of such redemption, at
a redemption price (expressed as a percentage of principal amount) of 109.75%
plus accrued and unpaid interest to the redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date in respect of then outstanding Securities);
provided, however, that at least $200 million of the Securities remain
outstanding after each such redemption.
At any time on or prior to June 1, 2002, the Securities may
also be redeemed in whole, but not in part, at the option of the Company upon
the occurrence of a Change of Control, upon not less than 30 nor more than 60
days' prior notice (but in no event more than 90 days after the occurrence of
such Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of and accrued but unpaid interest to, the date
of redemption (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date in respect
of then outstanding Securities).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase as provided in, and
subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
<PAGE> 94
4
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or for a period beginning 15 days before a selection of
Securities to be redeemed and ending on the date of selection or (ii) any
Securities for a period beginning 15 days before an interest payment date and
ending on such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company or Communications or to
comply with any request of the SEC in connection with qualifying the Indenture
under the Act, or to make any change that does not
<PAGE> 95
5
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
required repurchase, upon redemption pursuant to paragraph 5 of the Securities,
upon required repurchase, upon declaration or otherwise; (iii) failure by the
Company to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of
other Indebtedness of the Company or its Subsidiaries if the amount accelerated
(or so unpaid) exceeds $20.0 million and such acceleration or failure to pay is
not rescinded or cured, including by way of repayment, within a 10 day period;
(v) certain events of bankruptcy or insolvency with respect to the Company or
any Significant Subsidiary; and (vi) certain final, non-appealable judgments or
decrees for the payment of money in excess of $20.0 million. If an Event of
Default occurs and is continuing, the Trustee or Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Securityholders notice of
any continuing Default or Event of Default (except a Default or Event of
Default in payment of principal or interest) if it determines that withholding
notice is in their interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
<PAGE> 96
6
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. 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 Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York 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.
The Company will furnish to any Securityholder upon
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger
type. Requests may be made to:
Viasystems, Inc.
101 South Hanley Road, Suite 400
St. Louis, MO 63105
Attention of General Counsel
________________________________________________________________________________
<PAGE> 97
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
- -------------------------------------------------------------------------------
Date: _______________ Your Signature ____________________
Signature Guarantee: ____________________________________
(Signature must be guaranteed)
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE> 98
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: _______________ Your Signature: _________________________
(Sign exactly as your name appears on the other side
of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE> 99
EXHIBIT C
Transferee Letter of Representation
Viasystems, Inc.
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 9 3/4% Senior Subordinated Notes due 2007 (the "Notes")
of Viasystems, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of
the new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor," at least $250,000 principal amount
of the Notes, and we are acquiring the Notes not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities
Act. We have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risk of our investment in the
Notes and invest in or purchase securities similar to the Notes in the normal
course of our business. We and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
2. We understand that the Notes have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is two years after the
later of the date of original issue and the last date on which the Company
<PAGE> 100
2
or any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective
under the Securities Act, (c) in a transaction complying with the requirements
of Rule 144A under the Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor", in each case in a minimum principal amount of Notes of
$250,000 or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to
be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Termination Date of
the Notes pursuant to clauses (d), (e) or (f) above to require the delivery of
an opinion of counsel, certifications and/or other information satisfactory to
the Company and the Trustee.
TRANSFEREE:
---------------------
BY
-----------------------------
<PAGE> 1
EXHIBIT 4.4
================================================================================
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of
June 5, 1997
among
VIASYSTEMS GROUP, INC.,
as Guarantor,
VIASYSTEMS, INC.,
as US Borrower,
CIRCO CRAFT CO. INC.,
PCB INVESTMENTS PLC.,
FORWARD GROUP PLC,
CHIPS ACQUISITION LIMITED,
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED,
and the other Foreign Subsidiary Borrowers
from time to time parties hereto,
The Several Lenders
from Time to Time Parties Hereto
THE CHASE MANHATTAN BANK OF CANADA,
CHASE MANHATTAN INTERNATIONAL LIMITED
and the other Foreign Agents
from time to time appointed hereunder
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
======================================================================
CHASE SECURITIES INC.,
as Arranger
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . 39
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS . . . . . . . . . . . . . . . 40
2.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . 40
2.2 Procedure for Revolving Credit Borrowing . . . . . . . . . . . 41
2.3 Commitment Fee; Facility Fee; Administrative Agent Fees . . . 41
2.4 Termination or Reduction of Revolving Credit Commitments . . . 42
2.5 US Term Loans . . . . . . . . . . . . . . . . . . . . . . . . 43
2.6 Foreign Subsidiary Term Loans. . . . . . . . . . . . . . . . 47
2.9 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . 51
2.10 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . 52
2.11 Conversion and Continuation Options . . . . . . . . . . . . . 55
2.12 Bankers' Acceptances . . . . . . . . . . . . . . . . . . . . . 56
2.13 Existing Canadian B/As . . . . . . . . . . . . . . . . . . . . 58
2.14 Minimum Amounts of Tranches . . . . . . . . . . . . . . . . . 58
2.15 Swing Line Commitment . . . . . . . . . . . . . . . . . . . . 58
SECTION 3. ACCOMMODATIONS . . . . . . . . . . . . . . . . . . . . . . . . 60
3.1 The Accommodation Commitments . . . . . . . . . . . . . . . . 60
3.2 Procedure for Issuance of Specified Accommodations . . . . . . 61
3.3 Fees, Commissions and Other Charges . . . . . . . . . . . . . 61
3.4 Accommodation Participations . . . . . . . . . . . . . . . . . 62
3.5 Reimbursement Obligation of the Specified Borrower . . . . . . 64
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . 64
3.7 Accommodation Payments . . . . . . . . . . . . . . . . . . . . 65
3.8 Letter of Credit Applications . . . . . . . . . . . . . . . . 65
SECTION 4. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 65
4.1 Interest Rates and Payment Dates . . . . . . . . . . . . . . . 65
4.2 Computation of Interest and Fees . . . . . . . . . . . . . . . 66
4.3 Inability to Determine Interest Rate . . . . . . . . . . . . . 66
4.4 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . 67
4.5 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4.6 Requirements of Law . . . . . . . . . . . . . . . . . . . . . 71
4.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.8 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 75
4.9 Replacement of Specified Lender . . . . . . . . . . . . . . . 75
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 76
5.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . 76
5.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . 78
5.3 Corporate Existence; Compliance with Law . . . . . . . . . . . 78
5.4 Corporate Power; Authorization; Enforceable Obligations . . . 78
5.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . 79
5.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . 79
5.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . 80
5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5.11 US Federal Regulations . . . . . . . . . . . . . . . . . . . . 80
5.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
5.13 Canadian Benefit and Pension Plans . . . . . . . . . . . . . . 81
5.14 Investment Company Act; Other Regulations . . . . . . . . . . 81
5.15 Subsidiaries, Etc . . . . . . . . . . . . . . . . . . . . . . 82
5.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . 82
5.17 Delivery of Acquisition Documents . . . . . . . . . . . . . . 83
5.18 Representations and Warranties Contained in the Acquisition
Documents . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.19 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.20 Guarantee and Collateral Agreement; Mortgages. . . . . . . . . 84
5.21 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.22 No Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 85
6.1 Conditions to Chips Closing Date . . . . . . . . . . . . . . . 85
6.2 Conditions to Each Specified Loan . . . . . . . . . . . . . . 88
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 89
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . 89
7.2 Certificates; Other Information . . . . . . . . . . . . . . . 90
7.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . 91
7.4 Conduct of Business and Maintenance of Existence . . . . . . . 91
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . 91
7.6 Inspection of Property; Books and Records; Discussions . . . . 92
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
7.8 Canadian Benefit and Pension Plans . . . . . . . . . . . . . . 93
7.9 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . 93
7.10 Pledge of After Acquired Property . . . . . . . . . . . . . . 94
7.11 Pledge During Event of Default. . . . . . . . . . . . . . . . 94
7.12 Additional Subsidiaries . . . . . . . . . . . . . . . . . . . 95
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.13 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 95
7.14 Compulsory Acquisition; Whitewash. . . . . . . . . . . . . . . 95
7.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 96
7.16 Interest Rate Protection Agreements . . . . . . . . . . . . . 96
7.17 Currency Hedging Agreements . . . . . . . . . . . . . . . . . 96
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 96
8.1 Financial Condition Covenants . . . . . . . . . . . . . . . . 96
8.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . 100
8.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . 102
8.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . 104
8.5 Limitation on Fundamental Changes . . . . . . . . . . . . . . 105
8.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . 105
8.7 Limitation on Dividends . . . . . . . . . . . . . . . . . . . 106
8.8 Limitation on Capital Expenditures . . . . . . . . . . . . . . 107
8.9 Limitation on Investments, Loans and Advances . . . . . . . . 108
8.10 Limitation on Optional Payments and Modifications of Subordinated
Debt Instruments . . . . . . . . . . . . . . . . . . . . . . 110
8.11 Limitation on Transactions with Affiliates . . . . . . . . . 111
8.12 Limitation on Sales and Leasebacks . . . . . . . . . . . . . 111
8.13 Limitation on Changes in Fiscal Year . . . . . . . . . . . . 111
8.14 Restrictions Affecting Subsidiaries . . . . . . . . . . . . . 112
8.15 Limitation on Lines of Business . . . . . . . . . . . . . . . 112
8.16 Amendments to Corporate Documents; Acquisition Agreement;
Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 112
8.17 Passive Status of International Holdings Bankruptcy Remote
Nature of Bisto. . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 10. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 116
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 116
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . 116
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . 116
10.4 Reliance by the Specified Agents . . . . . . . . . . . . . . 117
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . 117
10.6 Non-Reliance on Agent and Lenders . . . . . . . . . . . . . . 117
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 118
10.8 Agents in Their Individual Capacity . . . . . . . . . . . . . 118
10.9 Successor Agents . . . . . . . . . . . . . . . . . . . . . . 118
10.10 Additional Ministerial Powers of the Specified Agents . . . . 119
10.11 Specified Issuing Lender and Collateral Agent. . . . . . . . 119
10.12 English Agent as Trustee. . . . . . . . . . . . . . . . . . . 119
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 11. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 120
11.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . 120
11.2 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . 120
11.3 Modification of Obligations . . . . . . . . . . . . . . . . . 120
11.4 Waiver by Holdings . . . . . . . . . . . . . . . . . . . . . 121
11.5 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 122
11.6 Negative Covenants . . . . . . . . . . . . . . . . . . . . . 122
SECTION 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 122
12.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . 122
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
12.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . 126
12.4 Survival of Representations and Warranties . . . . . . . . . 126
12.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . 126
12.6 Successors and Assigns; Participations and Assignments . . . 127
12.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . 130
12.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 130
12.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . 131
12.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . 131
12.11 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . 131
12.12 Risks of Superior Force . . . . . . . . . . . . . . . . . . . 131
12.13 Language . . . . . . . . . . . . . . . . . . . . . . . . . . 132
12.14 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 132
12.15 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . 132
12.16 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . 133
12.17 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 133
12.18 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 133
12.19 Sharing Agreement. . . . . . . . . . . . . . . . . . . . . . 134
12.20 No Guarantee of Domestic Obligations by Foreign Subsidiaries
of US Borrower. . . . . . . . . . . . . . . . . . . . . . . 134
12.21 Section 151 of the Companies Act of 1985. . . . . . . . . . . 134
</TABLE>
-iv-
<PAGE> 6
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 Form of Opinion of Weil Gotshal & Manges LLP,
Counsel to the Borrower and Holdings
F Closing Certificate
G Solvency Certificate
H Perfection Certificate
I Acknowledgement and Consent
SCHEDULES
Administrative Schedule
1.1 Commitments
1.1(B) Eurocurrency Rate Formula
2.12 Form of Canadian B/As
5.1(a) Financial Condition
5.4 Required Consents
5.6 Litigation
5.9 Intellectual Property
5.10 Taxes
5.13 Canadian Pension Plans
5.15 Subsidiaries, Joint Ventures, etc.
5.20 Filing Locations and Properties
5.22 Fees
8.2 Existing Indebtedness
8.3 Existing Liens
8.4 Existing Guarantee Obligations
8.9 Existing Investments
9(e) Certain Defaults
-v-
<PAGE> 7
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 5,
1997, among VIASYSTEMS GROUP, INC., a Delaware corporation ("Holdings"),
VIASYSTEMS, INC., a Delaware corporation (the "US Borrower"), CIRCO CRAFT CO.
INC., a Quebec corporation (the "Canadian Borrower"), PCB INVESTMENTS PLC, a
corporation organized under the laws of England and Wales ("English Bidco"),
FORWARD GROUP PLC, a corporation organized under the laws of England and Wales
(the "English Borrower"), CHIPS ACQUISITION LIMITED, a private limited company
organized under the laws of England and Wales ("Chips Limited"),
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED, a private limited company organized
under the laws of England and Wales ("ISL"), the several banks and other
financial institutions from time to time parties to this agreement (the
"Lenders"), THE CHASE MANHATTAN BANK OF CANADA ("Chase Canada"), as
administrative agent for the Canadian Lenders (in such capacity, the "Canadian
Agent"), CHASE MANHATTAN INTERNATIONAL LIMITED, as administrative agent for the
English Lenders (in such capacity, the "English Agent"), any Future Foreign
Agent which may from time to time be appointed hereunder and THE CHASE
MANHATTAN BANK ("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 a Merger Agreement dated as of the Chips
Closing Date (the "Holdings Merger Agreement"), Chips Holdings, Inc., a
Delaware corporation ("Chips Holdings"), will merge with and into Holdings,
with Holdings as the surviving corporation (the "Holdings Merger"); and
WHEREAS, following the Holdings Merger, pursuant to a Merger
Agreement, dated as of the Chips Closing Date (the "US Borrower Merger
Agreement", with the US Borrower Merger Agreement and the Holdings Merger
Agreement being collectively referenced to as the "Chips Acquisition
Agreement"), Chips Acquisition, Inc., a Delaware corporation and a direct
subsidiary of Chips Holdings ("Chips Inc."), which indirectly, through Chips
Limited acquired ISL on April 21, 1997, will merge with and into US Borrower,
with the US Borrower as the surviving corporation (the "Chips Acquisition
Merger"); and
WHEREAS, following the Chips Acquisition Merger, US Borrower will
contribute the stock of Chips Limited to the capital of International Holdings;
and
WHEREAS, International Holdings will contribute the stock of
Chips Limited to the capital of English Holding Company; and
WHEREAS, at the same time as the foregoing transactions, Holdings
is undergoing a recapitalization pursuant to which Series A preferred stock and
Series C preferred stock of Holdings is being exchanged for common stock of
Holdings (the "Stock Exchange"); and
<PAGE> 8
2
WHEREAS, in connection with the acquisition of ISL, Chips
Holdings issued its unsecured Loan Notes due March 31, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Chips Loan Notes"),
the payment of principal of and up to 6.22% interest on which is supported by
an irrevocable direct pay letter of credit issued by Chase Manhattan Bank
Delaware (as amended, supplemented, extended, renewed, replaced or otherwise
modified from time to time, "Chips Letter of Credit"); and
WHEREAS, Chips Holdings' other direct subsidiary, Bisto Funding,
Inc., a Delaware corporation intended to be a bankruptcy remote entity
("Bisto"), has assumed reimbursement obligations in respect of the Chips Letter
of Credit relating to the first $118,250,000 of principal of Chips Loan Notes
and a corresponding proportion of interest and letter of credit commissions
(not to exceed the investment earnings on the cash collateral account described
below less $1,000). Recourse to Bisto for its reimbursement obligations is
limited to a $118,250,000 cash collateral account and investment earnings
thereon less ordinary course operating expenses and $1,000; and
WHEREAS, Chips Inc. (and following the merger of Chips Inc. into
the US Borrower, the US Borrower) is liable for the balance of the
reimbursement obligations under or in respect of the Chips Letter of Credit
(including any interest or fees not paid by Bisto); provided that, (a) the
first $249,250,000 of principal drawings for which the US Borrower is
responsible will initially be converted to term loans of the US Borrower which,
when drawn in full, will be refinanced with term loans of Chips Limited
denominated in Pounds Sterling based on the spot exchange rate at such time and
(b) the remaining $70,000,000 of principal drawings will be converted to term
loans of the US Borrower; and
WHEREAS, to provide for (a) the mergers of (i) Holdings and Chips
Holdings and (ii) the US Borrower and Chips Inc. and the other transactions
contemplated by the Chips Acquisition Agreement, (b) the financing of the US
Borrower's principal reimbursement obligations under the Chips Letter of Credit
as described above, (c) to refinance a L.27,600,000 revolving credit facility
of Chips Limited, (d) the issuance of up to $400,000,000 of Senior Subordinated
Notes of the US Borrower and the application of proceeds thereof and (e)
certain other amendments to the Existing Credit Agreement provided herein,
Holdings, the Existing Borrowers, Chips Limited and ISL have requested that the
Amended and Restated Credit Agreement, dated as of April 11, 1997 (the
"Existing Credit Agreement") among Holdings, US Borrower, Canadian Borrower,
English Bidco and English Borrower (collectively, the "Existing Borrowers"),
the several lenders parties thereto (the "Existing Lenders"), The Chase
Manhattan Bank of Canada, Chase Manhattan International Limited and The Chase
Manhattan Bank, as administrative agent, be amended and restated as follows:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree that, effective on
the Chips Closing Date, the Existing Credit Agreement shall be and hereby is
amended and restated in its entirety to read as follows:
<PAGE> 9
3
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"5M": a company organized under the laws of the Netherlands.
"5M Acquisition": the acquisition by US Borrower of
approximately 88% of the Capital Stock of 5M for consideration not to
exceed the Equivalent Amount of $8,000,000.
"Acceptance Fee": a fee payable in C$ by the Canadian Borrower
to a Canadian Lender with respect to the acceptance of a B/A, calculated
on the face amount of the Canadian B/A at the rate per annum equal to
the Applicable Margin on the basis of the number of days in the
applicable Canadian Contract Period and a year of 365 days.
"Accommodations": the collective reference to the Letters of
Credit and bankers acceptances (other than Canadian B/As) 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 (including for all purposes hereof the portion of the Chips
Letter of Credit for which the US Borrower is responsible, which shall
be deemed an Accommodation issued on the Chips Closing Date).
"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
or the applicable Joinder Agreement and (b) as to any Specified
Revolving Credit Lender, its unconditional obligation to participate in
Accommodations of such Specified Borrower.
"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.
"Acquisition Documents": the collective reference to the
Richmond Acquisition Documents, the PCB Acquisition Documents, the
documents relating to the acquisition of the Canadian Borrower, the
Chips Acquisition Agreement and any Future Acquisition Documents.
"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 2.10(h).
<PAGE> 10
4
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (i) vote 51% or more of the securities
having ordinary voting power for the election of directors of such
Person or (ii) 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 and the Foreign Agents.
"Agreement": this Second Amended and Restated Credit Agreement,
as amended, amended and restated, supplemented or otherwise modified
from time to time.
"Amendment Documents": as defined in subsection 6.1(a).
"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:
<TABLE>
<CAPTION>
Base Rate Loans
---------------
Type Applicable Margin
---- -----------------
<S> <C>
Tranche A Term Loans 1.50%
Canadian Term Loans 1.50%
Tranche B Term Loans 2.00%
Tranche C Term Loans 2.50%
Revolving Credit Loans 1.50%
(including Swing Line Loans)
</TABLE>
<TABLE>
<CAPTION>
Eurocurrency Loans and B/As
---------------------------
Type Applicable Margin
---- -----------------
<S> <C>
Tranche A Term Loans 2.50%
Canadian Term Loans 2.50%
Tranche B Term Loans 3.00%
Tranche C Term Loans 3.50%
Revolving Credit Loans 2.50%
(including Letters of Credit and
Accommodations)
</TABLE>
<TABLE>
<CAPTION>
Facility Fee; Commitment Fee Applicable Margin
---------------------------- -----------------
<S> <C>
0.50%
</TABLE>
<PAGE> 11
5
; provided that (i) the Applicable Margin with respect to the extensions
of credit under the Canadian Revolving Credit Commitments shall be
reduced by the amount of the corresponding Applicable Margin for the
Facility Fee thereunder and (ii) in the event that the ratio of
Consolidated Total Debt of US Borrower and its Subsidiaries to
Consolidated EBITDA of US Borrower and its Subsidiaries, as most
recently determined in accordance with subsection 8.1(c), is as set
forth in the relevant column heading below for any quarterly period, any
such Applicable Margin with respect to Tranche A Term Loans, Canadian
Term Loans, and Revolving Credit Loans (including Swing Line Loans) and
the Facility Fee and Commitment Fee shall be as provided in the relevant
column heading below, (subject to reductions in Applicable Margins for
the Canadian Revolving Credit Commitments as specified in (i) above) but
in no event shall any such reductions be effective prior to December 31,
1997:
<TABLE>
<CAPTION>
Relevant Ratio Applicable Applicable
of Consolidated Total Margin For Applicable Margin for
Debt to Consolidated Eurocurrency Margin for Facility Fee and
EBITDA Loans and B/As Base Rate Loans Commitment Fee
--------------------- -------------- --------------- --------------
<S> <C> <C> <C>
4.00x and above 2.50% 1.50% 0.500%
3.25x to but excluding 4.00x 2.00% 1.00% 0.500%
3.00 to but excluding 1.75% 0.75% 0.375%
3.25x
Below 3.00x 1.50% 0.50% 0.375%
</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 Canadian Term Loans, and the Tranche A Term Loans and
the Commitment Fee and Facility 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
<PAGE> 12
6
(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 Canadian
Term Loans, and Tranche A Term Loans and the Commitment Fee and
Facility Fee during the period from the date upon which such
financial statements were required to be delivered (without
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 two (2) Business Days following 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), Canadian Term Loans, and Tranche A
Term Loans shall be 2-1/2%, in the case of Eurocurrency Loans and
Canadian B/As, and 1-1/2%, in the case of Base Rate Loans, and
1/2%, in the case of Facility Fees and 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 and any sale of accounts receivable in
connection with a receivable financing transaction) by Holdings, or any
of its Subsidiaries of any property of Holdings or any such Subsidiary
(including property subject to any Lien under any Loan Document), other
than as permitted pursuant to subsection 8.6(a), (b), (c) (provided
that, except with respect to the loss or condemnation of all or
substantially all of the assets of Holdings and its Subsidiaries, the
proceeds from such casualty or condemnation (including insurance) are
used to replace or rebuild the lost or condemned assets within the time
period specified in subsection 2.10(f)) and (d) through (h) and (j).
"Assignment": the Assignment dated as of November 30, 1996 made
by VTC in favor of the Collateral Agent for the ratable benefit of the
Secured Parties, as the same may be amended, supplemented or otherwise
modified from time to time.
<PAGE> 13
7
"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 aggregate of (i) the aggregate unpaid principal
amount at such time of all Specified Revolving Credit Loans made by such
Specified Revolving Credit Lender, (ii) an amount equal to such
Specified Revolving Credit Lender's Specified Revolving Credit
Commitment Percentage of the aggregate unpaid principal amount at such
time of all Specified Swing Line Loans of the Specified Borrower, 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."
"Base Rate": as to any Specified Borrower in any Specified
currency, the interest rate identified as the Base Rate therefor in the
Administrative Schedule or, in the case of any Future Foreign Subsidiary
Borrower, the Joinder Agreement with respect thereto.
"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 or the applicable Joinder
Agreement.
"benefitted Specified Lender": as defined in subsection 12.7.
"Bisto": as defined in the recitals hereto.
"Board": the Board of Governors of the Federal Reserve System
(or any successor thereto).
"Borrowers": the collective reference to the US Borrower and the
Foreign Subsidiary Borrowers.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2, 2.5(e) 2.6(f) or 2.15 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
<PAGE> 14
8
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 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.
"Canadian Agent": as defined in the preamble hereto.
"Canadian Bankers' Acceptance" and "Canadian B/A" and "B/A": a
bill of exchange denominated in C$, drawn by the Canadian Borrower and
accepted by a Canadian Lender or a Specified Participant in accordance
with this Agreement.
"Canadian Benefit Plans": all material employee benefit plans
maintained or contributed to by a Credit Party that are not pension
plans accepted for registration under the ITA or SPPAQ or other
applicable pension benefits or tax laws of Canada or a province or
territory thereof including, without limitation, all profit sharing,
savings, supplemental retirement, retiring allowance, severance,
deferred compensation, welfare, bonus, supplementary unemployment
benefit plans or arrangements and all life, health, dental and
disability plans and arrangements in which the employees or former
employees of the Credit Party employed in Canada participate or are
eligible to participate but excluding all stock option or stock purchase
plans.
"Canadian Borrower": as defined in the preamble hereto.
"Canadian Contract Period": the term of a Canadian B/A selected
by the Canadian Borrower in accordance with subsection 2.12 commencing
on the Borrowing Date, rollover date, or conversion date, as applicable,
of such Canadian B/A and expiring on a Business Day which shall be
either thirty (30) days, sixty (60) days, ninety (90) days, one hundred
twenty (120) days, or one hundred eighty (180) days thereafter, in all
cases subject to availability, provided that no Canadian Contract Period
shall extend beyond the Specified Revolving Credit Commitment
Termination Date, or such earlier date, if any, upon which the Canadian
Revolving Credit Commitments shall be terminated hereunder.
"Canadian Dollars" and "C$": lawful currency of Canada.
"Canadian Issuing Lender": Chase Canada or any other Canadian
Lender, as designated by Chase Canada as reasonably consented to by the
Canadian Borrower.
"Canadian Lenders": Lenders holding Canadian Loans or Canadian
Revolving Credit Commitments.
<PAGE> 15
9
"Canadian Letter of Credit": any Letter of Credit issued for the
account of the Canadian Borrower by the Canadian Issuing Lender.
"Canadian Loans": any loan made to the Canadian Borrower by, or
any Canadian B/A accepted by, any Canadian Lender pursuant to this
Agreement.
"Canadian Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Canadian 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 Canadian Borrower,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) the Canadian Loans and all other obligations
and liabilities of the Canadian Borrower to the Canadian Agent or to the
Canadian 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
hereunder or the other Loan Documents or any Interest Rate Agreement
entered into with a Canadian Lender 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 fees and
disbursements of counsel to the Canadian Agent or to the Canadian
Lenders that are required to be paid by the Canadian Borrower pursuant
to the terms of this Agreement) or otherwise.
"Canadian Pension Plan": any plan, program, arrangement, or
understanding that is a pension plan for the purposes of any applicable
pension benefits or tax laws of Canada or a province or territory
thereof (whether or not registered under any such laws) which is
maintained, administered, or contributed to by (or to which there is or
may be an obligation to contribute by) a Credit Party in respect to any
person's employment in Canada or a province or territory thereof with
the Credit Party and all related funding agreements.
"Canadian Reference Lenders": Chase Canada and any other
Canadian Lender appointed as such by the Canadian Agent and acceptable
to the Canadian Borrower.
"Canadian Refinancing": the refinancing on November 30, 1996 of
Indebtedness incurred in connection with the acquisition of the Canadian
Borrower by Holdings on October 1, 1996.
"Canadian Revolving Credit Commitment": as to any Canadian
Revolving Credit Lender, its obligation to maintain any Existing
Canadian Revolving Credit Loan and to make additional Canadian Revolving
Credit Loans to the Canadian Borrower pursuant to subsection 2.1 and to
participate in Swing Line Loans and Canadian Letters of Credit in an
aggregate amount not to exceed at any one time outstanding the amount
set forth opposite such Canadian Revolving Credit Lender's name in
Schedule 1.1 under the heading "Canadian Revolving Credit Commitment",
as such amount may be reduced from time to time as provided herein;
collectively, as
<PAGE> 16
10
to all the Canadian Revolving Credit Lenders, the "Canadian Revolving
Credit Commitments."
"Canadian Revolving Credit Lender": any Canadian Lender having a
Canadian Revolving Credit Commitment or that holds outstanding Canadian
Revolving Credit Loans or Specified Accommodation Participating
Interests hereunder.
"Canadian Revolving Credit Loans": Canadian Loans made by any
Canadian Revolving Credit Lender to the Canadian Borrower pursuant to
subsection 2.1.
"Canadian Swing Line Lender": any Canadian Lender having a Swing
Line Commitment or that holds outstanding Swing Line Loans.
"Canadian Term Loans": as to any Canadian Term Loan Lender, its
term loan to the Canadian Borrower described in subsection 2.6(a).
"Canadian Term Loan Lender": any Canadian Lender that holds
outstanding Canadian Term Loans.
"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 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 normal replacement and
maintenance programs properly expensed in accordance with GAAP, (x) with
the proceeds of any casualty insurance or condemnation award (with such
expenditures to be made, to the extent subsection 2.10(f) is applicable,
in accordance with subsection 2.10(f)), (y) with the cash proceeds of
any asset sale made pursuant to subsections 8.6(c) or (d), applied or
contractually committed to be applied within 180 days 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.
"Caribe": Circo Caribe Corporation, a corporation formed under
the laws of Puerto Rico and a Subsidiary of the Canadian Borrower.
"Cash Equivalents": as to any currency, the investments set
forth on the Administrative Schedule for such currency or in any Joinder
Agreement.
"Change in Control": the earlier to occur of (A) Hicks, Muse,
Tate & Furst Incorporated, Mills, their principals and their Affiliates
and management ("HMTFI") shall cease to have the power, directly or
indirectly, to vote or direct the voting of securities having a majority
of the ordinary voting power for the election of directors
<PAGE> 17
11
of Holdings, provided that the occurrence of the foregoing event shall
not be deemed a Change of Control if (a) at any time prior to the
consummation of an Initial Public Offering, and for any reason whatever,
(i) HMTFI otherwise has the right to designate (and does so designate) a
majority of the board of directors of Holdings or (ii) HMTFI and their
employees, directors and officers (the "HMTFI Group") own of record and
beneficially an amount of common stock of Holdings equal to at least 50%
of the amount of common stock of Holdings owned by the HMTFI Group of
record and beneficially as of the Closing Date and such ownership by the
HMTFI Group represents the largest single block of voting securities of
Holdings held by any Person or related group for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended, or (b) at any
time after the consummation of an Initial Public Offering, and for any
reason whatever, (i) 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 the HMTFI Group, 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 greater of (x) 15% of the shares
outstanding or (y) the percentage of the then outstanding voting stock
of Holdings owned by the HMTFI Group and (ii) the board of directors of
Holdings shall consist of a majority of Continuing Directors, and (B) of
a Change of Control as defined in any document pertaining to the Senior
Subordinated Indebtedness.
"Chase": as defined in the preamble hereto.
"Chase Canada": as defined in the preamble hereto.
"Chase Delaware": Chase Manhattan Bank Delaware together with
its successors and assigns.
"Chips Acquisition": the merger of Chips Inc. with and into the
US Borrower, pursuant to the Chips Acquisition Agreement.
"Chips Acquisition Agreement": as defined in the recitals
hereto.
"Chips Acquisition Term Loan Commitment": as to any US Lender,
its obligation to make Chips Acquisition Term Loans pursuant to
subsection 2.5(d) in an aggregate not to exceed such Chips Acquisition
Term Loan Lender's name in Schedule 1.1 under the heading "Chips
Acquisition Term Loan Commitment"; collectively, as to all Chips
Acquisition Term Loan Lenders, the "Chips Acquisition Term Loan
Commitments."
"Chips Acquisition Term Loan Lender": any US Lender that holds
(a) a Specified Accommodation Participating Interest in the Chips Letter
of Credit to be converted to Chips Acquisition Term Loans or (b)
outstanding Chips Acquisition Term Loans, which collectively for
purposes of subsection 12.1 shall be deemed to be a class of Specified
Foreign Subsidiary Term Loan Lenders.
<PAGE> 18
12
"Chips Acquisition Term Loans": term loans made by US Lenders to
US Borrower pursuant to subsection 2.5(d)(i).
"Chips Closing Date": the date of the satisfaction of all
conditions precedent in subsection 6.1.
"Chips Holdings": as defined in the recitals hereto.
"Chips Inc.": as defined in the recitals hereto.
"Chips Inc. Credit Agreement": the Credit Agreement dated as of
April 21, 1997 among Chips Inc., Chips Holdings, the several lenders
from time to time parties thereto, Chase Delaware, as issuing lender,
and Chase, as administrative agent for the lenders and the issuing
lender, as amended, supplemented or otherwise modified to the Chips
Closing Date.
"Chips Intercompany Note": as defined in subsection 2.6.
"Chips Letter of Credit": as defined in the recitals hereto.
"Chips Limited": as defined in the preamble hereto.
"Chips Limited Credit Agreement": the Agreement, dated 22 April,
1997 among Chips Limited, the financial parties thereto and Chase
Manhattan International Limited, as amended, supplemented or otherwise
modified to the Chips Closing Date.
"Chips Limited Term Loan Commitment": as to any US Lender, its
obligation to (a) make Chips Limited Term Loans to the US Borrower
pursuant to subsection 2.5(c) and (b) refinance such loans with Chips
Limited Term Loans to Chips Limited pursuant to subsection 2.6(f) and
(c) acquire Specified Accommodation Participating Interests in the
interest portion of the Chips Letter of Credit in an aggregate amount
not to exceed such Chips Limited Term Loan Lender's name in Schedule 1.1
under the heading "Chips Limited Term Loan Commitment"; collectively, as
to all Chips Limited Term Loan Lenders, the "Chips Limited Term Loan
Commitments."
"Chips Limited Term Loan Lender": any US Lender or English
Lender, as the case may be, that holds (a) a Specified Accommodation
Participating Interest in the Chips Letter of Credit to be converted to
Chips Limited Term Loans or in respect of the interest portion of the
Chips Letter of Credit or (b) outstanding Chips Limited Term Loans,
which collectively for purposes of subsection 12.1 shall be deemed to be
a class of Specified Foreign Subsidiary Term Loan Lenders.
"Chips Limited Term Loans": term loans made by US Lenders or
English Lenders, as the case may be, to the US Borrower or Chips
Limited, as the case may be, pursuant to subsection 2.5(c) or 2.6(f), as
the case may be.
<PAGE> 19
13
"Chips Loan Notes": as defined in the recitals hereto.
"Chips Loans": any loan made to Chips Limited or ISL, as the
case may be, by any English Lender pursuant to this Agreement.
"Chips Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Chips Loans and interest accruing after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to Chips Limited or ISL, as the case may be,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) the Chips Loans and all other obligations
and liabilities of Chips Limited or ISL, as the case may be, to the
English Agent or to 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 a Lender, 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
fees and disbursements of counsel to the English Agent or to the English
Lenders that are required to be paid by Chips Limited or ISL, as the
case may be, or pursuant to the terms of this Agreement) or otherwise.
"Chips Pro Forma Balance Sheet": as defined in subsection 5.1(d).
"Chips Reimbursement Agreement": the Reimbursement Agreement
dated as of April 21, 1997 among Bisto, as assignee of Chips Holdings,
the several lenders from time to time parties thereto, Chase Delaware,
as issuing lender, and Chase, as administrative agent for the lenders
and the issuing lender, as amended, supplemented or otherwise modified
from time to time.
"Chips Revolving Credit Commitment": as to any English Lender,
its obligation to make Chips Revolving Credit Loans to ISL pursuant to
subsection 2.1 and to participate in Specified Accommodations in an
aggregate amount not to exceed at any one time outstanding the amount
set forth opposite such English Lender's name in Schedule 1.1 under the
heading "Chips Revolving Credit Commitment", as such amount may be
reduced from time to time as provided herein; collectively, as to all
the English Lenders, the "Chips Revolving Credit Commitments."
"Chips Revolving Credit Loans": Chips Loans made by any English
Revolving Credit Lender to ISL pursuant to subsection 2.1.
"Civil Code Notice": as defined in subsection 9(m).
"Closing Date": November 30, 1996.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
<PAGE> 20
14
"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, Chips Acquisition Term Loan Commitments, Chips Limited Term
Loan 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 Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes
the Borrower and which is treated as a single employer under Section 414
of the Code.
"Compulsory Acquisition": as defined in subsection 7.14.
"Consent to Assignment": the Consent to Assignment dated
November 30, 1996 made by Lucent Technologies Inc in favor of the
Collateral Agent for the ratable benefit of the Secured Parties, as the
same may be amended, supplemented or otherwise modified from time to
time.
"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
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 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 US Borrower and its Subsidiaries at such date, except
that there shall be excluded therefrom the current portion of (a) all
Loans and, (b) all long-term Indebtedness for borrowed money (including
Financing Leases) 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 Net Income for such period, the sum of (i) total
income and franchise tax expense, (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, (iii)
depreciation and amortization expense, (iv) amortization of intangibles
(including, but not limited to, goodwill and organization costs
(including, with respect to the US Borrower, costs associated with the
Acquisition)), (v) other noncash charges (including any writeoffs of
purchased technology) and (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 (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
<PAGE> 21
15
income from discontinued operations and (ii) non cash 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 Total Debt": at a particular date, with respect to
US Borrower, the aggregate principal amount of Indebtedness under this
Agreement, Financing Leases, purchase money Indebtedness, the Senior
Subordinated Indebtedness, and any other Indebtedness for borrowed money
of the US Borrower and its Subsidiaries at such date in conformity with
GAAP, provided, that any cash collateral applied to secure the
reimbursement obligations of the US Borrower under the Chips Letter of
Credit, pursuant to subsections 2.5(c) or (d) or 2.10(d) shall be
subtracted from the calculation of Consolidated Total Debt.
"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 Holdings on the Closing
Date and each other director, if, in each case, such other director's
nomination for election to the board of directors of Holdings is
recommended by a majority of the then Continuing Directors or such other
director receives the vote of HMTFI in his or her election by the
shareholders.
"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.
"Contribution": as defined in subsection 6.1(d).
"Credit Parties": the collective reference to Holdings, each of
the Borrowers and each of their respective Subsidiaries which from time
to time is a party to any Loan Document.
"CSI": Chase Securities Inc.
"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.
"Discount Proceeds": for any Canadian B/A, an amount (rounded to
the nearest whole cent, and with one-half of one cent being rounded up)
calculated on the applicable Borrowing Date, rollover date or conversion
date by multiplying:
<PAGE> 22
16
(i) the face amount of the Canadian B/A; by
(ii) the quotient of one divided by the sum of one plus the
product of:
1. the Discount Rate (expressed as a decimal) applicable to
such Canadian B/A, and
2. a fraction, the numerator of which is the Canadian
Contract Period of the Canadian B/A and the denominator of
which is 365, being the number of days in the applicable
year,
with such quotient being rounded up or down to the fifth decimal place
and .000005 being rounded up.
"Discount Rate": with respect to any Canadian Lender, as
applicable to a Canadian B/A being purchased by such Canadian Lender on
any day, the average (as determined by the Canadian Agent) of the
respective percentage discount rates (expressed to two decimal places
and rounded upward, if necessary, to the nearest 0.01%) quoted to the
Canadian Agent and by each Canadian Reference Lender as the percentage
discount rate at which such Canadian Reference Lender would, in
accordance with its normal practices, at or about 10:00 a.m., Toronto
time, on such day, be prepared to purchase Bankers' Acceptances accepted
by such Canadian Reference Lender having a face amount and term
comparable to the face amount and term of such Canadian B/A.
"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 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
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.
<PAGE> 23
17
"English Accommodations": the collective reference to (a)
Accommodations issued by the English Issuing Lender for the account of
the English Borrower and (b) the English Bidco Loan Note Letter of
Credit.
"English Agent": as defined in the preamble hereto.
"English Bidco": as defined in the preamble hereto.
"English Bidco Loan Note Letter of Credit": a standby Letter of
Credit issued by the English Issuing Lender for the account of English
Bidco in an amount equal to the obligations guaranteed by Chase in
respect of the loan notes of English Bidco issued in connection with the
Offer in the aggregate amount of L.16,000,000 and maturing July 31,
1999.
"English Borrower": as defined in the preamble hereto.
"English Borrower Acquisition": the acquisition of all issued and
outstanding ordinary shares of the English Borrower by Partnership,
through English Bidco, an indirect wholly-owned special purpose English
subsidiary.
"English Holding Company": PCB Acquisition Limited, a private
limited company organized under the laws of England and Wales.
"English Holding Company Acquisition": the acquisition of English
Holding Company by Holdings, pursuant to a definitive merger agreement,
dated as of April 11, 1997, by and between Holdings and Partnership.
"English Issuing Lender": Chase, acting through its London
Branch.
"English Lenders": the collective reference to Lenders holding
Chips Limited Term Loans made to Chips Limited, Chips Revolving Credit
Commitments, English Loans or English Revolving Credit Commitments and
to Chase in its capacity as guarantor of the Guaranteed Loan Notes.
"English Loans": any loan made to 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 Chase, the
English Agent or to 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
<PAGE> 24
18
Documents, any Interest Rate Agreement entered into with a English
Lender, or any obligations of English Bidco in respect of its loan notes
issued in connection with the Offer and Chase's guarantee thereof 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
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 maintain any existing English Revolving Credit Loans
and to make any additional English Revolving Credit Loans to the English
Borrower pursuant to subsection 2.1 and to participate in English
Accommodations in an aggregate amount not to exceed at any one time
outstanding 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;
collectively, as to all the English Lenders, the "English Revolving
Credit Commitments."
"English Revolving Credit Lender": any English Lender having an
English Revolving Credit Commitment or a Chips Revolving Credit
Commitment or that holds outstanding English Revolving Credit Loans,
Chips Revolving Credit Loans or Specified Accommodation Participating
Interests hereunder.
"English Revolving Credit Loans": English Loans made by any
English Revolving Credit Lender to the English Borrower pursuant to
subsection 2.1.
"English Shares": all issued and outstanding ordinary shares of
the English Borrower.
"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.
"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.
"Eurocurrency Base Rate": as to any Specified Borrower in any
Specified currency, the interest rate identified as the Eurocurrency
Base Rate therefor in the
<PAGE> 25
19
Administrative Schedule or, in the case of any Future Foreign Subsidiary
Borrower, the Joinder Agreement with respect thereto.
"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
"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 Borrower 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 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 of any
Plan during such fiscal year to the extent not included in Consolidated
Net Income to determine Consolidated EBITDA for such fiscal year, (iii)
decreases in Consolidated Working Capital of the US Borrower and its
Subsidiaries for such fiscal year, (iv) the amount of any refund
received by Holdings and its Subsidiaries on taxes paid by US Borrower
and its Subsidiaries, (v) cash dividends, cash interest and other
similar cash payments received by Holdings in respect of investments to
the extent not included in Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year and (vi) extraordinary cash
gains to the extent subtracted or otherwise not included in Consolidated
Net Income to determine Consolidated EBITDA for such fiscal year over
(b) the sum, without duplication, of (i) the aggregate amount of cash
Capital Expenditures made by US Borrower and its Subsidiaries during
such fiscal year and permitted hereunder (other than Capital
Expenditures permitted under subsection 8.8(c)), (ii) 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 2.10(a), (b) or (c), (iii) the aggregate amount
of payments of principal in respect of any Indebtedness permitted
hereunder during such fiscal year (other than under this Agreement),
(iv) increases in Consolidated Working Capital of US Borrower and its
Subsidiaries for such fiscal year, (v) cash interest expense of US
<PAGE> 26
20
Borrower and its Subsidiaries for such fiscal year, (vi) 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, (vii)
extraordinary cash losses to the extent added to Consolidated Net Income
to determine Consolidated EBITDA for such fiscal year and (viii) the
amount of all Investments made in such fiscal year as permitted by
clauses (d), (h) and (j) of subsection 8.9, 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 Chips Acquisition, the Forward
Acquisition and the refinancing of the Senior Subordinated Indebtedness
shall be excluded from the calculation of Excess Cash Flow.
"Excluded Leased Properties": the collective reference to the
real properties leased by Holdings or any of its Subsidiaries described
on Part III of Schedule 5.20, including all buildings, improvements,
structures and fixtures now or subsequently located thereon.
"Existing Borrowers": as defined in the recitals hereto.
"Existing Canadian Lenders": the several Canadian banks and
other financial institutions parties to the Existing Credit Agreement,
as Canadian Lenders on the Chips Closing Date.
"Existing Canadian Revolving Credit Loans": as defined in
subsection 2.1(b).
"Existing Canadian Term Loans": as defined in subsection 2.6(a).
"Existing Credit Agreement": as defined in the recitals hereto.
"Existing English Lenders": the several banks and other
financial institutions parties to the Existing Credit Agreement, as
English Lenders on the Chips Closing Date.
"Existing English Revolving Credit Loans": as defined in
subsection 2.1.
"Existing Lenders": as defined in the recitals hereto.
"Existing Revolving Credit Loans": as defined in subsection
2.1(c).
"Existing US Lenders": the several banks and other financial
institutions parties to the Existing Credit Agreement, as US Lenders on
the Chips Closing Date.
"Existing US Revolving Credit Loans": as defined in subsection
2.1(a).
<PAGE> 27
21
"Existing US Term Loans": as defined in subsection 2.5.
"Facility Fee": as defined in subsection 2.3(b).
"Fee Properties": the collective reference to the real
properties owned in fee by Holdings and its Subsidiaries described on
Part I of Schedule 5.20, 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 in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Accommodations": any Accommodation issued for the
account of any Foreign Subsidiary Borrower by the Specified Issuing
Lender.
"Foreign Agents": the collective reference to the Canadian Agent,
the English Agent, and any Future Foreign Agent.
"Foreign Issuing Lenders": the collective reference to the
Canadian Issuing Lender, the English Issuing Lender, and the Future
Foreign Issuing Lender.
"Foreign Lenders": the collective reference to the Canadian
Lenders, the English Lenders, and any Future Foreign Subsidiary Lenders.
"Foreign Loans": the collective reference to the Canadian Loans,
the Chips Loans, the English Loans, and any Future Foreign Subsidiary
Loans.
"Foreign Obligations": the collective reference to the Canadian
Obligations, the Chips Obligations, the English Obligations, and any
Future Foreign Subsidiary Obligations.
"Foreign Revolving Credit Commitments": the collective reference
to the Canadian Revolving Credit Commitments, the Chips Revolving Credit
Commitments, the English Revolving Credit Commitments and any Future
Foreign Subsidiary Revolving Credit Commitments."
"Foreign Revolving Credit Lenders": the collective reference to
the Canadian Revolving Credit Lenders, the English Revolving Credit
Lenders, and any Future Foreign Subsidiary Revolving Credit Lenders."
"Foreign Revolving Credit Loans": the collective reference to
the Canadian Revolving Credit Loans, the Chips Revolving Credit Loans,
the English Revolving Credit Loans, and any Future Foreign Subsidiary
Revolving Credit Loans.
"Foreign Subsidiary": as to any Person any Subsidiary of such
Person which is organized under the laws of any jurisdiction outside of
the country in which such Person is organized.
<PAGE> 28
22
"Foreign Subsidiary Borrowers": the collective reference to the
Canadian Borrower, the English Borrower, English Bidco, Chips Limited,
ISL and any Future Foreign Subsidiary Borrower.
"Foreign Subsidiary Term Loans": the collective reference to the
Canadian Term Loans, Chips Limited Term Loans (to the extent converted
to Loans of Chips Limited as provided in subsection 2.6(f)) and any
Future Foreign Subsidiary Term Loans.
"Foreign Subsidiary Term Loan Lenders": the collective reference
to the Canadian Term Loan Lenders, Chips Limited Term Loan Lenders (to
the extent made to Chips Limited) and any Future Foreign Subsidiary Term
Loan Lender.
"Foreign Swing Line Lenders": the collective reference to the
Canadian Swing Line Lender and any Future Foreign Subsidiary Swing Line
Lenders.
"Future Acquisition Documents": any documents evidencing a
Permitted Acquisition or any other acquisition permitted in any
amendment hereto.
"Future Foreign Agent": any administrative agent appointed for
any Future Foreign Subsidiary Lenders .
"Future Foreign Issuing Lender": any issuing lender for
Accommodations for the account of a Future Foreign Subsidiary Borrower
appointed pursuant to any Joinder Agreement.
"Future Foreign Subsidiary Borrower": any Subsidiary of
International Holdings that becomes a borrower hereunder pursuant to any
Joinder Agreement.
"Future Foreign Subsidiary Lenders": as to any Future Foreign
Subsidiary Borrower, the Lenders to such Future Foreign Subsidiary
Borrower.
"Future Foreign Subsidiary Loans": as to any Future Foreign
Subsidiary Borrower, the Loans made by the Future Foreign Subsidiary
Lenders to such Future Foreign Subsidiary Borrower.
"Future Foreign Subsidiary Obligations": with respect to any
Future Foreign Subsidiary Borrower, the unpaid principal of and interest
on (including, without limitation, interest accruing after the maturity
of the Specified Loans of such Future Foreign Subsidiary Borrower and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to the such Future Foreign Subsidiary Borrower, whether or not
a claim for post-filing or post-petition interest is allowed in such
proceeding) the Specified Loans of such Future Foreign Subsidiary
Borrower and all other obligations and liabilities of such Future
Foreign Subsidiary Borrower to the Specified Agent or to the Specified
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
<PAGE> 29
23
in connection with, this Agreement, any notes thereunder or the other
Specified Loan Documents or any Interest Rate Agreement entered into
with a Specified Lender of such Foreign Subsidiary Borrower 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 fees
and disbursements of counsel to the Specified Agent or to such Specified
Lenders that are required to be paid by such Future Foreign Subsidiary
Borrower pursuant to the terms of this Agreement) or otherwise.
"Future Foreign Subsidiary Revolving Credit Commitments": as to
any Future Foreign Subsidiary Borrower, the obligation of each Specified
Revolving Credit Lender with respect thereto to make Specified Revolving
Credit Loans to such Future Foreign Subsidiary Borrower pursuant to the
applicable Joinder Agreement and, to the extent applicable, to
participate in Specified Swing Line Loans and Specified Accommodations
in an aggregate amount not to exceed at any one time outstanding the
amount set forth opposite such Specified Lender's name in the amount set
forth in the applicable Joinder Agreement, as such amount may be reduced
from time to time as provided herein.
"Future Foreign Subsidiary Revolving Credit Lenders": as to any
Future Foreign Subsidiary Borrower, any Lenders holding Specified Future
Foreign Subsidiary Revolving Credit Commitments.
"Future Foreign Subsidiary Revolving Credit Loans": as to any
Future Foreign Subsidiary Borrower, any revolving credit loans made to
such Future Foreign Subsidiary Borrower by the Future Foreign Subsidiary
Revolving Credit Lenders.
"Future Foreign Subsidiary Swing Line Lender": as to any Future
Foreign Subsidiary Borrower, any Lender having a Specified Swing Line
Commitment or that holds outstanding Specified Swing Line Loans.
"Future Foreign Subsidiary Term Loans": as to any Future Foreign
Subsidiary Borrower, any term loans made to such Future Foreign
Subsidiary Borrower by the Specified Lenders.
"Future Foreign Subsidiary Term Loan Lender": any Future Foreign
Subsidiary Lender that holds outstanding Future Foreign Subsidiary Term
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 (c), 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 and the rules and regulations of the
Securities and Exchange Commission (or in the case of a
<PAGE> 30
24
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 Holdings 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 Holdings, 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 Holdings' 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 Holdings, the Borrowers, the Administrative Agent and the
Required Lenders, all financial covenants, standards and terms in this
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, if applicable, the Securities and Exchange Commission
(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 Amended and Restated
Guarantee and Collateral Agreement dated as of April 11, 1997 made by
Holdings, the US Borrower and its Domestic Subsidiaries in favor of the
Collateral Agent for the ratable benefit of the Secured Parties, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Guaranteed Loan Notes": loan notes of English Bidco issued
pursuant to the Offer at the election of holders of English Shares
having the term contained in the Guaranteed Loan Note Instrument and
guaranteed by Chase.
"Guaranteed Loan Note Instrument": the Guaranteed Loan Note
Instrument between Chase and English Bidco, dated as of April 8, 1997,
as the same may be amended, supplemented, or otherwise modified from
time to time in accordance with its terms.
<PAGE> 31
25
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
the guaranteeing person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of
such Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
board of directors of such Person in good faith.
"HMTFI" and "HMTFI Group": as defined in the definition of
"Change of Control".
"Holdings": as defined in the preamble hereto.
"Holdings Contribution": the contribution on April 11, 1997 by
Holdings of the Capital Stock of (i) VTC, (ii) Canadian Borrower and
(iii) to the extent directly owned by Holdings, English Holding Company
to the US Borrower and the contribution by the US Borrower of the
Capital Stock of English Holding Company to International Holdings.
"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 obligations of such
Person under Financing Leases, (c) all obligations of such Person in
respect of bankers' acceptances or similar
<PAGE> 32
26
instruments issued or created for the account of such Person, (d) 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 (d) 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; and (e) the Accommodation Obligations of the US
Borrower with respect to the principal portion of the Chips Letter of
Credit.
"Initial Public Offering": means an underwritten public offering
of common stock of Holdings 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.
"Interest Coverage Ratio": for any period, with respect to 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 US Borrower and its Subsidiaries
net of cash interest income (such consolidated cash interest expense to
include 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).
"Interest Payment Date": (a) as to any Base Rate Loan, the Base
Rate Payment Date set forth on the Administrative Schedule or the
applicable Joinder Agreement, (b) as to any Eurocurrency Loan having an
Interest Period of three months or less, the last day of such Interest
Period and (c) as to any Eurocurrency Loan having an Interest Period
longer than three months, each day which is three months or a whole
multiple thereof, after the first day of such Interest Period 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
<PAGE> 33
27
(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 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 Holdings or its Subsidiaries is a
party or a beneficiary on the date hereof or becomes a party or a
beneficiary after the date hereof.
"International Holdings": Viasystems International, Inc., a
Delaware corporation.
"Investments": as defined in subsection 8.9.
"ISL": as defined the preamble hereto.
<PAGE> 34
28
"Issuing Lenders": the collective reference to the US Issuing
Lender and the Foreign Issuing Lenders.
"ITA": the Income Tax Act (Canada) and the regulations
promulgated thereunder, as amended or re-enacted from time to time.
"Joinder Agreement": a Joinder Agreement duly completed and
executed by (i) the US Borrower, Holdings and a Subsidiary of
International Holdings, (ii) the Administrative Agent, (iii) the
Specified Agent and (iv) each Specified Lender, and consented to by the
Required Lenders (such consent to be given or withheld in the reasonable
discretion of each Lender) and the Domestic Subsidiaries of the US
Borrower, pursuant to which (a) such Subsidiary agrees to become a
Foreign Subsidiary Borrower hereunder, (b) the Specified Agent agrees to
act on behalf of the Specified Lenders and, to the extent not already an
Agent, agrees to become an Agent hereunder, (c) each Specified Lender
agrees to make extensions of credit to or for the account of the
Specified Foreign Subsidiary Borrower to the extent set forth in such
Joinder Agreement and, to the extent not already a Lender, agrees to
become a Lender hereunder and (d) Holdings, the US Borrower and its
Domestic Subsidiaries confirm their guarantees in respect of the
Specified Obligations and which sets forth (x) the information for the
Specified Borrower, the Specified Loans and Specified Accommodations
required by the Administrative Schedule and any other administrative
provisions (including amortization schedules, and Applicable Margins)
not inconsistent with this Agreement and (y) the legal opinions, closing
certificates, guarantees and collateral security documents to be
delivered in connection therewith.
"Judgment Conversion Date": as defined in subsection 12.11(a).
"Judgment Currency": as defined in subsection 12.11(a).
"Leased Properties": the collective reference to the real
properties leased by Holdings and its Subsidiaries described on Part II
of Schedule 5.20 (other than the Excluded Leased Properties) including
all buildings, improvements, structures and fixtures now or subsequently
located thereon and owned or leased by the Borrower.
"Lenders": the collective reference to the US Lenders and the
Foreign 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".
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest
<PAGE> 35
29
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 Assignment, the
Guarantee and Collateral Agreement, 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, Canadian
Loans, Chips Loans, English Loans, and any Future Foreign Subsidiary
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, condition
(financial or otherwise) or prospects of Holdings and its Subsidiaries,
taken as a whole, (c) the ability of Holdings and its Subsidiaries,
taken as a whole, to perform their respective obligations under this
Agreement, any of the other Loan Documents, or documents relating to the
Transactions or (d) 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 substances, materials or wastes, defined or
regulated as such in or under any Environmental Law, including, without
limitation, friable asbestos, polychlorinated biphenyls and urea-
formaldehyde insulation.
"Mills": Mills & Partners, Inc.
"Mortgaged Properties": the collective reference to the Fee
Properties owned by the Borrower and its Subsidiaries listed on Part IV
of Schedule 5.20.
"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 B-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.
<PAGE> 36
30
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"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) 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 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 and satisfactorily documented
in connection therewith and net of taxes 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 (b) in
connection with any issuance by Holdings or any of its Subsidiaries of
equity or debt securities or instruments or any Permitted Issuance 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, actually incurred and satisfactorily
documented in connection therewith; provided however that, with respect
to any issuance of debt instruments or securities as described in clause
(b) above, only in the event 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).
"Nonconsenting Lender": as defined in subsection 4.9.
"Notes": the collective reference to the Revolving Credit Notes,
the Swing Line Notes, and the Term Notes.
"Obligations": the collective reference to the Domestic
Obligations, Canadian Obligations, Chips Obligations, English
Obligations, and any Future Foreign Subsidiary Obligations.
"Offer": as defined in the Existing Credit Agreement.
"Participation Certificate": a certificate in substantially the
form of Exhibit B.
"Partnership": HMTF Acquisition, L.P., a Delaware limited
partnership organized and formed by Hicks, Muse, Tate & Furst
Incorporated and Mills and Partners, which was merged into Holdings on
April 11, 1997 pursuant to the English Holding Company Acquisition.
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31
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PCB Acquisition Agreement": the definitive merger agreement,
dated as of April 11, 1997, by and between Holdings and Partnership.
"PCB Acquisition Documents": the PCB Acquisition Agreement and
all other agreements, instruments or certificates delivered in
connection with the English Holding Company Acquisition.
"Permitted Acquisition": the acquisition by a Subsidiary of
Holdings of a business related to Holdings' and its Subsidiaries'
business as approved by the board of directors of Holdings.
"Permitted Interest Period": as to any Eurocurrency Loan, the
permitted interest period lengths set forth in the Administrative
Schedule, or, in the case of a Future Foreign Subsidiary Borrower, set
forth in the applicable Joinder Agreement.
"Permitted Issuance": (a) the issuance by Holdings of shares of
Capital Stock as dividends on issued and outstanding Capital Stock of
the same class of Holdings or pursuant to any dividend reinvestment
plan, (b) the issuance by Holdings of options or other equity securities
of Holdings to outside directors, members of management or employees of
Holdings or any Subsidiary of Holdings, (c) the issuance of securities
as interest or dividends on pay-in-kind debt or preferred equity
securities permitted hereunder and under the other Loan Documents, (d)
the issuance to Holdings or any Subsidiary (or any director, with
respect to directors' qualifying shares) by any of its Subsidiaries of
any of their respective Capital Stock, in each case with respect to this
clause (d) to the extent such Capital Stock is pledged to the Collateral
Agent or the Specified Foreign Agent, as the case may be, pursuant to
the applicable Loan Document (provided that (i) only 65% of the voting
Capital Stock of any direct Foreign Subsidiary of the US Borrower is
required to be so pledged and (ii) no voting Capital Stock of any
indirect Foreign Subsidiary of the US Borrower is required to be so
pledged unless such Foreign Subsidiary is also a Subsidiary of a Foreign
Subsidiary Borrower, in which case subsection 7.12 shall be complied
with), (e) the issuance by Holdings of shares of its common stock in
connection with a Permitted Acquisition, (f) cash payments made in lieu
of issuing fractional shares of Holdings Capital Stock in an aggregate
amount not to exceed $100,000, (g) the Stock Exchange and (h) the
issuance by Holdings of shares of Capital Stock of Holdings to infuse
additional capital into Holdings in an aggregate amount not to exceed
$25,000,000.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or,
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32
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": legal currency of the United Kingdom.
"Process Agent": as defined in subsection 12.15(f).
"Properties": as defined in subsection 5.16.
"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.
"Regulation G, T, U or X": Regulation G, T, U or X of the Board
as in effect from time to time.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the US
Borrower and its Subsidiaries on the Chips Closing Date, as reasonably
determined by the US Borrower's Board of Directors.
"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. Section 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 present or future 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, guidelines, 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.
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"Restricted Payments": as defined in subsection 8.7.
"Revolving Credit Commitments": the collective reference to the
US Revolving Credit Commitments and the Foreign 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 Lenders": the collective reference to the US
Revolving Credit Lenders and the Foreign Revolving Credit Lenders.
"Revolving Credit Loans": the collective reference to the US
Revolving Credit Loans and the Foreign Revolving Credit Loans.
"Revolving Credit Note" and "Revolving Credit Notes": as defined
in subsection 2.8(e).
"Richmond Acquisition": the acquisition on November 30, 1996 by
VTC of the Richmond Business pursuant to the Richmond Acquisition
Agreement.
"Richmond Acquisition Agreement": the Acquisition Agreement
dated as of November 26, 1996, among VTC and Lucent Technologies Inc.,
together with all schedules and exhibits thereto, as amended,
supplemented or otherwise modified from time to time in accordance with
subsection 8.16.
"Richmond Acquisition Documents": the Richmond Acquisition
Agreement and all other agreements, instruments or certificates
delivered in connection with the Richmond Acquisition.
"Richmond Business": the business of designing, manufacturing
and marketing printed circuit boards, back planes and related products
and components for telecommunications and other applications of the
Interconnection Technologies Unit of Lucent Technologies Inc.
"Scheduled Revolving Credit Commitment Termination Date":
November 30, 2002 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 Agents, and the Lenders.
"Senior Subordinated Financing": $216,000,000 of existing senior
subordinated indebtedness of the US Borrower incurred to finance the
English Holding Company Acquisition pursuant to a Senior Subordinated
Loan Agreement dated as of April 11, 1997.
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34
"Senior Subordinated Indebtedness": unsecured senior subordinated
Indebtedness of the US Borrower (including, the Senior Subordinated
Financing and any permanent refinancing thereof); provided such
indebtedness has (i) no maturity, amortization, mandatory redemption or
purchase option (other than with asset sale proceeds, subject to the
provisions of this Agreement, or following a change of control) or
sinking fund payment prior to the tenth anniversary of the Chips Closing
Date, (ii) no financial maintenance covenants, (iii) such other terms
and conditions (including without limitation, interest rate, events of
default, subordination and covenants) as shall be reasonably
satisfactory to the Administrative Agent and (iv) any permanent
refinancing shall not be less favorable to the US Borrower and the
Lenders as the Senior Subordinated Financing taken as a whole.
"Senior Subordinated Notes": as defined in subsection 6.1(f).
"Sharing Agreement": the Amended and Restated Sharing Agreement
dated as of April 11, 1997 among the Collateral Agent, the
Administrative Agent and the Foreign Agents, 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
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 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 such
date, such Person has the ability to pay its debts as and when they fall
due and could not be deemed to be insolvent 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.
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35
"Specified 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 the Specified Issuing Lender under any
Accommodation.
"Specified 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.
"Specified 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.
"Specified 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, or in
the case of any Future Foreign Subsidiary Borrower, the applicable
Joinder Agreement.
"Specified Participant": as defined in subsection 12.6(b).
"Specified Participating Lender": with respect to any
Accommodation, any Specified Revolving Credit Lender (other than the
Specified Issuing Lender) any Chips Acquisition Term Loan Lender or any
Chips Limited Term Loan Lender with respect to its Specified
Accommodation Participating Interest in such Accommodation.
"Specified Refunded Swing Line Loans": as defined in subsection
2.15(b).
"Specified Register": as defined in subsection 12.6(d).
"Specified Revolving Credit Commitment Period": with respect to
any Specified Borrower, the Specified Revolving Credit Commitment Period
set forth in the Administrative Schedule, or in the case of any Future
Foreign Subsidiary Borrower, the applicable Joinder Agreement.
"Specified Revolving Credit Commitment Termination Date": with
respect to any Specified Borrower, the Specified Revolving Credit
Commitment Termination Date set forth in the Administrative Schedule, or
in the case of any Future Foreign Subsidiary Borrower, the applicable
Joinder Agreement.
"SPPAQ": the Supplemental Pensions Plan Act (Quebec), as
amended, and any successor thereto, and any regulations promulgated
thereunder.
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36
"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 purposes.
"Standby L/C Application": as defined in subsection 3.2.
"Stock Exchange": as defined in the recitals hereto.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such
Person, 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, a subsidiary
undertaking within the meaning of Section 258 of the Companies Act 1985.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of US Borrower.
"Supply Agreement": the Supply Agreement dated November 26, 1996
between Lucent Technologies Inc. and VTC substantially in the form of
Exhibit 5.7(d) to the Richmond Acquisition Agreement, as amended,
supplemented or otherwise modified from time to time.
"Swing Line Commitment": any Specified Swing Line Lender's
obligation to make Specified Swing Line Loans pursuant to subsection
2.15 as set forth in the Administrative Schedule or, in the case of a
Future Foreign Subsidiary Borrower, the applicable Joinder Agreement.
"Swing Line Lenders": the collective reference to the US Swing
Line Lenders and the Foreign 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, the
Specified Swing Line Loans of such Specified Swing Line Lender.
"Swing Line Note": as defined in subsection 2.8(e).
"Term Loans": the collective reference to the US Term Loans, the
Chips Acquisition Term Loans, the Foreign Subsidiary Term Loans and to
the extent not
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37
included therein, the Chips Limited Term Loans; provided all references
to the Term Loans (except in subsection 2.9) shall include any portion
of the reimbursement obligations of the US Borrower under the Chips
Letter of Credit to be converted to Chips Acquisition Term Loans or
Chips Limited Term Loans.
"Term Loan Lenders": the collective reference to the US Term
Loan Lenders, the Chips Acquisition Term Loan Lenders, the Chips Limited
Term Loan Lenders and the Foreign Subsidiary Term Loan Lenders.
"Term Note" and "Term Notes": as defined in subsection 2.8(e).
"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 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 goods in the ordinary course of
business.
"Trade L/C Application": as defined in subsection 3.2.
"Tranche": the reference to Eurocurrency Loans or Canadian B/As,
as applicable, of a Specified Borrower the Interest Periods or Canadian
Contract Periods, as applicable, 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" or "Canadian B/A Tranches", as
applicable.
"Tranche A Term Loans": as to any Tranche A Term Loan Lender,
its term loan to the US Borrower described in subsection 2.5(b)(i).
"Tranche A Term Loan Lender": any US Lender that holds
outstanding Tranche A Term Loans.
"Tranche A Term Loan Percentage": as to any Tranche A Term Loan
Lender, the percentage of the aggregate outstanding Tranche A Term Loans
constituted by its Tranche A Term Loan.
"Tranche B Term Loan": as to any Tranche B Term Loan Lender, its
term loan to the US Borrower described in subsection 2.5(b)(ii).
"Tranche B Term Loan Lender": any US Lender that holds
outstanding Tranche B Term Loans.
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38
"Tranche B Term Loan Percentage": as to any Tranche B Term Loan
Lender, the percentage of the aggregate outstanding Tranche B Term Loans
constituted by its Tranche B Term Loan.
"Tranche C Term Loan": as to any Tranche C Term Loan Lender, its
term loan to the US Borrower described in subsection 2.5(b)(iii).
"Tranche C Term Loan Lender": any US Lender that holds
outstanding Tranche C Term Loans.
"Tranche C Term Loan Percentage": as to any Tranche C Term Loan
Lender, the percentage of the aggregate outstanding Tranche C Term Loans
constituted by its Tranche C Term Loan.
"Transactions": the refinancing of the existing indebtedness of
the US Borrower with the proceeds of the Senior Subordinated Notes, the
English Borrower Acquisition, the English Holding Company Acquisition,
the Holdings Contribution and the Chips Acquisition.
"Transferee": as defined in subsection 12.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurocurrency Loan, or as Canadian B/A in the case of a Canadian 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 Issuing Lender": Chase or Chase Delaware with respect to the
Chips Letter of Credit or any future Letters of Credit issued by Chase
Delaware for the account of the US Borrower.
"US Lenders": 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 by a US Lender to US Borrower pursuant
to this Agreement.
"US Revolving Credit Commitment": as to any US Revolving Credit
Lender, its obligation to maintain any Existing US Revolving Credit Loan
and to make
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39
additional 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 "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": US Loans made by any US Revolving
Credit Lender to the US Borrower pursuant to subsection 2.1.
"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": as to any US Term Loan Lender, its term loans
to the US Borrower described in subsection 2.5.
"US Term Loan Lenders": the collective reference to the Tranche
A Term Loan Lenders, the Tranche B Term Loan Lenders, and the Tranche C
Term Loan Lenders.
"VTC": Viasystems Technologies Corp. (formerly known as Circo
Technologies Inc.), a Delaware corporation.
"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.
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
Holdings 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.
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(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) US Borrower's
Confirmation. The US Borrower acknowledges and confirms that the Existing US
Lenders have made revolving credit loans to it under the Existing Credit
Agreement (such revolving credit loans, the "Existing US Revolving Credit
Loans"). The US Borrower hereby represents, warrants, agrees, covenants and
reaffirms that: (i) it has no (and it permanently and irrevocably waives, and
releases the Administrative Agent and the Existing US Lenders from, any, to the
extent arising on or prior to the Chips Closing Date) defense, setoff, claim or
counterclaim against the Administrative Agent or any Existing US Lender in
regard to its Domestic Obligations in respect of such Existing US Revolving
Credit Loans and (ii) reaffirms its obligation to pay such Existing US
Revolving Credit Loans in accordance with the terms and provisions of this
Agreement and the other Loan Documents.
(b) Canadian Borrower's Confirmation. The Canadian Borrower
acknowledges and confirms that the Existing Canadian Lenders have made
revolving credit loans to it under the Existing Credit Agreement (such
revolving credit loans, the "Existing Canadian Revolving Credit Loans"). The
Canadian Borrower hereby represents, warrants, agrees, covenants and reaffirms
that: (i) it has no (and it permanently and irrevocably waives, and releases
the Canadian Agent and the Existing Canadian Lenders from, any, to the extent
arising on or prior to the Chips Closing Date) defense, setoff, claim or
counterclaim against the Canadian Agent or any Existing Canadian Lender in
regard to its Canadian Obligations in respect of such Existing Canadian
Revolving Credit Loans and (ii) reaffirms its obligation to pay such Existing
Canadian Revolving Credit Loans in accordance with the terms and provisions of
this Agreement and the other Loan Documents.
(c) English Borrower's Confirmation. The English Borrower
acknowledges and confirms that the Existing English Lenders have made revolving
credit loans to it under the Existing Credit Agreement (such revolving credit
loans, the "Existing English Revolving Credit Loans" and, together with the
Existing US Revolving Credit Loans and the Existing Canadian Revolving Credit
Loans, the "Existing Revolving Credit Loans"). The English Borrower hereby
represents, warrants, agrees, covenants and reaffirms that: (i) it has no (and
it permanently and irrevocably waives, and releases the English Agent and the
Existing English Lenders from, any, to the extent arising on or prior to the
Chips Closing Date) defense, setoff, claim or counterclaim against the English
Agent or any Existing English Lender in regard to its English Obligations in
respect of such Existing English Revolving Credit Loans and (ii) reaffirms its
obligation to pay such Existing English Revolving Credit Loans in accordance
with the terms and provisions of this Agreement and the other Loan Documents.
(d) The Lenders' Commitments. Subject to the terms and
conditions hereof, each Specified Revolving Credit Lender severally agrees to
maintain its Existing Revolving Credit Loans and to make additional Revolving
Credit Loans to the related Specified
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41
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
(and Indebtedness under subsection 8.2(n)(ii) in the case of the US Borrower),
not to exceed the amount of such Specified Lender's Specified Revolving Credit
Commitment. During the Specified Revolving Credit Commitment Period, the
Specified Borrower may use the 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 2.11.
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, (iv) in the case of the Canadian Borrower, if the borrowing is
to be entirely or partially of Canadian B/As, the respective amounts and
lengths of the initial Canadian Contract Period thereof, and (v) 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 $500,000 (or, if the then
Specified Available Revolving Credit Commitments are less than the Equivalent
Amount of $500,000, such lesser amount) and (B)(x) in the case of Eurocurrency
Loans, the Equivalent Amount of $1,000,000 and (y) in the case of Canadian
B/As, C$1,600,000 or a whole multiple of C$100,000 in excess thereof. 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 or any Joinder Agreement, as the case may be, 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; Facility Fee; Administrative Agent Fees.
(a) Each Specified Borrower (other then the Canadian Borrower) agrees to pay
to the Specified Agent for the account of each Specified Revolving Credit
Lender a commitment fee for the period from and including the first day of the
Specified Revolving Credit Commitment Period to the Specified Revolving Credit
Commitment Termination Date, computed at a rate per annum
<PAGE> 48
42
equal to the Applicable Margin for Commitment Fees on the average daily
Specified Available Revolving Credit Commitment of such Specified Revolving
Credit Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September, and December and on the
Specified Revolving Credit Commitment Termination Date.
(b) The Canadian Borrower agrees to pay to the Canadian Agent
for the account of each Canadian Revolving Credit Lender a facility fee
("Facility Fee") for the period from and including the first day of the
Specified Revolving Credit Commitment Period to the Specified Revolving Credit
Commitment Termination Date, computed at a rate per annum equal to the
Applicable Margin for Facility Fees on the Canadian Revolving Credit Commitment
of such Canadian Lender during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September, and
December and on the Specified Revolving Credit Commitment Termination Date.
(c) Each Borrower shall pay to Chase and the other Agents the
amounts payable by it set forth in the Fee Letters dated October 17, 1996,
March 2, 1997, March 20, 1997 and June 5, 1997 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 five (5)
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 or Canadian B/As) in full of the Specified
Revolving Credit Loans, Specified Swing Line Loans and Specified Accommodation
Obligations then outstanding, together with accrued interest thereon to the
date of such prepayment, cancellation of all Specified Accommodations and the
payment of any unpaid commitment fee or Facility Fee then accrued hereunder.
Any such reduction shall be in a minimum Equivalent Amount of $500,000, 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 (or Canadian B/A, if
applicable) then outstanding which has been fully cash collateralized shall no
longer be considered a "Specified Accommodation" (or "Canadian B/A", if
applicable) 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
<PAGE> 49
43
first, to payment of the Specified Swing Line Loans then outstanding, second,
to payment of the Specified Revolving Credit Loans, except Canadian B/As (if
applicable), then outstanding, third, to payment of any Specified Accommodation
Obligations then outstanding and last, to cash collateralize any outstanding
Canadian B/As (if applicable) and Specified Accommodation on terms reasonably
satisfactory 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 US Term Loans. (a) US Borrower's Confirmation. The US
Borrower acknowledges and confirms that the Existing US Lenders have previously
made term loans to, or assumed by, it (collectively, the "Existing US Term
Loans") in an aggregate principal amount of $155,000,000. The US Borrower
hereby represents, warrants, agrees, covenants and reaffirms that: (i) it has
no (and it permanently and irrevocably waives, and releases the Administrative
Agent and the Existing US Lenders from, any, to the extent arising on or prior
to the Chips Closing Date) defense, setoff, claim or counterclaim against the
Administrative Agent or any Existing US Lender in regard to its Domestic
Obligations in respect of the Existing US Term Loans and (ii) reaffirms its
obligation to pay the Existing US Term Loans in accordance with the terms and
provisions of this Agreement and the other Loan Documents.
(b) US Term Loan Lenders' Commitments. Subject to the terms and
conditions hereof, each US Term Loan Lender severally agrees to maintain its
Existing US Term Loans.
(i) Amortization of Tranche A Loans. The aggregate Tranche A
Term Loans of all the Tranche A Term Loan Lenders shall be payable in
twelve (12) consecutive semi-annual installments 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 Tranche A Term Loans then
outstanding):
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
June 30, 1997 $ 0
December 31, 1997 0
June 30, 1998 0
December 31, 1998 0
June 30, 1999 0
December 31, 1999 0
June 30, 2000 0
December 31, 2000 5,500,000
</TABLE>
<PAGE> 50
44
<TABLE>
<S> <C>
June 30, 2001 8,000,000
December 31, 2001 8,000,000
June 30, 2002 11,750,000
December 31, 2002 11,750,000
</TABLE>
(ii) Amortization of Tranche B Loans. The aggregate Tranche B
Term Loans of all the Tranche B Term Loan Lenders shall be payable in
fifteen (15) consecutive semi-annual installments 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 Tranche B Term Loans then
outstanding):
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
June 30, 1997 $ 250,000
December 31, 1997 250,000
June 30, 1998 250,000
December 31, 1998 250,000
June 30, 1999 250,000
December 31, 1999 250,000
June 30, 2000 250,000
December 31, 2000 250,000
June 30, 2001 250,000
December 31, 2001 250,000
June 30, 2002 250,000
December 31, 2002 250,000
June 30, 2003 16,000,000
December 31, 2003 16,000,000
June 30, 2004 20,000,000
</TABLE>
(iii) Amortization of Tranche C Term Loans. The aggregate
Tranche C Term Loans of all the Tranche C Term Loan Lenders shall be
payable in seventeen (17) consecutive semi-annual installments 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 Tranche C
Term Loans then outstanding):
<PAGE> 51
45
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
June 30, 1997 $ 250,000
December 31, 1997 250,000
June 30, 1998 250,000
December 31, 1998 250,000
June 30, 1999 250,000
December 31, 1999 250,000
June 30, 2000 250,000
December 31, 2000 250,000
June 30, 2001 250,000
December 31, 2001 250,000
June 30, 2002 250,000
December 31, 2002 250,000
June 30, 2003 250,000
December 31, 2003 250,000
June 30, 2004 10,000,000
December 31, 2004 10,000,000
June 30, 2005 31,500,000
</TABLE>
(c) Chips Limited Term Loan Lenders' Commitments. (i) Subject
to the terms and conditions hereof, each Chips Limited Term Loan Lender
severally agrees to make Chips Limited Term Loans on the date of any drawing
under the Chips Letter of Credit in respect of the first $249,250,000 principal
on the Chips Loan Notes which the US Borrower is obligated to reimburse for the
purpose of reimbursing such drawing, in the amount not to exceed the amount set
forth opposite such Chips Limited Term Loan Lenders' name on Schedule 1.1.
(ii) Amortization of Chips Limited Term Loans. The aggregate
Chips Limited Term Loans of all the Chips Limited Term Loan Lenders
shall be payable in ten (10) consecutive semi-annual installments 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 Chips Limited
Term Loans then outstanding). Such installments shall be applied first
to repay any outstanding Chips Limited Term Loans and second to cash
collateralize the reimbursement obligations of the US Borrower under the
Chips Letter of Credit.
<PAGE> 52
46
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
Dec. 31, 1998 $11,711,041.50
Jun. 30, 1999 $12,101,409.55
Dec. 31, 1999 $12,101,409.55
Jun. 30, 2000 $24,593,187.16
Dec. 31, 2000 $24,593,187.16
Jun. 30, 2001 $24,815,696.95
Dec. 31, 2001 $24,815,696.95
Jun. 30, 2002 $25,022,592.01
Dec. 31, 2002 $25,022,592.01
Apr. 30, 2003 $64,473,187.16
</TABLE>
(d) Chips Acquisition Term Loan Lenders' Commitments. (i)
Subject to the terms and conditions hereof, each Chips Acquisition Term Loan
Lender severally agrees to make Chips Acquisition Term Loans on the date of any
drawing under the Chips Letter of Credit in respect of principal on the Chips
Loan Notes which the US Borrower is obligated to reimburse in excess of
$249,250,000 for the purpose of reimbursing such drawing, in the amount not to
exceed the amount set forth opposite such Chips Acquisition Term Loan Lender's
name on Schedule 1.1.
(ii) Amortization of Chips Acquisition Term Loans. The
aggregate Chips Acquisition Term Loans of all the Chips Acquisition Term
Loan Lenders shall be payable in ten (10) consecutive semi-annual
installments 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 Chips Acquisition Term Loans then outstanding). Such installments
shall be applied first to repay any outstanding Chips Acquisition Term
Loans and second to cash collateralize the reimbursement obligations of
the US Borrower under the Chips Letter of Credit.
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
Dec. 31, 1998 $3,288,958.60
Jun. 30, 1999 $3,398,590.45
Dec. 31, 1999 $3,398,590.45
Jun. 30, 2000 $6,906,812.84
Dec. 31, 2000 $6,906,812.84
Jun. 30, 2001 $6,969,303.05
Dec. 31, 2001 $6,969,303.05
Jun. 30, 2002 $7,027,407.99
Dec. 31, 2002 $7,027,407.99
Apr. 30, 2003 $18,106,812.84
</TABLE>
(e) Procedure for Chips Acquisition and Chips Limited Term Loan
Borrowings. Subject to the limitations of this subsection 2.5 and 7.15, the US
Borrower shall give the Administrative Agent irrevocable notice by the
Specified Notice Time
<PAGE> 53
47
requesting that the Chips Limited Term Loan Lenders or the Chips Acquisition
Term Loan Lenders, as the case may be, make Chips Limited Term Loans or Chips
Acquisition Term Loans, as the case may be, on the Business Day of any
principal drawing on the Chips Letter of Credit for which the US Borrower is
responsible. Each borrowing shall be in an amount equal to the applicable
principal reimbursement obligations. Upon receipt of any such notice from the
US Borrower, the Administrative Agent shall promptly notify each Chips Limited
Term Loan Lender or Chips Acquisition Term Loan Lender, as the case may be,
thereof. Each Chips Limited Term Loan Lender or Chips Acquisition Term Loan
Lender, as the case may be, will make the amount of its pro rata share of each
borrowing available to the Administrative Agent for the account of the US
Borrower at the office of the Administrative Agent specified in subsection 12.2
for same day value, on the Borrowing Date requested by the US Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the US Borrower by applying (and the US Borrower hereby
irrevocably requests and instructs that the Administrative Agent apply) such
amounts to directly reimburse the US Issuing Lender for the applicable
reimbursement obligations.
2.6 Foreign Subsidiary Term Loans. (a) Canadian Borrower's
Confirmation. The Canadian Borrower acknowledges and confirms that certain of
the Existing Canadian Lenders have previously made term loans (collectively,
the "Existing Canadian Term Loans") to it in an aggregate principal amount of
C$86,750,000. The Canadian Borrower hereby represents, warrants, agrees,
covenants and reaffirms that: (i) it has no (and it permanently and irrevocably
waives, and releases the Canadian Agent and the Existing Canadian Lenders from,
any, to the extent arising on or prior to the Chips Closing Date) defense,
setoff, claim or counterclaim against the Canadian Agent or any Existing
Canadian Lender in regard to its Obligations in respect of the Existing
Canadian Term Loans and (ii) reaffirms its obligation to pay the Existing
Canadian Term Loans in accordance with the terms and provisions of this
Agreement and the other Specified Loan Documents.
(b) Canadian Term Loan Lenders' Commitments. Subject to the
terms and conditions hereof, each Canadian Term Loan Lender severally agrees to
maintain its Existing Canadian Term Loan.
(i) Amortization of Canadian Term Loans The aggregate Canadian
Term Loans of all the Canadian Term Loan Lenders shall be payable in
twelve (12) consecutive semi-annual installments 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 Canadian Term Loans then
outstanding):
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
June 30, 1997 C$667,307
December 31, 1997 C$667,307
June 30, 1998 C$3,002,885
December 31, 1998 C$3,002,885
</TABLE>
<PAGE> 54
48
<TABLE>
<S> <C>
June 30, 1999 C$5,838,942
December 31, 1999 C$5,838,942
June 30, 2000 C$7,507,212
December 31, 2000 C$7,507,212
June 30, 2001 C$10,676,923
December 31, 2001 C$10,676,923
June 30, 2002 C$15,681,731
December 31, 2002 C$15,681,731
</TABLE>
(c) English Bidco's Confirmation. English Bidco acknowledges
and confirms that (i) Chase guaranteed the Guaranteed Loan Notes under the
Guaranteed Loan Note Instrument in an aggregate principal amount not to exceed
L.20,000,000 and (ii) English Bidco agreed to reimburse Chase on each date on
which Chase notifies English Bidco of the date and amount of a demand presented
under any Guaranteed Loan Note and paid by Chase for the amount of (a) such
demand so paid and (b) 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 Chips Closing Date) defense, setoff, claim,
or counterclaim against Chase in regard to its English Obligations in respect
of the Guaranteed Loan Notes and Chase's guarantee thereof and (ii) reaffirms
its obligation to reimburse Chase as set forth above.
(d) Future Foreign Subsidiary Term Loans. Subject to the terms
and conditions hereof and the applicable Joinder Agreement, each Specified
Future Foreign Subsidiary Term Loan Lender severally agrees to make a term loan
to the Specified Future Foreign Subsidiary Borrower on a date certain in an
aggregate principal amount set forth in the applicable Joinder Agreement.
(e) Type of Foreign Subsidiary Term Loans. The Term 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 subsection 2.11
and in the applicable Joinder Agreement.
(f) Conversion of Chips Limited Term Loans. On the fifth
Business Day following the date on which the Chips Limited Term Loans have been
fully drawn upon, subject to the terms and conditions hereof, the Chips Limited
Term Loans shall be refinanced by the deemed repayment on the Promissory Note
from Chips Limited to US Borrower (the "Chips Intercompany Note"), which in
turn will be financed with the proceeds of loans to Chips Limited denominated
in Pounds Sterling based on the spot exchange rate on such fifth Business Day
(as reasonably determined by the Administrative Agent). The amortization
schedule for the loan to Chips Limited shall be the same as the amortization
schedule contained in subsection in 2.5(c) but shall be converted to Pounds
Sterling on such date at the same exchange rate. Each Chips Limited Term Loan
Lender or its English Affiliate shall
<PAGE> 55
49
credit on its books a Chips Limited Term Loan of Chips Limited the proceeds of
which shall be deemed to have been used by Chips Limited to repay the Chips
Intercompany Note (and Chips Limited hereby irrevocably requests such loan and
instructs the Chips Limited Term Loan Lenders to use such proceeds to make
payment on its behalf under such Chips Intercompany Note) which in turn shall
be used by the US Borrower to repay the corresponding Chips Limited Term Loan
with the US Borrower (and US Borrower hereby irrevocably agrees to accept such
repayment on the Chips Intercompany Note and to utilize such amount to repay
the corresponding Chips Limited Term Loan of the US Borrower). The
Administrative Agent shall give US Borrower, Chips Limited and each Chips
Limited Term Loan Lenders three Business Days notice of such refinancing.
(g) European Currency. In the event that the legal currency of
the United Kingdom becomes the Euro prior to the date referred to in subsection
2.6(f), each Chips Limited Term Loan Lender shall remain obligated to refinance
its Chips Limited Term Loans and any references to Pounds Sterling shall be
deemed references to the Euro converted at the appropriate exchange rate (as
reasonably determined by the Administrative Agent).
2.7 Procedure for Future Foreign Subsidiary Term Loan Borrowing.
The Specified Future Foreign 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 a date certain and
specifying the amount to be borrowed. Upon receipt of such notice the
Specified Agent shall promptly notify each Specified Term Loan Lender thereof.
On such date, each Specified Term Loan Lender shall make available to the
Specified Agent at its office specified in the applicable Joinder Agreement an
amount in immediately available funds equal to the Specified Term Loans to be
made by such Lender. The Specified Agent shall on such date credit the account
of such Specified Borrower on the books of such office of the Specified Agent
with the aggregate of the amounts made available to the Specified Agent by the
Specified Term Loan Lenders.
2.8 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 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 Tranche A Term Loan Lender, such Specified Lender's Ratable Portion of the
amounts specified in subsection 2.5(b)(i) (or, if less, the aggregate amount of
the Tranche A Term Loans of such Specified Lender then outstanding), on the
dates specified in subsection 2.5(b)(i) (or such earlier date on which the
Tranche A Term Loans become due and payable pursuant to Section 9); (iv) each
Tranche B Term Loan Lender, such Specified Lender's Ratable Portion of the
amounts specified in subsection 2.5(b)(ii) (or, if less, the aggregate amount
of the Tranche B Term Loans of such Specified Lender then outstanding), on the
dates specified in subsection 2.5(b)(ii) (or such earlier date on which the
Tranche B Term Loans become due and payable pursuant to Section 9); (v) each
Tranche C Term Loan
<PAGE> 56
50
Lender, such Specified Lender's Ratable Portion of the amounts specified in
subsection 2.5(b)(iii) (or, if less, the aggregate amount of the Tranche C Term
Loans of such Specified Lender then outstanding), on the dates specified in
subsection 2.5(b)(iii) (or such earlier date on which the Tranche C Term Loans
become due and payable pursuant to Section 9); (vi) each Canadian Term Loan
Lender, such Specified Lender's Ratable Portion of the amounts specified in
subsection 2.6 (or, if less, the aggregate amount of the Canadian Term Loans of
such Lender then outstanding), on the dates specified in subsection 2.6 (or
such earlier date on which the Canadian Term Loans become due and payable
pursuant to Section 9); and (vii) each Chips Acquisition Term Loan Lender,
such Specified Lender's Ratable Portion of the amounts specified in subsection
2.5(d)(ii) (or, if less, the aggregate amount of the Chips Acquisition Term
Loans of such Specified Lender then outstanding), on the dates specified in
subsection 2.5(d)(ii) (or such earlier date on which the Chips Acquisition Term
Loans become due and payable pursuant to Section 9); (viii) each Chips Limited
Term Loan Lender, such Specified Lender's Ratable Portion of the amounts
specified in subsection 2.5(c)(ii) (or, if less, the aggregate amount of the
Chips Limited Term Loans of such Specified Lender then outstanding), on the
dates specified in subsection 2.5(c)(ii) (or such earlier date on which the
Chips Limited Term Loans become due and payable pursuant to Section 9) and (ix)
each Future Foreign Subsidiary Term Loan Lender, such Specified Lender's
Ratable Portion of the amounts specified in the applicable Joinder Agreement
(or, if less, the aggregate amount of the Specified Future Foreign Subsidiary
Term Loans of such Lender then outstanding), on the dates specified in an
applicable Joinder Agreement (or such earlier date on which the Specified
Future Foreign Subsidiary 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,
the Type thereof and each Interest Period or Canadian Contract Period, if any,
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 2.8(b) shall, to the
extent permitted by applicable law and absent 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 applicable Specified Register
<PAGE> 57
51
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) Each Specified Borrower (other than the English Borrower) agrees
that, upon request to the Specified Agent by any Specified Lender, such
Specified Borrower will execute and deliver to such Specified Lender (i) a
promissory note of such Specified Borrower evidencing the Specified Revolving
Credit Loans of such Specified Lender, substantially in the form of Exhibit A-1
with appropriate insertions as to Borrower, currency, 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").
2.9 Optional Prepayments. The US Borrower may, at any time and from
time to time, prepay, or cause any Foreign Subsidiary Borrower to prepay, such
Specified Borrower's Specified Loans, in whole or in part, without premium or
penalty, 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) Tranche A Term Loans, Tranche B Term
Loans, and/or Tranche C Term Loans, (2) Chips Acquisition Term Loans, (3)
Canadian Term Loans, (4) Chips Limited Term Loans, (5) Future Foreign
Subsidiary Term Loans, (6) Specified Revolving Credit Loans, or (7) 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, with respect to
the first $10,000,000 (or the Equivalent Amount thereof) following the Chips
Closing Date, as the US Borrower may elect and, with respect to any amount of
such prepayments in excess of $10,000,000 (or the Equivalent Amount thereof),
such prepayments shall be applied (i) pro rata to each class or tranche of Term
Loans ratably based upon the then outstanding principal amounts of such Term
Loans (with each class or tranche of Term Loans, 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, and the denominator of which is equal
to the then outstanding principal amount of all Term Loans) and (ii) to reduce
the then remaining installments of such Term Loans based upon the then
remaining number of installments (i.e. each then remaining installment of the
applicable Term Loans shall be reduced by an amount equal to the aggregate
amount
<PAGE> 58
52
to be applied to such Term Loan divided by the number of the then remaining
installments for such Term Loans); provided, that if the amount to be applied
to any installment required by this Agreement would exceed the then remaining
amount of such installment, then an amount equal to such excess shall be
applied to the next succeeding installment after giving effect to all prior
reductions thereto (including the amount of prepayments theretofore allocated
pursuant to the preceding portion of this sentence). Amounts prepaid on
account of any Term Loans may not be reborrowed; provided, that, if any Foreign
Subsidiary Borrower desires to prepay its Specified Term Loans and ratable
prepayment of the Term Loans of any other Specified Borrower would result in
any adverse tax impact, the affected Term Loans shall not be required to be
ratably prepaid. Partial prepayments shall be in an aggregate principal
Equivalent Amount of at least $500,000 and shall include any amounts due in
respect thereof under subsection 4.8. Canadian B/As may not be optionally
prepaid.
2.10 Mandatory Prepayments.
(a) Subsequent to the Chips Closing Date, unless the Required
Lenders and the US Borrower shall otherwise agree, if Holdings or any of its
Subsidiaries shall issue any class of Capital Stock other than a Permitted
Issuance or incur any Indebtedness other than any Indebtedness permitted
pursuant to subsection 8.2 (excluding Indebtedness to refinance the Senior
Subordinated Financing if there are any Net Cash Proceeds after giving effect
to such refinancing) or 11.6, on 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 100% of the Net Cash Proceeds thereof (or
Equivalent Amount thereof, as the case may be) as set forth in paragraph (d) of
this subsection 2.10.
(b) Unless the Required Lenders and the US Borrower shall
otherwise agree, if Holdings or any of its Subsidiaries shall consummate any
Asset Sale (including the sale and leaseback of assets and any sale of accounts
receivable in connection with a receivable financing transaction), on the date
of consummation of such Asset Sale, each Borrower shall prepay an amount of its
Specified Term Loans equal to its Specified Borrower Percentage of 100% of the
Net Cash Proceeds thereof (or the Equivalent Amount thereof, as the case may
be) as set forth in paragraph (d) of this subsection 2.10.
(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, 1997, 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 75% of such Excess Cash Flow (or Equivalent
Amount thereof, as the case may be) as set forth in paragraph (d) of this
subsection 2.10. 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),
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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 remaining installments of such Term Loans based upon the then
remaining number of installments of such Term Loans (i.e. each then remaining
installment of such Term Loans shall be reduced by an amount equal to the
aggregate amount to be applied to such class or tranche of Term Loans divided
by the number of the then remaining installments for such class or tranche of
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
and to cash collateralize 100% of the face amount of Canadian B/As until their
maturity; provided, that if the amount to be applied to any installment as
required by this Agreement would exceed the then remaining amount of such
installment, then an amount equal to such excess shall be applied to the next
succeeding installment after giving effect to all prior reductions thereto
(including the amount of prepayments theretofore allocated pursuant to the
preceding portion of this sentence), 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, (a) any Net Cash Proceeds of any
refinancing of the Senior Subordinated Financing, issued on the Chips Closing
Date, after giving effect to such refinancing shall be applied first to the
Tranche A Term Loans in direct order of maturity, second to the Canadian Term
Loans in direct order of maturity, third to the repayment of English Revolving
Credit Loans, Chips Revolving Credit Loans or Canadian Revolving Credit Loans,
as and in the amounts the US Borrower shall elect and fourth to the Tranche C
Term Loans in the direct order of maturity, (b) if mandatory prepayments of
Chips Acquisition Term Loans or Chips Limited Term Loans exceeds the
outstanding amount of the Chips Acquisitions Term Loans or the Chips Limited
Term Loans, as the case may be, the balance shall be applied to cash
collateralize the US Borrower's reimbursement obligations in respect of the
Chips Letter of Credit and (c) the proceeds of the Chips Limited Term Loans of
Chips Limited will be applied as provided in subsection 2.6(f).
(e) 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 (or the sum of the Equivalent Amounts
thereof in the relevant currency, if applicable) 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 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 and
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Canadian B/As in an amount equal to such excess upon terms reasonably
satisfactory to the Specified Agent.
(f) If at any time Holdings or any Subsidiary shall receive any
cash proceeds of any casualty or condemnation in excess of the Equivalent
Amount of $2,000,000 pursuant to subsection 8.6(c), such proceeds shall be
deposited with the Collateral Agent (or, in the case of a Foreign Subsidiary
Borrower and its Subsidiaries, the Specified Foreign Agent) who shall hold such
proceeds in a cash collateral account reasonably satisfactory to it. From time
to time upon request, the Collateral Agent or Specified Foreign Agent, as the
case may be, will release such proceeds to Holdings or such Subsidiary, as
necessary, to pay for replacement or rebuilding of the assets lost or
condemned. If such assets are not replaced or rebuilt within one (1) year
(subject to reasonable extension for force majeure or weather delays) following
the condemnation or casualty or if the Specified Borrower fails to notify the
Collateral Agent or Specified Foreign Agent, as the case may be, in writing on
or before 180 days after such casualty or condemnation that the Specified
Borrower shall commence the replacement or rebuilding of such asset, then, in
either case, the Collateral Agent or Specified Foreign Agent, as the case may
be, may apply any amounts in the cash collateral account to the ratable
repayment of the Specified Term Loans or, in the case of a casualty or
condemnation affecting the US Borrower or its Domestic Subsidiaries, the Term
Loans as Net Cash Proceeds of an Asset Sale in accordance with subsection
2.10(b).
(g) The provisions of this subsection 2.10 shall not be in
derogation of any other covenant or obligation of Holdings 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.
(h) Notwithstanding the foregoing provisions of this subsection
2.10, 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.
(i) Notwithstanding anything to the contrary contained herein,
nothing herein shall require any Foreign Subsidiary Borrower to make any
payment to any Lenders (other
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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.
(j) In the case of Canadian B/As, the Canadian Agent may, in its
discretion, adjust the amount of any mandatory prepayment upward or downward to
the nearest C$100,000 between the Canadian Lenders.
2.11 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 2.14 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 2.14 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 deposit with the
Specified Agent 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.
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(d) For greater certainty, the conversion of any Loan to another
basis of Loan, as provided in this subsection 2.11, shall not constitute a
repayment of amounts owing under the Specified Loans under this Agreement nor a
new advance of funds hereunder.
2.12 Bankers' Acceptances. (a) Subject to the terms and
conditions of this Agreement, the Canadian Borrower may request a borrowing
denominated in Canadian Dollars by presenting drafts for acceptance and
purchase as Canadian B/As by the Canadian Lenders.
(b) No Canadian Contract Period with respect to a Canadian B/A
shall extend beyond the final payment of the Canadian Term Loans or the
Specified Revolving Credit Commitment Termination Date, as applicable.
(c) To facilitate availment of the borrowings by way of Canadian
B/As, the Canadian Borrower hereby appoints each Canadian Lender as its
attorney to sign and endorse on its behalf, in handwriting or by facsimile or
mechanical signature as and when deemed necessary by such Canadian Lender,
blank forms of Canadian B/As substantially in the form of Schedule 2.12. In
this respect, it is each Canadian Lender's responsibility to maintain an
adequate supply of blank forms of Canadian B/As for acceptance under this
Agreement. The Canadian Borrower recognizes and agrees that all Canadian B/As
signed and/or endorsed on its behalf by a Canadian Lender shall bind the
Canadian Borrower as fully and effectually as if signed in the handwriting of
and duly issued by the proper signing officers of the Canadian Borrower. Each
Canadian Lender is hereby authorized to issue such B/As endorsed in blank in
such face amounts as may be determined by such Canadian Lender; provided that
the aggregate amount thereof is equal to the aggregate amount of Canadian B/As
required to be accepted and purchased by such Canadian Lender. No Canadian
Lender shall be liable for any damage, loss or other claim arising by reason of
any loss or improper use of any such instrument except the gross negligence or
wilful misconduct of the Canadian Lender or its officers, employees, agents or
representatives. Each Canadian Lender shall maintain a record with respect to
Canadian B/As (a) received by it from the Canadian Agent in blank hereunder,
(b) voided by it for any reason, (c) accepted and purchased by it hereunder,
and (d) cancelled at their respective maturities. Each Canadian Lender further
agrees to retain such records in the manner and for the statutory periods
provided in the various provincial or federal statutes and regulations which
apply to such Canadian Lender. Each Canadian Lender agrees to provide such
records to the Canadian Borrower at the Canadian Borrower's expense upon
request. On request by or on behalf of the Canadian Borrower, a Canadian
Lender shall cancel all forms of Canadian B/A which have been pre-signed or
pre-endorsed on behalf of the Canadian Borrower and which are held by the said
Canadian Lender and are not required to be issued in accordance with the
Canadian Borrower's irrevocable notice.
(d) Drafts of the Canadian Borrower to be accepted as Canadian
B/As hereunder shall be signed as set forth in this subsection 2.12.
Notwithstanding that any Person whose signature appears on any Canadian B/A may
no longer be an authorized signatory for any of the Canadian Lenders or the
Canadian Borrower at the date of issuance of a Canadian B/A, such signature
shall nevertheless be valid and sufficient for all purposes as if such
authority had remained in force at the time of such issuance and any such
Canadian B/A so signed shall be binding on the Canadian Borrower.
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(e) Promptly following receipt of a notice of borrowing,
rollover or conversion in such form as shall be reasonably approved by the
Canadian Agent by way of Canadian B/As, the Canadian Agent shall so advise the
Canadian Lenders and shall advise each Canadian Lender of the aggregate face
amount of the Canadian B/As to be accepted by it and the applicable Canadian
Contract Period (which shall be identical for all Canadian Lenders). The
aggregate face amount of the Canadian B/As to be accepted by a Canadian Lender
shall be determined by the Canadian Agent by reference to such Canadian
Lender's Ratable Portion of such Canadian Loan.
(f) Upon acceptance of a Canadian B/A by a Canadian Lender, such
Canadian Lender shall purchase, or arrange the purchase of, each Canadian B/A
from the Canadian Borrower at the Discount Rate for such Canadian Lender
applicable to such B/A accepted by it and provide to the Canadian Agent the
Discount Proceeds for the account of the Canadian Borrower. The Acceptance Fee
payable by the Canadian Borrower to a Canadian Lender under subsection 4.1 in
respect of each Canadian B/A accepted by such Canadian Lender shall be set off
against the Discount Proceeds payable by such Canadian Lender under this
subsection 2.12.
(g) Each Canadian Lender may at any time and from time to time
hold, sell, rediscount or otherwise dispose of any or all Canadian B/As
accepted and purchased by it.
(h) With respect to each Loan which is outstanding hereunder by
way of Canadian B/As, at or before 11:00 a.m. two (2) Business Days before the
maturity date of such B/As, the Canadian Borrower shall notify the Canadian
Agent at the Canadian Agent's address set forth in subsection 12.2 by
irrevocable telephone notice, followed by a notice of rollover on the same day,
if the Canadian Borrower intends to issue Canadian B/As on such maturity date
to provide for the payment of such maturing B/As. If the Canadian Borrower
fails to notify the Canadian Agent of its intention to issue Canadian B/As on
such maturity date, the Canadian Borrower shall provide payment to the Canadian
Agent on behalf of the Canadian Lenders of an amount equal to the aggregate
face amount of such B/As on the maturity date of such B/As. If the Canadian
Borrower fails to make such payment, such maturing B/As shall be deemed to have
been converted on their maturity date into a Base Rate Loan in an amount equal
to the face amount of such B/As and the Canadian Borrower shall on demand pay
any penalties that may have been incurred by the Canadian Agent and any
Canadian Lender due to the failure of the Canadian Borrower to make such
payment.
(i) The Canadian Borrower waives presentment for payment and any
other defence to payment of any amounts due to a Canadian Lender in respect of
a Canadian B/A accepted and purchased by it pursuant to this Agreement which
might exist solely by reason of such B/A being held, at the maturity thereof,
by such Canadian Lender in its own right and the Canadian Borrower agrees not
to claim any days of grace if such Canadian Lender as holder sues the Canadian
Borrower on the Canadian B/A for payment of the amount payable by the Canadian
Borrower thereunder. On the specified maturity date of a Canadian B/A, or such
earlier date as may be required or permitted pursuant to the provisions of this
Agreement, the Canadian Borrower shall pay the Canadian Lender that has
accepted and purchased such B/A the full face amount of such Canadian B/A and
after such payment, the Canadian Borrower shall have no further liability in
respect of such Canadian B/A and such
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Canadian Lender shall be entitled to all benefits of, and be responsible for
all payments due to third parties under, such B/A.
(j) If a Canadian Lender grants a participation in a portion of
its rights under this Agreement to a Specified Participant, then in respect of
any Loans by way of Canadian B/As, a portion thereof may, at the option of such
Canadian Lender, be by way of Canadian B/A accepted by such Specified
Participant. In such event, the Canadian Borrower shall upon request of the
Canadian Agent or the Canadian Lender granting the participation execute and
deliver a form of Canadian Bankers' Acceptance undertaking in favor of such
Specified Participant for delivery to such Specified Participant.
2.13 Existing Canadian B/As. Canadian B/As issued by the
Canadian Issuing Lender under the Existing Credit Agreement shall be deemed to
be Canadian B/As issued hereunder.
2.14 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 or Canadian B/A Tranche shall be in a
minimum Equivalent Amount of $1,600,000 and so that there shall not be more
than ten (10) Eurocurrency Tranches or Canadian B/A Tranches of any Specified
Borrower at any one time outstanding.
2.15 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 may the sum of the
Specified Swing Line Loans, the Specified Revolving Credit Loans and Specified
Accommodation Outstandings exceed the Specified Revolving Credit Commitments.
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 $150,000. 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
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specified therein. Partial prepayments shall be in an aggregate principal
Equivalent Amount of $150,000.
(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 2.15 shall
apply) each Specified 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 2.15 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 2.15(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 times (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.
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(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 2.15(b) and to purchase participating
interests pursuant to subsection 2.15(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 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, Holdings, 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 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 or (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. Each Specified Accommodation shall (i) be (w) the
Chips Letter 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 English Bidco Loan Note Letter of Credit and the Chips Letter
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 English Bidco Loan Note Letter 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
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Date) and the Chips Letter of Credit shall mature April 30, 2003; provided,
further, that in no case shall any Accommodation (other than the Chips Letter
of Credit) have an expiry or maturity date later than five (5) Business Days
prior to 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.
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 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
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.
3.3 Fees, Commissions and Other Charges. (a)(i) 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 (or, in the case of the Chips Letter of
Credit, Tranche A Terms Loans) bearing interest at the Eurocurrency Rate of
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the average daily face amount of such Specified Accommodation (or portion
thereof for which the US Borrower is primarily responsible), payable quarterly
in arrears on the last day of each March, June, September and December and on
the Specified Revolving Credit Commitment Termination Date (or, in the case of
the Chips Letter of Credit, April 30, 2003), provided that, notwithstanding the
foregoing, acceptance fees with respect to Canadian B/As shall be paid as set
forth in subsection 2.12.(f). A portion of such commission or fee, as
applicable, equal to 1/4 (or, in the case of the Chips Letter of Credit, 1/8)
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 (or, in the case of the Chips Letter of Credit, the Chips Limited
Term Loan Commitments or Chips Acquisition Term Loan Commitments, as the case
may be). Such commission and fee shall be nonrefundable.
(ii) The US Borrower shall pay to Chase, for the account of the
US Issuing Lender and the Participating Lenders (as defined in the Chips
Reimbursement Agreement), a letter of credit commission with respect to the
Chips Letter of Credit calculated at a rate per annum equal to 1/4 of 1% of
that portion of the average daily face amount of the Chips Letter of Credit
which is in excess of $346,462,500, payable quarterly in arrears on the last
day of each March, June, September and December and on April 30, 2003, provided
that the US Borrower shall not be required to pay any letter of credit
commissions pursuant to this clause (a)(ii) to the extent that such commissions
are paid pursuant to subsection 3.2(a) of the Chips Reimbursement Agreement.
(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, 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 (or, in the case of the Chips Letter of Credit,
Chips Acquisition Term Loan Commitment or Chips Limited Term Loan Commitment,
as the case may be) 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
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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 Chase under the
English Bidco 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 (or, in the case of the Chips Letter of Credit, Chips
Acquisition Term Loan Commitment (in the case of the principal portion only) or
Chips Limited Term Loan Commitment (in the case of the principal portion or
interest portion), as the case may be) 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 (or, in the case of the Chips
Letter of Credit, a Chips Limited Term Loan Lender or Chips Acquisition Term
Loan 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 (or, in the case of the Chips
Letter of Credit, a Chips Limited Term Loan Lender or Chips Acquisition Term
Loan Lender) from which such Assignee acquired its interest hereunder shall be
proportionately reallotted between such Specified Assignee and such transferor
Specified Revolving Credit Lender (or, in the case of the Chips Letter of
Credit, a Chips Limited Term Loan Lender or Chips Acquisition Term Loan
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 the account of the
Specified Issuing Lender, on demand, an amount equal to the product of (i) such
amount, times (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,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360 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
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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). Notwithstanding anything herein to the contrary, US
Borrower shall not have any reimbursement obligations in respect of drawings
under the Chips Letter of Credit for principal of the Chips Loan Notes until
such drawings exceed $118,250,000.
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 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
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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.
3.9 Existing Letters of Credit. The Letters of Credit issued by
the US Issuing Lender, the Canadian Issuing Lender and the English Issuing
Lender, if any, under the Existing Credit Agreement and the Chips Inc. Credit
Agreement shall be deemed to be Specified Accommodations issued hereunder on
the Chips Closing Date.
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, Facility Fee, or
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.
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(e) Each Canadian B/A shall be subject to an Acceptance Fee
which is a rate per annum equal to the Applicable Margin for Canadian B/As
payable as set forth in subsection 2.12(f).
4.2 Computation of Interest and Fees. (a) Unless otherwise
indicated in the Administrative Schedule or the applicable Joinder Agreement,
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) For the purposes of the Interest Act (Canada) and disclosure
thereunder, whenever interest to be paid under any Loan Document is to be
calculated on the basis of a year of 360 days or any other period of time that
is less than a calendar year, the yearly rate of interest to which the rate
determined pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by either 360 or such other period of time, as
the case may be.
(d) 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 a criminal 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
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(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, 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 applicable overdue percentage pursuant to Section 4.1(c).
4.4 Pro Rata Treatment and Payments. (a) Each borrowing,
conversion or continuation pursuant to subsection 2.11, of Specified Loans
(other than 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, to the nearest C$100,000, only in the case of
Canadian B/As, 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.
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(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
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) (in the case of the
Specified Lenders, shall be distributed ratably among such Lenders in
accordance with the Specified Revolving Credit Commitment Percentage (or, in
the case of the Chips Letter of Credit, Commitments) 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, Chips Acquisition
Term Loan Lender, Chips Limited Term Loan Lender (a "Non-Funding Lender") has
(x) failed to make a Specified Revolving Credit Loan, Chips Limited Term Loan
or Chips Acquisition Term Loan, as the case may be, 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, in each
case by reason of the provisions of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 or otherwise, 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 Loan, Chips
Acquisition Term Loan or Chips Limited Term Loans, as the case may be,
held by the Specified
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Lenders other than the Non-Funding Lender pro rata according to the
respective outstanding principal amounts of the Specified Revolving
Credit Loan, Chips Acquisition Term Loan or Chips Limited Term Loan, as
the case may be, of such Specified Lenders;
(ii) otherwise, such payment shall be made on account of the
outstanding Specified Revolving Credit Loans, Chips Acquisition Term
Loans or Chips Limited Term Loans, as the case may be, held by the
Specified Revolving Credit Lenders, Chips Acquisition Term Loan Lenders
or Chips Limited Term Loan 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, Chips Acquisition Term Loans or Chips Limited
Term Loans, as the case may be, 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. 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 the
Specified Borrower on account of principal, interest and fees shall be made
without set-off or counterclaim and shall be made to the Specified Agent, for
the account of the Specified Lenders at the Specified Agent's office listed in
subsection 12.2, 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 or Canadian B/As) 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 or Canadian B/A
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) 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
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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 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.
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 or Canadian B/As as contemplated
by this Agreement, (a) the commitment of such Specified Lender hereunder to
make Eurocurrency Loans or Canadian B/As, continue Eurocurrency Loans or
Canadian B/As as such and convert Base Rate Loans to Eurocurrency Loans or
Canadian B/As, as applicable, shall forthwith be cancelled and (b) such
Specified Lender's Loans then outstanding as Eurocurrency Loans or Canadian
B/As, if any, shall be converted automatically to Specified Base Rate Loans on
the respective last days of the then current Interest Periods or Canadian
Contract Periods, as applicable, 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 or Canadian B/As. If any such conversion of a Eurocurrency Loan or
Canadian B/A 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 Canadian B/As or to convert Base Rate Loans into
Eurocurrency Loans or Canadian B/As, as applicable, shall be reinstated.
Notwithstanding
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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 Canadian B/As 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);
(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 deems to be
material, of making, converting into, continuing or maintaining Eurocurrency
Loans or Canadian B/As or to increase the cost to such Specified Lender, by an
amount which such Specified Lender 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 demand,
any additional amounts necessary to compensate such Specified Lender for such
increased cost or reduced amount receivable, provided, in respect of
Eurocurrency Loans or Canadian B/As, 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 Eurocurrency or
Canadian B/A lending office if the making of such designation would allow the
Specified Lender or its Eurocurrency Loan or Canadian B/A lending office to
continue to perform its obligations to make Eurocurrency Loans or Canadian B/As
or to continue to fund or maintain Eurocurrency Loans or Canadian B/As and
avoid the need for, or materially reduce the amount of, such
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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, through the Specified
Agent, of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this subsection
submitted by such 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 or Canadian B/As of such
Specified Lender then outstanding into Base Rate Loans if a Base Rate option is
available in accordance with subsection 2.11 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 for nine (9) months
following such termination and repayment.
(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 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 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, the Specified Borrower
shall pay to such Specified Lender such additional amount or amounts as will
compensate such Specified Lender for such reduction. This covenant shall
survive the termination of this Agreement and the payment of the Specified
Loans and all other amounts payable hereunder for nine months following such
termination and repayment.
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 and franchise taxes imposed
in lieu of net income taxes. If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to 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
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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 if such Specified Lender fails or is unable to comply with the
requirements of paragraph (b) of this subsection or if such Specified Lender
fails to comply with the requirements of paragraphs (c) or (d) of this
subsection 4.7. 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 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 for a period of nine
(9) months thereafter.
(b) With respect to US Lenders, each US Lender that is not
incorporated under the laws of the United States of America or a state thereof
shall:
(i) (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
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 and (B) a duly completed
Internal Revenue Service 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
(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
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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, (y) 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 Internal Revenue Service 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 (and to deliver to the US Borrower and the
Administrative Agent two further copies of 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; or
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a US Lender hereunder which renders all such
forms and certificates inapplicable or which would prevent such US Lender from
duly completing and delivering any such form or certificate with respect to it
and such US Lender so advises the US Borrower and the Administrative Agent.
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.
(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
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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 the English Borrower, Chips
Limited or ISL, as the case may be, that at the date hereof it is (and each of
its transferees shall represent and it shall be a condition precedent to the
sale of an English Lender's participating interest in any English Loan or Chips
Loan to a Specified Participant and the assignment of all or part of its rights
or obligations under any English Loan or Chips Loan to any English Lender or
any affiliate thereof that such Specified Participant, English Lender or
affiliate shall so represent at the time of the sale or assignment that it is
at the date of the sale or assignment) 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, ISL or Chips
Limited, as the case may be, to be made to it free of United Kingdom taxes and
has filed such a claim with all of the appropriate supporting documents and a
gross payment direction will be (or should be issued in due course) to the
English Borrower, ISL or Chips Limited, as the case may be, by the Inland
Revenue; provided 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).
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 may sustain or incur 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 or Canadian B/A, (b) default by
the Specified Borrower in making a borrowing of, conversion into or
continuation of Eurocurrency Loans or Canadian B/As after the Specified
Borrower has given a notice 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 or Canadian B/As on a day which is not the
last day of an Interest Period or Canadian Contract 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 or Canadian B/A through the purchase of a
deposit bearing interest at the Eurocurrency Rate in an amount equal to the
amount of such Eurocurrency Loan or Canadian B/A and having a maturity
comparable to the relevant Interest Period or Canadian Contract Period;
provided, however, that each Specified Lender may fund each of its Eurocurrency
Loans or Canadian B/As 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
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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 or
Canadian B/As 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 "Nonconsenting Lender" (as defined below in this subsection 4.9) or
(d) any Specified Lender becomes a "Non-Funding Lender", then the Specified
Borrower may, on ten (10) 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) the Specified
Borrower shall have no right to replace the Specified Agent, (ii) neither the
Specified Agent nor any Specified Lender shall have any obligation to the
Specified Borrower to find a replacement Specified Lender or other such entity,
(iii) in the event of a replacement of a Nonconsenting Lender or 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 180 days after (A) the date the
Nonconsenting Lender shall have notified the Specified Borrower and the
Specified Agent of its failure to agree to any requested consent, waiver or
amendment or (B) 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 condition to the replacement of such Specified Lender. In the event
that (x) the Specified Borrower or the Specified Agent has requested the
Lenders to consent to a departure or waiver of any provisions of the Specified
Loan Documents or to agree to any amendment thereto, (y) the consent, waiver or
amendment in question requires the agreement of all Lenders in accordance with
the terms of subsection 12.1 and (z) Required Lenders have agreed to such
consent, waiver or amendment, then any Specified Lender who does not agree to
such consent, waiver or amendment shall be deemed a "Nonconsenting 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.
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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, Holdings, and the US Borrower (and each Foreign Subsidiary
Borrower, only as to itself, and its Subsidiaries) hereby represent and warrant
to the Agents and each Lender that:
5.1 Financial Condition. (a) The audited consolidated
financial statements of Holdings dated December 31, 1996, copies of which have
been furnished to each Lender on or before the Chips Closing Date, have been
prepared using accounting methods, procedures and policies which, except as set
forth in Schedule 5.1(a), 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 (as to any unaudited interim financial statements, subject
to normal year-end audit adjustments and the absence of footnotes). Neither
Holdings nor any of its Subsidiaries had, to the knowledge of the US Borrower
and Holdings, as at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction, which is not reflected in the foregoing statements or in
the notes thereto and which, to the knowledge of the US Borrower and Holdings,
has any reasonable likelihood of resulting in a material cost or loss.
(b) The audited consolidated financial statements of the
Canadian Borrower dated December 31, 1995 and 1994, copies of which have been
furnished to each Lender on or before the Chips Closing Date, have been
prepared using accounting methods, procedures and 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 Canadian
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 (as to any unaudited
interim financial statements, subject to normal year-end audit adjustments and
the absence of footnotes). Neither the Canadian Borrower nor any of its
Subsidiaries had, to the knowledge of the Canadian Borrower and Holdings, as at
the date of the most recent balance sheet referred to above, any material
Guarantee Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which is not reflected in the foregoing statements or in the notes thereto and
which, to the knowledge of the Canadian Borrower and Holdings, has any
reasonable likelihood of resulting in a material cost or loss.
(c) The audited consolidated financial statements of the English
Borrower dated January 31, 1996, and, to the knowledge of Holdings and the
English Borrower, the audited consolidated financial statements of the English
Borrower dated January 31, 1995 and 1994, copies of which have been furnished
to each Lender on or before the Chips Closing Date, have been prepared using
accounting methods, procedures and policies which are in accordance with GAAP
applied on a basis consistent with that of prior years and present
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fairly in all material respects the financial positions of the English
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 (as to any unaudited
interim financial statements, subject to normal year-end audit adjustments and
the absence of footnotes). Neither the English Borrower nor any of its
Subsidiaries had, to the knowledge of the English Borrower and Holdings, as at
the date of the most recent balance sheet referred to above, any material
Guarantee Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which is not reflected in the foregoing statements or in the notes thereto and
which, to the knowledge of the English Borrower and Holdings, has any
reasonable likelihood of resulting in a material cost or loss.
(d) The revised pro forma balance sheet of the US Borrower and
its Subsidiaries (the "Chips Pro Forma Balance Sheet"), certified by the
Responsible Officer of US Borrower, copies of which have been heretofore
furnished to each Lender, is, to the best knowledge of the US Borrower, the
unaudited balance sheet of the US Borrower as at March 31, 1997, adjusted to
give effect to (i) the Chips Acquisition and (ii) the contribution of (x) the
capital stock of Chips Limited to International Holdings and (y) the capital
stock of Chips Limited by International Holdings to English Holding Company and
the financings contemplated by this Agreement and (iii) the other Transactions.
The Chips Pro Forma Balance Sheet, together with the notes thereto, were
prepared based on good faith assumptions and are based on the best information
available to the US Borrower as of the date of delivery thereof, and reflect on
a pro forma basis the financial position of the US Borrower and its combined
Subsidiaries as at the Chips Closing Date.
5.2 No Change. (a) Since December 31, 1996, there has been no
Material Adverse Change and (b) since the Closing Date no dividends or other
distributions have been declared, paid or made upon the Capital Stock of the
Credit Parties except as permitted hereby nor, except for the Transactions,
has any of the Capital Stock of the Credit Parties been redeemed, retired,
purchased or otherwise acquired for value by the Credit Parties or any of their
Subsidiaries.
5.3 Corporate Existence; Compliance with Law. Holdings and each
of its Subsidiaries (a) is duly organized, validly existing or validly
subsisting and 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 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 Party has the power and authority, and the legal right, to make,
deliver and perform this
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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 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 set forth on Schedule 5.4, each of 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 (iii) those referred to subsection 5.20.
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 Holdings or 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
Acquisition 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 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 none of such property is
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subject to any Lien except as permitted by subsection 8.3. Such real and other
properties comprise all of the properties the use of which is necessary for the
conduct of Holdings' and its Subsidiaries' business as presently conducted and
as proposed to be conducted by it. As of the date hereof, the Fee Properties
as listed on Part I of Schedule 5.20 constitute all the real and immovable
properties owned by good and valid title or title in fee simple, as applicable,
by Holdings or its Subsidiaries, the Leased Properties as listed on Part II of
Schedule 5.20 together with the Excluded Leased Properties as listed on Part
III of Schedule 5.20 constitute all of the real and immovable properties leased
by Holdings or its Subsidiaries. As of the date hereof, each of the Leased
Properties listed on Part II of Schedule 5.20 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"). To the best knowledge of any Specified Borrower and
Holdings, and 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, 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. 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 on 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 (including without limitation the Mortgaged Properties) 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.
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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 G, 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 effect
in conformity with the requirements of FR Form U-1 or G-3 referred to in said
Regulation U or G.
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 Canadian Benefit and Pension Plans. The Canadian Pension
Plans are duly registered under the provisions of the ITA and any other
Requirements of Law applicable to a Credit Party and no event has occurred
which is reasonably likely to cause the loss of such registered status. The
Canadian Pension Plans and the Canadian Benefits Plans have been administered
in accordance with the ITA and all other Requirements of Law applicable to a
Credit Party. All material obligations of each Credit Party (including
fiduciary and funding obligations) required to be performed in connection with
the Canadian Pension Plans and the funding media therefor have been performed.
There have been no improper withdrawals or applications of the assets of the
Canadian Pension Plans or the Canadian Benefit Plans which could reasonably be
expected to have a Material Adverse
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Effect. Except as disclosed in Schedule 5.13 as of the most current evaluation
date, each of the Canadian Pension Plans is fully funded and there exist no
going concern unfunded actuarial liabilities or solvency deficiencies in
respect of such plans.
5.14 Investment Company Act; Other Regulations. Neither
Holdings 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. No Specified Borrower is subject to
regulation under any Requirement of Law which limits its ability to incur
Indebtedness.
5.15 Subsidiaries, Etc. As of the date hereof, the only
Subsidiaries of Holdings, and the only partnerships, limited liability
companies or other joint ventures in which Holdings or any of its Subsidiaries
has an interest are those listed on Schedule 5.15. As of the date hereof,
Holdings 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 5.15 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 Holdings 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 5.15.
5.16 Environmental Matters. After taking into account the
environmental indemnities in the Acquisition Documents: (a) The facilities
and properties owned, leased or operated by Holdings 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 Holdings and its Subsidiaries, the
Properties and all operations at the Properties are, and to the knowledge of
the US Borrower and Holdings 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 Holdings 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
Holdings and its Subsidiaries, nor does Holdings or 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
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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 or Holdings,
threatened, under any Environmental Law to which Holdings or any Subsidiary is
or will be named as a party with respect to the Properties or the business of
Holdings 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
with respect to the Properties or the business of Holdings 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.
(f) There has been no release or, to the best knowledge of any
Specified Borrower and Holdings, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of Holdings or any Subsidiary in connection with the Properties
or otherwise in connection with the business of Holdings 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.
5.17 Delivery of Acquisition Documents. Each Specified Agent
has received for itself and for each Specified Lender a complete copy of each
of the Acquisition 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 Acquisition
Documents. Each of the Acquisition Documents has been duly executed and
delivered by the Credit Parties party thereto and, to the best knowledge of the
US Borrower and Holdings, all other parties thereto and is full force and
effect. The representations and warranties of Holdings and its Subsidiaries
and, to the best knowledge of the US Borrower and Holdings, the other parties,
in each of the Acquisition Documents are true and correct in all material
respects.
5.19 Disclosure. No information, financial statement, report,
certificate or other document prepared or furnished by or on behalf of any
Credit Party to any Agent or
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any Lender in connection with this Agreement, any other Specified Loan
Document, or any of the Acquisition Documents (but excluding all projections
and pro forma financial statements which shall have been prepared in good faith
and based upon reasonable assumptions) contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. As of the Chips Closing Date,
there is no fact known to the US Borrower or Holdings (other than general
economic conditions, which conditions are commonly known and affect businesses
generally) which has, or which could reasonably be expected to have, in the
reasonable judgment of such Credit Party, 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 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 Holdings, 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 and the Assignment
are 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 fully perfected, first priority Liens on,
and security interests in, all right, title and interest of Holdings, 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 5.20 constitute all
material real properties owned by Holdings 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 Chips Closing Date) and
when amendments to the Mortgages are filed in the offices specified on Schedule
5.20, 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
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and the proceeds thereof superior in right to any other Person other than Liens
permitted hereby.
(e) Schedule 5.20 also sets out, as of the Chips Closing Date,
the nations and the states and/or provinces in which the Canadian Borrower's
account debtors are located, together with the aggregate amount of account
receivable owing by such account debtors in each relevant jurisdiction, in each
case where the aggregate amount of such accounts receivable in such relevant
jurisdiction exceeds the Equivalent Amount of $1,000,000.
5.21 Solvency. Each of Holdings and each Specified Borrower is,
individually and together with its Subsidiaries, Solvent.
5.22 No Fees. Neither Holdings nor any Subsidiary is under any
obligation to pay any broker's fees, finder's fee, commission, transaction fee
or expenses in connection with the transactions contemplated by this Agreement
or the Chips Acquisition Agreement other than fees and expenses listed on
Schedule 5.22.
5.23 Insurance. The insurance maintained by or reserved against
on the books of Holdings, the Borrowers and their respective Subsidiaries is
sufficient to protect Holdings and its Subsidiaries against such risks as are
usually insured against in the same general area 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.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Chips Closing Date. The effectiveness of this
Agreement and the amendment and restatement of the Credit Agreement is subject
to the satisfaction, on the Chips Closing Date, of the following conditions
precedent on or prior to July 3, 1997:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a Responsible
Officer of each Borrower, Chips Limited, ISL, Chase Delaware, the
Agents, the Majority Class Lenders, the US Revolving Credit Lenders and
the Canadian Revolving Credit Lenders, with a copy for each Lender, (ii)
for the account of each of the Chips Acquisition Term Loan Lenders and
the Chips Limited Term Loan Lenders who have requested a Term Note of
Chips Inc. pursuant to subsection 2.8(e), a Term Note of US Borrower
executed and delivered by a Responsible Officer of the US Borrower;
(iii) a Supplement to the Amended and Restated Guarantee and Collateral
Agreement in form and substance reasonably satisfactory to the
Administrative Agent executed and delivered by a Responsible Officer of
the US Borrower with respect to the Chips Limited intercompany note
between US Borrower and Chips Limited for $302,000,000, (iv) a
Supplement to the Amended and Restated Sharing Agreement among the
Agents dated
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April 11, 1997 executed by each of the Specified Agents and the
Collateral Agent in form and substance satisfactory to the
Administrative Agent with respect to the sharing of the Chips
Obligations, (v) a pledge by English Holding Company of all of the
Capital Stock of Chips Limited to secure the Chips Obligations, (vi) a
pledge by Chips Limited of all of the Capital Stock of ISL to secure the
Chips Obligations, (vii) a pledge by ISL and its Subsidiaries of all of
their material unencumbered assets, to secure the Chips Obligations owed
or owing by ISL, (viii) a guarantee executed by ISL's Subsidiaries to
secure the Chips Obligations owed or owing by ISL and (ix) a guarantee
by Chips Limited of the Chips Obligations owed or owing by ISL
(collectively, the "Amendment Documents").
(b) Corporate Proceedings of the Credit Parties. The
Administrative Agent shall have received, with a copy for each Lender, 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 of Holdings, each Borrower and its
applicable Subsidiaries authorizing (i) the execution, delivery and
performance of this Agreement, the other Amendment Documents to which it
is a party, (ii) the borrowings contemplated hereunder, and (iii) if
applicable, the Chips Acquisition and the Contribution, certified by the
Secretary, Assistant Secretary, or comparable officer of such Person as
of the Chips 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, with a copy for each Lender, a certificate of the
Secretary or an Assistant Secretary (or comparable officer) of each of
Holdings, each Borrower and its applicable Subsidiaries, dated the Chips
Closing Date, as to the incumbency and signature of the officers of such
Person executing each Amendment 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) Contributions. (i) The Borrower shall have contributed all
of the Capital Stock of Chips Limited to International Holdings and (ii)
International Holdings shall in turn have contributed all of the Capital
Stock of Chips Limited to English Holding Company. All documents,
instruments, and other matters relating to the Contribution shall be
reasonably satisfactory to the Administrative Agent in all respects
(collectively, the "Contribution").
(e) The Chips Acquisition. The Chips Acquisition shall have
been consummated for a net cash purchase price (after taking into
account the issuance of any new equity of Holdings to purchase equity of
Chips Holdings) not to exceed the sum of outstanding indebtedness of
Chips Limited and ISL (other than indebtedness refinanced with the Chips
Revolving Credit Commitments), pursuant to the Chips Acquisition
Agreement which shall be reasonably satisfactory to the Administrative
Agent and none of the material terms and conditions shall have been
waived without the consent of the Administrative Agent.
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(f) Senior Subordinated Notes. The US Borrower shall have
issued not less than $216,000,000 and up to $400,000,000 of Senior
Subordinated Notes of the Borrower to refinance the outstanding Senior
Subordinated Indebtedness having (i) no maturity, amortization,
mandatory redemption or purchase option (other than with asset sale
proceeds, to the extent permitted by the Loan Documents, or following a
change of control) or sinking fund payment prior to the tenth
anniversary of the Chips Closing Date, (ii) no financial maintenance
covenants, and (iii) such other terms and conditions (including without
limitation, interest rate, events of default, subordination and
covenants) as shall be reasonably satisfactory to the Administrative
Agent; provided such terms are no less favorable taken as a whole to the
Credit Parties and the Lenders than the Senior Subordinated Indebtedness
being refinanced (the "Senior Subordinated Notes").
(g) Fees. The Lenders, the Agents, and CSI shall have received
the fees and expenses to be received on the Chips Closing Date.
(h) Consents, Licenses and Approvals. (i) All governmental and
material third party approvals (including material landlords' and other
consents) reasonably necessary or advisable in connection with the Chips
Acquisition, the Contribution and financings related thereto, and the
continuing operations of Holdings and its Subsidiaries shall have been
obtained and be in full force and effect, (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 Chips Acquisition, the
Contribution and/or the financings thereof, and (iii) the Administrative
Agent shall have received, with a counterpart for each US Lender, a
certificate of a Responsible Officer of the US Borrower (A) attaching
copies of all consents, authorizations and filings referred to in
subsection 5.4 required to be obtained on or before the Chips Closing
Date, and (B) stating that such consents, licenses and filings are in
full force and effect, and each such consent, authorization and filing
shall be in form and substance reasonably satisfactory to the
Administrative Agent.
(i) Financial Information. The Administrative Agent shall have
received the Chips Pro Forma Balance Sheet.
(j) Solvency. The Lenders shall have received (i) an opinion
satisfactory in form and substance to them from Brownstone Associates
Incorporated which shall document the Solvency of Holdings and the US
Borrower on a consolidated basis after giving effect to the Chips
Acquisition and the other transactions contemplated hereby and (ii) a
solvency certificate in the form of Exhibit G.
(k) Perfection. All filings and other actions required 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 satisfied that
such action shall be taken or will be promptly taken), and all such
collateral shall be free and clear of other Liens except as permitted
hereby.
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(l) Perfection Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a Perfection Certificate
in the form of Exhibit H duly completed by US Borrower and its Domestic
Subsidiaries.
(m) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Lender, the following executed
legal opinions, each dated the Chips Closing Date:
(i) the executed legal opinion of Weil Gotshal & Manges LLP,
US counsel to the Credit Parties, substantially in the form of Exhibit
E; and
(ii) the executed legal opinion of Allen & Overy, English
counsel to the Secured Parties, in form and substance reasonably
satisfactory to the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may require.
(n) Chips Inc. Credit Agreement and Chips Limited Credit
Agreement. The Chips Inc. Credit Agreement shall have been terminated
and all amounts thereunder paid or refinanced in full. The
Administrative Agent shall have received evidence that the Chips Limited
Credit Agreement will be terminated and refinanced in full upon the
first borrowing by Chips Limited under this Agreement.
(o) Closing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a Closing Certificate
substantially in the form of Exhibit F hereto and dated the Chips
Closing Date, executed by a Responsible Officer of the US Borrower and
Holdings.
(p) Acknowledgement and Consent. The Administrative Agent shall
have received from each Credit Party, with a counterpart for each
Lender, an Acknowledgment and Consent, substantially in the form of
Exhibit I.
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 Chips 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.
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(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.
(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 Holdings, US Borrower and 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
The US Borrower, each Foreign Subsidiary Borrower, as to itself
and its Subsidiaries, and Holdings each 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, the US Borrower, each Foreign Subsidiary Borrower, as to itself and its
Subsidiaries, and Holdings 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 each Lender:
(a) as soon as available, but in any event within 90 (or, in the
case of the year ending December 31, 1996, 120) days after the end of
each fiscal year of US Borrower, a copy of the consolidated (and
unaudited consolidating) balance sheet of US Borrower and its
consolidated Subsidiaries as at the end of such year and the
consolidated (and unaudited consolidating) 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 except in the case of the financial statements for the
years ending December 31, 1996 and 1997, 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 45
days after the end of each of the first three (3) quarterly periods of
each fiscal year of US Borrower, the unaudited consolidating and
consolidated balance sheet of US Borrower and its
<PAGE> 96
90
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidating and consolidated statements of income and
retained earnings and consolidated statement of cash flows of 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 commencing with the quarter ending March 31, 1998 and (ii)
commencing with the quarter ending March 31, 1997, the figures set forth
in the relevant budgets required to be delivered in accordance with
subsection 7.2(c), certified by a Responsible Officer as being fairly
stated in all material respects when considered in relation to the
consolidated financial statements of US Borrower and its consolidated
Subsidiaries (subject to normal year-end audit adjustments);
(c) as soon as available, but in any event not later than 45
days after the end of each month (other than a month the last day of
which coincides with the last day of any fiscal quarter) of each fiscal
year of US Borrower, the consolidated balance sheet of US Borrower and
its consolidated Subsidiaries as at the end of such month and the
related unaudited consolidated statements of income and retained
earnings and consolidated statement of cash flows of Holdings and its
consolidated Subsidiaries for such month and the portion of the fiscal
year through the end of such month, setting forth in each case in
comparative form (i) the figures for the previous year commencing with
the 1998 fiscal year and (ii) commencing with March 1997, the figures
set forth in the relevant budgets required to be delivered in accordance
with subsection 7.2(c);
all such financial statements shall fairly present in all material respects the
consolidated 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 each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default relating to the
covenants contained in subsection 8.1, except as specified in such
certificate.
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and 7.1(b), a certificate of a
Responsible Officer (i) stating that, to the best of such Responsible
Officer's knowledge, Holdings and the US Borrower and its Subsidiaries
during such period has observed or performed all of its 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
<PAGE> 97
91
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 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, 8.8 and 8.9;
(c) as soon as available but not later than forty-five (45) days
subsequent to the end of each fiscal year of US Borrower, a copy of the
projections by US Borrower of the operating budget and cash flow budget
of 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;
(d) within five (5) days after the same are filed, copies of all
financial statements and reports which Holdings 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.
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, 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 Holdings or its Subsidiaries, as the case may be;
provided that, notwithstanding the foregoing, Holdings 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. 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 or desirable in the normal conduct
of its business except if (i) in the reasonable business judgment of Holdings
or such Subsidiary, as the case may be, it is in its best economic interest not
to preserve and maintain such rights or franchises, and (ii) such failure to
preserve and maintain such privileges, rights or franchises would not
materially adversely affect the rights of the Secured Parties under the Loan
Documents or the value of the collateral security for the Specified
Obligations, and as otherwise permitted pursuant to subsection 8.5; comply with
all Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate, be reasonably expected
to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. (a) Keep all property
(including the Mortgaged Properties) useful and necessary in its business in
good working order and
<PAGE> 98
92
condition; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least
such risks (but including in any event public liability, product liability and
business interruption) as are usually 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 each Lender, 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, theft and such other casualties as may be
reasonably satisfactory to the Collateral Agent and (ii) insuring the US
Borrower, its Domestic Subsidiary or Holdings, as the case may be, the
Collateral Agent and the Secured Parties, 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 may be reasonably
satisfactory to the Collateral Agent and the Secured Parties.
(c) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change 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 as insured party or
loss payee, 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
permit representatives of any Specified Lender 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
as often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of Holdings and its Subsidiaries
with officers and employees of Holdings and its Subsidiaries and with its
independent certified public accountants; provided that the Specified Agent or
such Specified Lender shall notify US Borrower prior to any contact with such
accountants and give US Borrower the opportunity to participate in such
discussions.
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 Holdings or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between Holdings
or any of its Subsidiaries and any Governmental Authority, which in
either case, if not cured or if adversely
<PAGE> 99
93
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) the following events, if, individually or in the aggregate,
the liability that could reasonably be expected to result would be
material to Holdings and its Subsidiaries, taken as a whole: (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
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 Holdings 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 Holdings or any Subsidiary of Holdings but only to
the extent that such complaint, order, citation, notice or written
communication individually or in the aggregate could reasonably be
expected to result in material liability or a material obligation under
any Environmental Law.
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 Holdings or the applicable Commonly Controlled
Entity proposes to take with respect thereto.
7.8 Canadian Benefit and Pension Plans.
(a) For each existing Canadian Pension Plan and Canadian Benefit
Plan and for any Canadian Pension Plan or Canadian Benefit Plan
hereafter adopted, the Canadian Borrower and each of its Subsidiaries
shall in a timely fashion perform all obligations (including fiduciary,
funding, investment and administration obligations) required to be
performed in connection with such plan and the funding media therefor in
accordance with the terms of such plan and any Requirement of Law.
(b) The Canadian Borrower and each of its Subsidiaries shall
deliver to the Canadian Agent, if requested by the Canadian Agent,
acting reasonably, promptly after the filing thereof with any applicable
Governmental Authority, copies of each annual and other return, report
or valuation with respect to each Canadian Pension Plan, copies of any
actuarial report with respect to each Canadian Pension Plan (only
<PAGE> 100
94
if required by any Governmental Authority), and a copy of the audited
annual financial report with respect to each Canadian Pension Plan
(whether or not required by any Governmental Authority) and promptly
after receipt thereof, a copy of any direction, notice or other
communication in respect of any breach of any Requirement of Law, which
would have the effect of increasing the funding obligation in respect of
each such plan, or which could result in the imposition of any Lien on
any of the properties or assets of a Credit Party, and any order or
ruling that such Credit Party may receive from any applicable
Governmental Authority with respect to any Canadian Pension Plan.
7.9 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;
(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 and the pendency of
such proceedings could not 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 Holdings, 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 litigation expenses, except to the
extent that any of the foregoing arise out of or relate to the gross
negligence or wilful misconduct of, 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 or
otherwise in the ordinary course of business consistent with past
practices of the party seeking indemnification therefor. The agreements
in this paragraph shall survive repayment of all Specified Loans and all
other amounts payable hereunder.
7.10 Pledge of After Acquired Property. If at any time
following the Chips 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 $1,000,000
in the aggregate, the Specified Borrower and any such Subsidiary shall grant to
the Specified Agent for the ratable benefit of the Specified Lenders
<PAGE> 101
95
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 International Holdings need be so
pledged, (ii) no voting Capital Stock of any indirect Foreign Subsidiary of
International Holdings 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 7.12 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 $1,000,000 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.
7.11 Pledge During Event of Default. At any time during the
continuance of an Event of Default, upon the request of the Specified Agent,
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 any
unencumbered property of the Specified Borrower and its Subsidiaries of any
nature whatsoever, as collateral security for the Specified Obligations,
pursuant to documentation reasonably satisfactory to the Specified Agent and
take such actions the Specified Agent shall reasonably require to ensure the
priority and perfection of such Lien, provided, however, that if the grant of
such Lien would be reasonably likely to result in Holdings incurring income tax
liability (as determined by Holdings and agreed to by the Specified Agent)
pursuant to Subpart F of the Code, the property pledged pursuant hereto will be
that property which can be pledged without incurring such liability; provided,
further, that (i) only 65% of the voting Capital Stock of any direct Foreign
Subsidiary of International Holdings need be so pledged and (ii) no voting
Capital Stock of any indirect Foreign Subsidiary of International Holdings 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 7.12 shall be
complied with.
7.12 Additional Subsidiaries. If, at any time, any Specified
Borrower or any of its Subsidiaries shall form any new Subsidiary after the
date of this Agreement (this subsection not constituting authority to form a
Subsidiary), such Specified Borrower or such Subsidiary, as the case may be,
shall, subject to applicable Requirements of Law (i) cause such new Subsidiary
to guarantee the Specified Obligations, and (ii) cause each holder of any
Capital Stock of such 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 Subsidiary is a direct Foreign
Subsidiary of International Holdings, only 65% of the voting Capital Stock of
such Foreign Subsidiary need be pledged to the Collateral Agent and (ii) no
voting Capital Stock of any indirect Foreign Subsidiary of International
Holdings 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.
<PAGE> 102
96
7.13 Intellectual Property. Whenever any 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, Holdings shall cause
such Credit 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, 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 Agent's security
interest in any Copyright, Patent or Trademark or such Intellectual Property
and the goodwill and general intangibles of such Credit Party relating thereto
or represented thereby.
7.14 Compulsory Acquisition; Whitewash. Complete the compulsory
acquisition of the shares of the English Borrower not yet acquired in the Offer
("Compulsory Acquisition") and, subject to compliance with applicable
Requirements of Law, to cause the English Borrower and its material
Subsidiaries to promptly complete the English "whitewash procedures" set forth
in Sections 155-158 of the Companies Act 1985 (as amended) so as to be able to
assume or guarantee and secure the obligations under the English Bidco Loan
Note Letter of Credit and, to the extent permitted by such whitewash
procedures, so assume or guarantee and secure. Cause ISL and its material
Subsidiaries to promptly complete the English "whitewash procedures" set forth
in Sections 155-158 of the Companies Act of 1985 (as amended) so as to be able
to assume or guarantee and secure the obligations under the Chips Limited Term
Loans and, to the extent permitted by such whitewash procedures, so assume or
guarantee and secure.
7.15 Use of Proceeds. Use the Specified Revolving Credit
Commitments for general corporate purposes of the Specified Borrower and its
Subsidiaries, provided that, (i) the portion of the US Revolving Credit
Commitments in excess of $50,000,000 may be used solely for Permitted
Acquisitions, (ii) no part of the English Revolving Credit Commitments
guaranteed and/or secured by the English Borrower and/or its Subsidiaries may
be used for purposes of the English Bidco Loan Note Letter of Credit unless and
until the whitewash procedures have been completed and only to the extent
permitted thereby and (iii) no more than L.16,000,000 of the English Revolving
Credit Commitments may be used for purposes other than English Bidco Loan Note
Letter of Credit, reimbursement obligations in respect thereof and obligations
in respect of the related loan notes. Use the Chips Limited Term Loans solely
to refinance the reimbursement obligations of the US Borrower under the Chips
Letter of Credit in respect of an amount up to $249,250,000 of principal
drawings. Use the Chips Acquisition Term Loans solely to refinance the
reimbursement obligations of the US Borrower under the Chips Letter of Credit
in respect of an amount up to $70,000,000 of principal drawings.
7.16 Interest Rate Protection Agreements. Ensure that at all
times during the two year period following the Chips Closing Date at least 50%
of the sum of 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.
<PAGE> 103
97
7.17 Currency Hedging Agreements. Within 90 days of the Chips
Closing Date, enter into currency hedge agreements in an amount satisfactory to
the US Borrower and otherwise reasonably satisfactory to the Administrative
Agent which protect the US Borrower against adverse fluctuations of Dollars
against Pounds Sterling.
SECTION 8. NEGATIVE COVENANTS
The US Borrower, each Foreign Subsidiary Borrower as to itself
and its Subsidiaries, and Holdings each 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 are owing to any Secured Party, the US Borrower, each Foreign
Subsidiary Borrower as to itself and its Subsidiaries, and Holdings 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. Permit the Interest Coverage Ratio of US
Borrower (i) for any of the three-, six- or nine-month periods ending at
the end of the first, second and third full calendar quarters ended
following the Closing Date to be less than the ratio set forth below for
such calendar quarters for 1997, and (ii) thereafter (commencing with
the four consecutive calendar quarters ending on December 31, 1997), for
any period of four consecutive calendar quarters ending at the end of
the calendar quarters set forth below to be less than the ratio set
forth opposite such calendar quarter below:
<TABLE>
<CAPTION>
Calendar Quarter Interest Coverage Ratio
---------------- -----------------------
<S> <C> <C> <C>
1997 1st 2.75 to 1.00
2nd 1.75 to 1.00
3rd 1.75 to 1.00
4th 1.75 to 1.00
1998 1st 1.80 to 1.00
2nd 1.90 to 1.00
3rd 2.00 to 1.00
4th 2.10 to 1.00
1999 1st 2.15 to 1.00
2nd 2.20 to 1.00
3rd 2.25 to 1.00
4th 2.25 to 1.00
2000 1st 2.35 to 1.00
2nd 2.40 to 1.00
3rd 2.45 to 1.00
4th 2.50 to 1.00
</TABLE>
<PAGE> 104
98
<TABLE>
<CAPTION>
Calendar Quarter Interest Coverage Ratio
---------------- -----------------------
<S> <C> <C> <C>
2001 1st 2.75 to 1.00
2nd 2.75 to 1.00
3rd 2.75 to 1.00
4th 2.75 to 1.00
2002 1st 3.00 to 1.00
2nd 3.00 to 1.00
3rd 3.00 to 1.00
4th 3.00 to 1.00
2003 1st 3.00 to 1.00
2nd 3.00 to 1.00
3rd 3.00 to 1.00
4th 3.00 to 1.00
2004 1st 3.00 to 1.00
2nd 3.00 to 1.00
3rd 3.00 to 1.00
4th 3.00 to 1.00
</TABLE>
(b) Maintenance of Consolidated EBITDA. Permit Consolidated
EBITDA of Holdings (i) for any of the three-, six- and nine-month
periods ending at the end of the first, second and third full calendar
quarters following the Closing Date to be less than the amount set forth
below for such calendar quarters for 1997, and (ii) thereafter
(commencing with the four consecutive calendar quarters ending on
December 31, 1997), for any period of four consecutive calendar quarters
ending at the end of the calendar quarters set forth below to be less
than the amount set forth opposite such calendar quarter below:
<TABLE>
<CAPTION>
Calendar Quarter Amount
---------------- ------
<S> <C> <C>
1997 2nd 37,000,000
3rd 79,000,000
4th 124,000,000
1998 1st 150,000,000
2nd 155,000,000
3rd 165,000,000
4th 175,000,000
1999 1st 180,000,000
2nd 182,500,000
3rd 185,000,000
4th 190,000,000
</TABLE>
<PAGE> 105
99
<TABLE>
<CAPTION>
Calendar Quarter Amount
---------------- ------
<S> <C> <C>
2000 1st 192,500,000
2nd 195,000,000
3rd 200,000,000
4th 205,000,000
2001 1st 207,500,000
2nd 210,000,000
3rd 215,000,000
4th 220,000,000
2002 1st 222,500,000
2nd 225,000,000
3rd 230,000,000
4th 235,000,000
2003 1st 237,500,000
2nd 240,000,000
3rd 245,000,000
4th 250,000,000
2004 1st 250,000,000
2nd 250,000,000
3rd 250,000,000
4th 250,000,000
</TABLE>
(c) Maintenance of Consolidated Total Debt to Consolidated
EBITDA. Permit the ratio of Consolidated Total Debt of Holdings and its
Subsidiaries to Consolidated EBITDA of Holdings and its Subsidiaries for
any period of four consecutive calendar quarters ending at the end of
the calendar quarters set forth below to be greater than the ratio set
forth opposite such calendar quarter below; provided that for the
purposes of determining the ratio for any period of four consecutive
calendar quarters ending at the end of the second, third and fourth full
calendar quarters following the Closing Date, Consolidated EBITDA of
Holdings and its Subsidiaries (i) for the third calendar quarter of 1996
shall be deemed to be $50,800,000, (ii) for the fourth calendar quarter
of 1996 shall be deemed to be $50,800,000, and (iii) for the first and
second calendar quarter of 1997 shall be deemed to be $51,800,000:
<PAGE> 106
100
<TABLE>
<CAPTION>
Fiscal Year Ratio
----------- -----
<S> <C> <C>
1997 2nd 5.75 to 1.00
3rd 5.60 to 1.00
4th 5.50 to 1.00
1998 1st 5.45 to 1.00
2nd 5.40 to 1.00
3rd 5.35 to 1.00
4th 5.25 to 1.00
1999 1st 5.20 to 1.00
2nd 5.15 to 1.00
3rd 5.10 to 1.00
4th 5.00 to 1.00
2000 1st 4.95 to 1.00
2nd 4.90 to 1.00
3rd 4.85 to 1.00
4th 4.75 to 1.00
2001 1st 4.70 to 1.00
2nd 4.65 to 1.00
3rd 4.60 to 1.00
4th 4.50 to 1.00
2002 1st 4.45 to 1.00
2nd 4.40 to 1.00
3rd 4.35 to 1.00
4th 4.25 to 1.00
2003 1st 4.20 to 1.00
2nd 4.15 to 1.00
3rd 4.10 to 1.00
4th 4.00 to 1.00
2004 1st 4.00 to 1.00
2nd 4.00 to 1.00
3rd 4.00 to 1.00
4th 4.00 to 1.00
</TABLE>
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;
<PAGE> 107
101
(b) (i) Indebtedness among the Credit Parties arising as a
result of intercompany loans and (ii) Indebtedness of Foreign
Subsidiaries of US Borrower that are not Credit Parties to the Credit
Parties and the other Subsidiaries in an aggregate Equivalent Amount
outstanding not to exceed $15,000,000 at any one time;
(c) Indebtedness of Subsidiaries of Holdings outstanding on the
Chips 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, except that the
Indebtedness of the Canadian Borrower used in respect of Financing
Leases and the Canada/Quebec Agreement on Industrial Development may be
increased by an aggregate amount not to exceed C$2,250,000 and the
Indebtedness of Circo Caribe, Inc. under a line of credit, may be
replaced or refinanced with a line of credit not to exceed $3,000,000;
(d) Indebtedness resulting from the endorsement of negotiable
instruments in the ordinary course of business;
(e) Indebtedness of Subsidiaries of Holdings in respect of
obligations under Financing Leases and purchase money Indebtedness in an
aggregate amount outstanding not to exceed Equivalent Amount of
$25,000,000 at any one time;
(f) Indebtedness in respect of Interest Rate Agreements;
(g) Indebtedness of any Credit Party (other than Holdings) 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) Indebtedness incurred in connection with the sale of the
accounts receivable of Holdings and its Subsidiaries in connection with
a trade receivables financing transaction otherwise permitted under
subsection 8.6(i);
(k) additional Indebtedness of Subsidiaries of Holdings in an
aggregate principal amount outstanding not to exceed the Equivalent
Amount of $35,000,000 at any one time;
(l) at any time following the termination of the US Revolving
Credit Commitment, Indebtedness of Subsidiaries of Holdings in respect
of unsecured revolving lines of credit in an aggregate amount
outstanding not to exceed $100,000,000 at any one time;
(m) (i) unsecured Indebtedness of the Subsidiaries of Holdings
to the seller in any Permitted Acquisition or (ii) Indebtedness assumed
in connection with any
<PAGE> 108
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Permitted Acquisition in an aggregate amount for clauses (i) and (ii)
for all Permitted Acquisitions not to exceed the Equivalent Amount of
$30,000,000; provided at the time of incurrence the requirements of
subsection 8.9(k) shall be satisfied;
(n) Indebtedness of any Foreign Subsidiary of the US Borrower
which is not a Credit Party for working capital purposes in an aggregate
amount not to exceed $15,000,000 at one time outstanding; provided that
either (i) each such working capital facility is supported by a US
Letter of Credit and the Foreign Subsidiary signs the related Letter of
Credit Application with the US Borrower and grants the Collateral Agent
a security interest in its material properties as collateral security
for its Accommodation Obligations or (ii) the availability under the US
Revolving Credit Commitments shall be reduced by the amount of each such
working capital facility;
(o) Indebtedness of any Foreign Subsidiary of the US Borrower
which is not a Credit Party under unsecured overdraft facilities
incurred in the ordinary course of business in an aggregate amount
outstanding not to exceed the Equivalent Amount of $10,000,000 at any
one time;
(p) Indebtedness of Caribe in an aggregate amount outstanding
not to exceed $5,000,000 at any one time;
(q) unsecured Senior Subordinated Indebtedness of the US
Borrower not to exceed $400,000,000 in the aggregate including any
permanent refinancing of the Senior Subordinated Financing so long as
any Net Cash Proceeds of such refinancing after giving effect thereto
are applied in accordance with subsection 2.10;
(r) Indebtedness of 5M existing at the time of the 5M
Acquisition not to exceed $6,000,000 at any one time outstanding;
(s) Indebtedness of Bisto existing at the time of the Chips
Acquisition with respect to reimbursement obligations in respect of the
Chips Letter of Credit relating to the first $118,250,000 of principal
of the Chips Loan Notes and a corresponding proportion of interest and
letter of credit commissions (not to exceed the investment earnings on
$118,250,000 in a cash collateral account less ordinary course operating
expenses and $1,000);
(t) Indebtedness arising from agreements with Governmental
Authorities of any foreign country, or political subdivision or agency
thereof, relating to the construction of plants and the purchase and
installation (including related training costs) of equipment to be used
in a Related Business; provided that such Indebtedness (i) has a
maturity in excess of ten years and 91 days and (ii) in the aggregate
does not exceed $50,000,000 or the Equivalent Amount; and
(u) Indebtedness of (a) Holdings in respect of the Chips Loan
Notes not to exceed $437,500,000 and (b) of English Bidco in respect of
Guaranteed Loan Notes not to exceed L.20,000,000.
<PAGE> 109
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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)(i) Liens created by the Loan Documents in favor of the
Specified Agent or the Lenders and (ii) Liens on cash collateral
securing any reimbursement obligations of the US Borrower in respect of
the Chips Letter of Credit required by subsections 2.5(c) and (d) and
2.10(d), provided, such cash collateral shall, notwithstanding anything
in any Loan Document to the contrary, first be applied to such
reimbursement obligations;
(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 Holdings
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, 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
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 Mortgage, 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 of the business of Holdings 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 or in the title opinions delivered concurrently with the
Canadian Credit Agreement dated as of November 26, 1996 in respect of
the immovable properties situated in the Province of Quebec or
thereafter;
(g) Liens in existence on the Chips 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 Chips Closing Date and
that the amount
<PAGE> 110
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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
Holdings 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 the property of Holdings or any of its Subsidiaries
in favor of landlords securing licenses, subleases, or leases permitted
hereunder;
(j) licenses, leases or subleases permitted hereunder granted to
others not interfering in any material respect in the business of
Holdings 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 Holdings or any of its
Subsidiaries 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 arising from the sale of the accounts receivable of
Subsidiaries of Holdings in connection with a trade receivables
financing transaction otherwise permitted under subsection 8.6(i);
(o) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to Subsidiaries of Holdings) the
Equivalent Amount of $10,000,000 in aggregate amount at any time
outstanding;
(p) Liens on cash collateral of Bisto securing indebtedness
under subsection 8.2(s); and
(q) Liens on property financed thereby securing grants permitted
under subsection 8.2(t).
<PAGE> 111
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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 Holdings
permitted pursuant to subsection 8.2(c) in existence on the Chips
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 in favor of the companies issuing title
insurance policies insuring the title to any property to induce such
issuance;
(e) surety bonds issued in respect of the type of obligations
described in subsection 8.3(e);
(f) indemnities made in the Loan Documents, the Acquisition
Documents or in any of the agreements contemplated hereby and thereby
and in the monitoring and oversight agreement and the financial advisory
agreement described in subsection 8.7(a)(iv) and in the corporate
charter and/or bylaws of Holdings and its Subsidiaries;
(g) indemnities and guarantees (other than guarantees of
Indebtedness (other than Indebtedness of Subsidiaries of Holdings
permitted hereunder)) made in the ordinary course of business, provided
that such indemnities and guarantees could not individually or in the
aggregate have a Material Adverse Effect;
(h) unsecured subordinated guarantees by the Domestic
Subsidiaries of the US Borrower of the Senior Subordinated Indebtedness;
and
(i) Guarantee Obligations of Bisto of Indebtedness permitted
pursuant to subsection 8.2(s).
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 Holdings may be merged or
consolidated with or into any Foreign Subsidiary of Holdings unless such
Domestic Subsidiary shall be the surviving corporation),
<PAGE> 112
106
(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) and (iii) the US
Borrower may merge with Chips Inc. and Holdings may merge with Chips Holdings.
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 or worn out property disposed of in the ordinary
course of business or property that is no longer useful in the conduct
of Holdings' 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) any sale or other transfer of any property or assets
constituting fixed assets for at least 75% cash, provided that the
aggregate fair market value of the sales and transfers made pursuant to
this paragraph (d) in the aggregate do not exceed the Equivalent Amount
of $12,500,000 in any fiscal year;
(e) intercompany sales or transfers of assets made in the
ordinary course of business;
(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 Holdings 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) the sale of the accounts receivable of Subsidiaries of
Holdings in connection with a trade receivable financing transaction
reasonably acceptable to the Specified Agent; provided that all of the
Net Cash Proceeds of each such sale are applied to the prepayment of the
Term Loans as required by subsection 2.10; and
(j) dispositions permitted by subsection 8.5.
8.7 Limitation on Dividends. Declare or pay any dividend (other
than dividends payable solely in common stock of US Borrower or Holdings) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the
<PAGE> 113
107
purchase, redemption, defeasance, retirement or other acquisition of, any class
of Capital Stock of US Borrower or Holdings or any of their respective
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 Holdings or any Subsidiary or otherwise (such declarations,
payments, setting apart, purchases, redemptions, defeasances, retirements,
acquisitions and distributions being herein called "Restricted Payments"),
except that:
(a) US Borrower may make Restricted Payments to Holdings, so
long as (except with respect to clause (iii) below or with respect to
clause (iv) below an Event of Default which relates to a payment default
under subsection 9(a)) 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 Holdings
directly to pay 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; provided, however any such administrative
expenses shall not exceed an aggregate amount of $1,000,000 per
fiscal year;
(ii) payments, the proceeds of which will be used to
repurchase the Capital Stock or other securities of Holdings from
outside directors, employees or members of the management of
Holdings, or any Subsidiary, at a price not in excess of fair
market value, in an aggregate amount not in excess of $3,000,000,
net of the proceeds received by the US Borrower as a result of
any resales of any such Capital Stock or other securities;
(iii) payments, the proceeds of which will be used to pay
taxes of Holdings as part of a consolidated group;
(iv) payments, the proceeds of which will be used to pay
management fees to Hicks Muse & Co. Partners, L.P. in accordance
with the terms of its monitoring and oversight agreement and the
financial advisory agreement;
(v) if such Restricted Payment is a purchase of Capital
Stock or a distribution to Holdings to permit Holdings to
purchase its Capital Stock, in either case, made in order to
fulfil the obligations of Holdings or any of the Borrowers under
an employee stock purchase plan or similar plan covering
employees of Holdings or any Subsidiary as from time to time in
effect in an aggregate net amount not to exceed $5,000,000.
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(b) any Subsidiary of any of the Borrowers may make Restricted
Payments to the Specified Borrower or to their respective Subsidiaries;
(c) Permitted Issuances may be made; and
(d) 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 US Borrower and its Subsidiaries
during any of the fiscal years of US Borrower set forth below the amount set
forth opposite such fiscal year below:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1997 $115,000,000
1998 $100,000,000
1999 and thereafter $90,000,000
</TABLE>
; provided that 100% of any amount not used in any fiscal year may be
carried forward only into the next succeeding fiscal year;
(b) In addition to the Capital Expenditures permitted pursuant
to paragraph (a) of this subsection 8.8, the US Borrower may spend additional
Capital Expenditures (which shall not be counted in the limitations set forth
such paragraph) of $16,000,000 to build a new facility in the United States of
America.
(c) In addition to the Capital Expenditures permitted pursuant
to paragraphs (a) and (b) of this subsection 8.8, to the extent such proceeds
are not otherwise utilized pursuant to the last paragraph of subsection 8.9 or
8.9(k), US Borrower and its Subsidiaries may make additional Capital
Expenditures (which shall not be counted in the limitations set forth in
paragraph (a) of this subsection 8.8) consisting of the investment of Excess
Cash Flow generated during prior fiscal years (beginning with Excess Cash Flow
generated in the fiscal year ended in December 1997 but, in each case,
including the retained portion of Excess Cash Flow for only those periods where
the respective Excess Cash Flow payment has theretofore occurred) and not
required to be applied to prepay the Term Loans pursuant to subsection 2.10.
(d) Notwithstanding the foregoing, in no event shall Capital
Expenditures be made by Holdings.
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;
<PAGE> 115
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(b) Investments in Cash Equivalents;
(c) (i) Investments (other than Permitted Acquisitions) by
Holdings 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 US Borrower that are not Credit Parties not to
exceed $15,000,000;
(d) loans and advances by Holdings or its Subsidiaries to their
respective directors, officers and employees 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 Chips
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 subsections 8.2(b) and (p),
subsection 8.4, subsection 8.7 and by subsection 8.8;
(g) promissory notes and other similar non-cash consideration
received by the Subsidiaries of Holdings 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
Holdings 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;
(k) so long as after giving effect thereto no Default or Event
of Default shall have occurred and be continuing, Investments after the
Chips Closing Date by Subsidiaries of Holdings resulting from Permitted
Acquisitions in an aggregate amount which may include Indebtedness
permitted by subsection 8.2(m) not to exceed the sum of (A) the amount
of $100,000,000 and (B) the amount of common stock of Holdings issued
subsequent to the Chips Closing Date in connection with Permitted
Acquisitions and (C) the portion of Excess Cash Flow for all prior
fiscal years commencing with 1997 retained by Holdings and not utilized
pursuant to subsection 8.8(c) or the last sentence of this subsection
8.9, provided, that (i) the Administrative Agent shall have received,
with copies for each Lender at least fifteen (15) days prior
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to such Permitted Acquisition, (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 Holdings
after giving effect to such Permitted Acquisition showing the aggregate
purchase price (including the assumption of any Indebtedness) for
Permitted Acquisitions made by Holdings and its Subsidiaries since the
Chips 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 any assets required to be secured pursuant
to subsections 7.10 and 7.12 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), Holdings 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 Holdings;
(l) Investments in Caribe not to exceed $20,000,000 in an
aggregate amount at any one time outstanding;
(m) the Acquisition; and
(n) the Chips Acquisition.
In addition to the Investments permitted pursuant to this
subsection 8.9, to the extent such proceeds are not otherwise utilized pursuant
to subsection 8.8(c) or 8.9(k), the Subsidiaries of Holdings may make
additional Investments (which shall not be counted in the limitations set forth
above) as follows: (i) Investments consisting of the investment of Net Cash
Proceeds not required to be applied to prepay the Term Loans pursuant to
subsection 2.10, including (x) with respect to the investment of proceeds of
the insurance and condemnation proceeds not required to prepay the Term Loans
pursuant to subsection 2.10 and (y) with respect to the investment of proceeds
of the sale of assets which are permitted pursuant to subsection 8.6; and (ii)
Investments consisting of the investment of Excess Cash Flow generated during
prior fiscal years (beginning with Excess Cash Flow generated in the fiscal
year ended in December 1997 but, in each case, including the retained portion
of the respective Excess Cash Flow for only those periods where the respective
Excess Cash Flow payment has theretofore occurred) and not required to be
applied to prepay the Term Loans pursuant to subsection 2.10.
8.10 Limitation on Optional Payments and Modifications of
Subordinated Debt Instruments. (a) Make any optional payment or prepayment on
or redemption of any Senior Subordinated Indebtedness (except pursuant to a
permanent refinancing of the Senior Subordinated Financing) and any payments in
redemption, defeasance or repurchase thereof, except mandatory payments of
interest, fees and expenses required by the terms of the
<PAGE> 117
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agreement governing or instrument evidencing such indebtedness but only to the
extent permitted under the subordination provisions applicable thereto.
(b) Amend, supplement or otherwise modify any of the provisions
of any Senior Subordinated Indebtedness:
(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
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 Senior Subordinated Indebtedness.
8.11 Limitation on Transactions with Affiliates. (a) Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (i) otherwise permitted under this Agreement, or (ii) (x)
in the ordinary course of Holdings's or such Subsidiary's business and (y) upon
fair and reasonable terms no less favorable to Holdings or such Subsidiary, as
the case may be, than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate.
(b) In addition, notwithstanding the foregoing, Holdings 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 Holdings;
<PAGE> 118
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(ii) the payment to Hicks Muse & Co. Partners, L.P. of fees and
expenses pursuant to a monitoring and oversight agreement and a
financial advisory agreement approved by the board of directors of
Holdings; and
(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.
8.12 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by Holdings or any
Subsidiary of real or personal, immovable or movable, property which has been
or is to be sold or transferred by Holdings 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 Holdings 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 120 days of the acquisition of such capital
asset for the purpose of providing permanent financing of such capital asset.
8.13 Limitation on Changes in Fiscal Year. Permit the fiscal
year of Holdings to end on a day other than December 31; provided that Holdings
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 agreement which prohibits or limits the ability
of Holdings 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 (including the government loan to
Caribe), 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) with respect to Bisto, as provided in the Chips Reimbursement Agreement,
or (b) pay dividends or make other distributions or pay any Indebtedness owed
to Holdings or any of its Subsidiaries except (i) as permitted by this
Agreement and the other Loan Documents and (ii) with respect to Bisto, as
provided in the Chips Reimbursement Agreement.
8.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
Holdings and its Subsidiaries are engaged on the date of this Agreement or
which are reasonably related thereto.
8.16 Amendments to Corporate Documents; Acquisition Agreement;
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 Acquisition 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 Acquisition
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Document or the Supply Agreement except to the extent that any such amendment,
supplement or modification could not reasonably be expected to have a Material
Adverse Effect.
8.17 Passive Status of International Holdings Bankruptcy Remote
Nature of Bisto. Permit International Holdings to engage in any activities or
incur any Indebtedness or Guarantee Obligations other than (A) owning the stock
of Foreign Subsidiaries of the US Borrower, (B) its activities incident to the
performance of the Loan Documents, (C) transactions pursuant to or in
connection with the Transactions, and (D) unsecured subordinated guarantees of
the Senior Subordinated Indebtedness. Permit Bisto, to engage in any business
activities or incur any Indebtedness or Guarantee Obligations other than its
reimbursement obligations under the Chips Letter of Credit.
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, Holdings or any of their Subsidiaries 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, Holdings or any of their Subsidiaries shall
default in the performance or observance of any agreement contained in
Section 8 or Section 11 of this Agreement or Section 5 of the Guarantee
and Collateral Agreement; or
(d) Any Borrower, Holdings 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) Except as set forth on Schedule 9(e), any Credit Party or
any of its 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
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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 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 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,
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, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, administrator, liquidator, custodian, 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 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
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
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
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
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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) 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) Any Credit Party or any of its Subsidiaries shall directly
or indirectly (i) terminate or cause to terminate, in whole or in part,
or initiate the termination of, in whole or in part, any Canadian
Pension Plan so as to result in any liability to a Credit Party, (ii)
accept payment of any amount from any Canadian Pension Plan, or (iii)
merge any Canadian Pension Plan which in each case could reasonably be
expected to have a Material Adverse Effect.
(i) One or more judgments or decrees shall be entered against
Holdings, the Specified Borrower or any of their Subsidiaries involving
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
(j) Holdings, 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
(k) 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 (and, if such invalidity
is such so as to be amenable to cure without materially disadvantaging
the position of the Specified Agent and the Secured Parties thereunder,
the Credit Party shall have failed to cure such invalidity within thirty
(30) days after notice from the Specified Agent or such shorter time
period as is specified by the Specified Agent in such notice and is
reasonable in the circumstances), or the validity or enforceability
thereof 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 (and, if such invalidity is such so as to be amenable to cure
without materially disadvantaging the position of the Specified Agent
and the Secured Parties, as secured parties thereunder, the Credit Party
shall have failed to cure such invalidity within thirty (30) days after
notice from the Specified Agent or such shorter time period as specified
by the Specified Agent in such notice and is reasonable in the
circumstances); or
(l) (x) A Change of Control shall occur, (y) Holdings shall fail
to own directly or indirectly, beneficially and of record 100% of the
Capital Stock of the US Borrower free and clear of all Liens other than
Liens in favor of the Secured Parties pursuant to the Guarantee and
Collateral Agreement, or (z) the US Borrower shall fail to own directly
or indirectly, beneficially and of record 100% of the Capital Stock of
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each Foreign Subsidiary Borrower, provided that with respect to the
English Borrower, until completion of the Compulsory Acquisition the US
Borrower need own indirectly only 94% of the Capital Stock of the
English Borrower;
(m) A Notice of crystallization, a prior notice of exercise of a
hypothecary recourse, an advance registration (as such terms is used in
Article 2966 to 2968 of the Civil Code of Quebec) or a notice of
withdrawal of an authorization to collect claims (a "Civil Code Notice")
is sent to any Credit Party in respect of a substantial part of the
claims, properties or assets of such Credit Party, or is registered
thereagainst, unless the rights purported to be enforced pursuant to
such Civil Code Notice are being contested in good faith by appropriate
legal proceedings and the exercise of such rights is stayed pending such
proceedings;
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 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, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
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
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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
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
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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 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
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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 resulting solely from the
Specified Agent's gross negligence or wilful misconduct. 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. 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 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, Chips Limited Term Loan Lender and Chips
Acquisition Term Loan 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, in its capacity under the other Loan
Documents, in the same manner as such provisions are expressly stated to apply
to a Specified Agent. Each English Revolving Credit Lender
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hereby acknowledges that Chase may make drawings under the English Bidco Loan
Note Letter of Credit in accordance with the terms thereof without regard to
its capacity as an Agent hereunder and whether or not the English Bidco Loan
Note Letter of Credit is valid or enforceable.
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.
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, Holdings 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
Obligations, and Holdings 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 Obligations and/or enforcing any rights under this Section 11 or under the
Obligations in accordance with subsection 12.5. The guarantee contained in
this Section 11 shall remain in full force and effect until the Obligations are
paid in full and each of the Commitments is terminated,
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notwithstanding that from time to time prior thereto any Borrower may be free
from any Specified Obligations.
11.2 Waiver of Subrogation. Notwithstanding any payment or
payments made by Holdings in respect of the Obligations or any setoff or
application of funds of Holdings by any Agent or any Lender, until payment in
full of the Obligations and the termination of each of Commitments and until
the Accommodations have been terminated, Holdings 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 Obligations, nor shall Holdings
seek any reimbursement from any Borrower in respect of payments made by
Holdings hereunder.
11.3 Modification of Obligations. Holdings hereby consents
that, without the necessity of any reservation of rights against Holdings and
without notice to or further assent by Holdings, any demand for payment of the
Obligations made by any Agent, any Issuing Lender, any Lender may be rescinded
by the Agent, the Issuing Lender, or the Lenders, and the Obligations
continued, and the 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 Obligations may be sold, exchanged, waived, surrendered or released, all
without the necessity of any reservation of rights against Holdings and without
notice to or further assent by Holdings which will remain bound hereunder
notwithstanding any such renewal, extension, modification, acceleration,
compromise, 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 Obligations. When making any demand hereunder against Holdings, 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 Holdings 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 Holdings. For the purposes of this subsection "demand" shall
include the commencement and continuance of any legal proceedings.
11.4 Waiver by Holdings. Holdings waives the benefits of
division and discussion and any and all notice of the creation, renewal,
extension or accrual of the 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
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contained in this Section 11, and the 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 Holdings 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. Holdings waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Specified Borrower or Holdings 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 Holdings) which constitutes, or might be construed
to constitute, an equitable or legal discharge of any Borrower for any of its
Obligations, or of Holdings under the guarantee contained in this Section 11 in
bankruptcy or in any other instance, and the obligations and liabilities of
Holdings 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 Borrower or against any other Person which may
be or become liable in respect of any 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 Holdings
and the successors and assigns thereof, and shall inure to the benefit of the
Lenders and their successors, indorsees, transferees and assigns, until the
Obligations shall have been satisfied in full and the Commitments shall be
terminated, notwithstanding that from time to time during the term of this
Agreement any Borrower may be free from any 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 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 Holdings or any
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, Holdings, any Borrower or
any substantial part of their respective property, or otherwise, all as though
such payments had not been made.
11.6 Negative Covenants. Until the Obligations shall have been
paid in full, the Accommodations shall have expired or been terminated and the
Commitments shall have been terminated, Holdings hereby agrees that it shall
not (i) cease to own, directly or indirectly, 100% of the Capital Stock of the
US Borrower, (ii) amend its certificate of incorporation or by-laws unless such
amendment does not adversely affect the interests of any Secured Party in any
material respect, (iii) engage in any activities other than (A) owning the
stock of the US Borrower and Bisto, (B) its activities incident to the
performance of (x) the Loan Documents, and (y) 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
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set forth in subsection 2.10, (C) transactions pursuant to or in connection
with the Transactions, and (D) activities contemplated by this Section 11, (iv)
make any Restricted Payment except as permitted by subsections 8.7(a) through
(d) or (v) amend, supplement or otherwise modify any of the provisions of the
Chips Loan Notes without the consent of the Administrative Agent and the
Required Lenders.
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 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 or reduce the percentage specified in the definition of
Required Lenders or consent to the assignment or transfer by Holdings or 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 $20,000,000 or release Holdings 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 2.14 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) amend, modify or waive any
provision of (w) subsection 2.5 (to the extent such subsection 2.5 relates to
the Tranche A Term Loans) without the written consent of Tranche A Term Loan
Lenders the Tranche A Term Loan Percentages of which aggregate at least a
majority, (x) subsection 2.5 (to the extent such subsection 2.5 relates to the
Tranche B Term Loans) without the written consent of Tranche B Term Loan
Lenders the 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
Tranche C Term Loans) without the written consent of Tranche C Term Loan
Lenders the Tranche C Term Loan Percentages of which aggregate at least a
majority, or (z) subsection 2.6 (to the extent subsection 2.6 relates to the
Specified Foreign Subsidiary Term Loans) without the written consent of the
Specified Foreign Subsidiary Lenders holding a majority of the outstanding
Specified Foreign Subsidiary Term Loans, (v) amend, modify or waive any
provision of subsection 2.1, 2.2, 2.3 or 2.4 or Section 3 without the written
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consent of the Specified Revolving Credit Lenders the Specified Revolving
Credit Commitment Percentages of which aggregate at least a majority of the
outstanding 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 any prepayment required by subsection 2.10(a), (b) or (c),
without the consent of Lenders having in the aggregate at least a majority of
the outstanding Term Loans, (viii) 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 and Tranche A Term Loan Lenders the Total
Credit Percentages (calculated for this purpose without reference to
outstanding Tranche B Term Loans, Tranche C Term Loans, or the Foreign
Subsidiary Term Loans and outstanding Foreign Revolving Credit Commitments) of
which aggregate at least a majority, (B) Specified Foreign Revolving Credit
Lenders the Total Credit Percentages (calculated for this purpose without
reference to outstanding other Specified Revolving Credit Commitments, Tranche
B Term Loans, Tranche C Term Loans, or the Foreign Subsidiary Term Loans) of
which aggregate at least a majority, (C) Tranche B Term Loan Lenders the
Tranche B Term Loan Percentages of which aggregate at least a majority, (D)
Tranche C Term Loan Lenders the Tranche C Term Loan Percentages of which
aggregate at least a majority, and (E) Specified Foreign Subsidiary Term Loan
Lenders with respect to each class of Specified Foreign Subsidiary Term Loans
which hold a majority of the outstanding Specified Foreign Subsidiary Term
Loans of such class, (the US Lenders and the Foreign Subsidiary Lenders
referred to in clauses (A), (B), (C), (D), and (E), collectively, the "Majority
Class Lenders"), (ix) amend, modify or waive the provisions of any Specified
Accommodation or any Specified Accommodation Obligation without the written
consent of the Specified Issuing Lender and each affected Specified
Accommodation Participant, (x) 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, or (xi) 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) 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. 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.
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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 two (2) 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,
Holdings and the Agents, the Issuing Lenders and the Swing Line Lenders, and as
set forth on the signature pages hereto or in any Joinder Agreement in the case
of the other parties 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: c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Attention: David Sindelar
Telecopy: (314) 746-2299
with copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy: (214) 740-7313
Holdings: c/o Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Attention: David Sindelar
Telecopy: (314) 746-2299
with copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy: (214) 740-7313
The Administrative The Chase Manhattan Bank
Agent,the US Loan & Agency Services Group
Issuing Lender or One Chase Manhattan Plaza, 8th Floor
US Swing Line New York, New York 10081
Lender: Attention: Janet Belden
Telecopy: (212) 552-5658
with copies to: The Chase Manhattan Bank
270 Park Avenue, 37th Floor
New York, New York 10017
Attention: Edmund DeForest
Telecopy: (212) 270-4584
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126
The Canadian The Chase Manhattan Bank of Canada
Agent,the Canadian 1 First Canadian Place
Issuing Lender or Suite 6900, P.O. Box 106
Canadian Swing Line Toronto, Ontario
Lender: Canada M5X 1A4
Attention: Amanda Staff
Telecopy: (416) 216-4162
with copies to: The Chase Manhattan Bank
270 Park Avenue, 37th Floor
New York, New York 10017
Attention: Edmund DeForest
Telecopy: (212) 270-4584
The English Chase Manhattan International Limited
Agent,the English Trinity Tower
Issuing Lender: 9 Thomas More Street
London, England E19YT
Attention: Stephen Clark or
Stephen Hurfford
Telecopy: 011 44 171 777 3840
with copies to: The Chase Manhattan Bank
270 Park Avenue, 37th Floor
New York, New York 10017
Attention: Edmund DeForest
Telecopy: (212) 270-4584
The Collateral The Chase Manhattan Bank
Agent: Loan & Agency Services Group
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Janet Belden
Telecopy: (212) 552-5658
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, 2.7, 2.8, 2.11,
2.12, 2.13 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.
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127
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, 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 counsel to the Specified Agent and, at any time after and during the
continuance of an Event of Default, of one counsel to all the Specified
Lenders, and (c) to pay, indemnify, and hold each Specified Lender and the
Specified Agent (and their respective 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, and (d) to pay, indemnify, and hold each Specified Lender and the
Specified Agent (and their respective 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 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 nor Holdings may
assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
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128
(b) Any Specified Lender may, in the ordinary course of its
commercial lending 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 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; and provided further that
no Specified Participant with respect to a Canadian Lender under this
subsection 12.6(b) which is a non-resident of Canada (as defined in the ITA)
shall be entitled to the benefit of subsection 4.7.
(c) Any Specified Lender may, in the ordinary course of its
commercial lending 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 or
any local affiliate thereof or, with
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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 or a local
affiliate thereof, 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 $5,000,000 or, if such assigning Lender's
outstanding Commitment on the date of such assignment is less than the
Equivalent Amount of $5,000,000, the aggregate of such assigning Lender's
Commitments hereunder) unless 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) any Chips Limited Term
Loan Lender shall only be permitted to assign all or any part of its rights and
obligations (with respect to its Specified Accommodation Participating Interest
in the Chips Letter of Credit to be converted to Chips Limited Term Loans or
its outstanding Chips Limited Term Loans to US Borrower) to a US entity which
(i) satisfies subsection 4.7(d)(ii) or (ii) has an English affiliate, branch or
agency that satisfies subsection 4.7(d)(i). Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) 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 (y) 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). No Assignee
of a Canadian Lender under this subsection 12.6(c) which is a non-resident of
Canada (as defined in the ITA) shall be entitled to the benefit of section 4.7.
(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. 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 recorded therein for all purposes of this Agreement. No
assignment or transfer of any Specified Loan (or portion thereof) or any
Specified Note and the obligations evidenced thereby, shall be effected unless
and until it has been recorded in the Specified Register as provided in this
subsection 12.6(d). 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.
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130
(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 or
an affiliate thereof, 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 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 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 12.15.
(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
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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 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 (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.
<PAGE> 138
132
(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 the province of Ontario
or in the courts of any other jurisdiction (the applicable 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 Risks of Superior Force. Each of the Credit Parties
expressly assumes all risks of superior force, such that it shall be bound to
timely execute each and every of its obligations under this Agreement
notwithstanding the existence or occurrence of any event or circumstance
constituting a superior force within the meaning of Article 1693 of the Civil
Code of Quebec.
12.13 Language. The parties hereto have agreed that this
Agreement as well as any document or instrument relating thereto be drawn up in
English only. Les parties aux presentes ont convenu que la presente Convention
ainsi que tous autres actes ou documents s'y rattachant soient rediges en
anglais seulement.
12.14 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.
<PAGE> 139
133
12.15 Submission To Jurisdiction; Waivers. Each of the
Borrowers and Holdings 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 Holdings or such Borrower at their respective addresses set
forth in subsection 12.2 or at such other address of which any Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
(f) with respect to the Foreign Subsidiary Borrowers, appoints
Viasystems, Inc., 101 South Hanley Road, Suite 400, St. Louis, Missouri
63105, as its agent (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.
12.16 Acknowledgements. Each of the Borrowers and Holdings
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
<PAGE> 140
134
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.
12.17 WAIVERS OF JURY TRIAL. HOLDINGS, 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.
12.18 Confidentiality. Each Specified Lender agrees to keep
confidential any information obtained by it pursuant hereto and the other Loan
Documents identified as confidential in writing 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 officers, directors, employees, representatives, attorneys, agents or
affiliates who 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 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 12.18, (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 advised of the confidential nature of such
information and agree to be bound by provisions of this subsection 12.18, (g)
to the National Association of Insurance Commissioners and (h) with the
Specified Borrower's prior written consent. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED, HEREIN, THE AGENTS, THE LENDERS AND THE ISSUING LENDERS
AGREE THAT NO PUBLIC ANNOUNCEMENT, CIRCULAR OR ADVERTISEMENT SHALL BE MADE,
ISSUED OR PUBLISHED BY ANY OF THEM DISCLOSING ANY OF THE TERMS OF OR THE SELLER
TO THE CHIPS ACQUISITION. FOR PURPOSES OF THE IMMEDIATELY PRECEDING SENTENCE
THE PROVISION OF INFORMATION TO ANY NEWSPAPER, MAGAZINE OR ANY OTHER FORM OF
MEDIA SHALL CONSTITUTE THE MAKING, ISSUANCE OR PUBLICATION OF A PUBLIC
ANNOUNCEMENT, CIRCULAR OR ADVERTISEMENT. The agreements in this subsection
shall survive repayment of the Specified Loans and all other amounts payable
hereunder.
<PAGE> 141
135
12.19 Sharing Agreement. Notwithstanding anything to the
contrary contained in this Agreement, any of the other Loan Documents, or the
Sharing Agreement, the Credit Parties and their respective Subsidiaries are not
a party to and shall not be bound by the Sharing Agreement.
12.20 No Guarantee of Domestic Obligations by Foreign
Subsidiaries of US Borrower. Notwithstanding anything herein to the contrary
or in any of the other Loan Documents, no Foreign Subsidiary of the US Borrower
guarantees the Domestic Obligations and none of the assets of any Foreign
Subsidiary secure or shall be used to pay the Domestic Obligations.
12.21 Section 151 of the Companies Act of 1985. Notwithstanding
any other provision of this Agreement none of the Foreign Subsidiary Borrowers
may take any action under this Agreement or assume any obligations in relation
thereto which would result in a breach of the provisions of Section 151 of the
Companies Act of 1985 (as amended) and more particularly neither the English
Borrower nor any of its Subsidiaries may, until completion of the "whitewash
procedures" set forth in Sections 155-158 of the Companies Act of 1985 (as
amended) referred to in Section 7.14 hereof, (i) borrow under any English Loan
or English Accommodations for the purposes of replacing, refinancing, or
substituting indebtedness under the Existing Credit Agreement, except for
English Revolving Credit Loans, or the obligations of the English Issuing
Lender under the English Bidco Loan Note Letter of Credit or any obligations
relating thereto or (ii) borrow under any English Loan or English
Accommodations for the purpose of financing the Compulsory Acquisition.
[rest of page intentionally left blank]
<PAGE> 142
136
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.
VIASYSTEMS GROUP, INC.,
as Guarantor
By: /s/
---------------------------------
Name:
Title:
BORROWERS
VIASYSTEMS, INC.,
as US Borrower
By: /s/
---------------------------------
Name:
Title:
CIRCO CRAFT CO. INC.,
as Canadian Borrower
By: /s/
---------------------------------
Name:
Title:
PCB INVESTMENTS PLC,
as English Bidco
By: /s/
---------------------------------
Name:
Title:
FORWARD GROUP PLC,
as English Borrower
By: /s/
---------------------------------
Name:
Title:
<PAGE> 143
137
CHIPS ACQUISITION LIMITED,
as a Foreign Subsidiary Borrower
By: /s/
---------------------------------
Name:
Title:
INTERCONNECTION SYSTEMS (HOLDINGS)
LIMITED,
as a Foreign Subsidiary Borrower
By: /s/
---------------------------------
Name:
Title:
AGENTS
THE CHASE MANHATTAN BANK,
as Administrative Agent and Collateral
Agent, and as a Lender
By: /s/
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK OF CANADA,
as Canadian Agent, and as a Canadian
Lender
By: /s/
---------------------------------
Name:
Title:
CHASE MANHATTAN INTERNATIONAL LIMITED,
as English Agent
By: /s/
---------------------------------
Name:
Title:
<PAGE> 144
138
CHASE MANHATTAN BANK DELAWARE,
as a US Issuing Lender
By: /s/
---------------------------------
Name:
Title:
Address for Notices
Letter of Credit Department
1201 Market Street, 9th Floor
Wilmington, Delaware 19080
Attn: Michael P. Handago
Telephone: (302) 428-3311
Telecopy: (302) 428-3390
US LENDERS
CIBC INC.
By: /s/
---------------------------------
Name:
Title:
Address for Notices
CIBC Wood Gundy
425 Lexington Avenue
New York, New York 10017
Attention: Cyd Petre
Telecopy: (212) 856-3991
BANK OF MONTREAL
By: /s/
---------------------------------
Name:
Title:
Address for Notices
430 Park Avenue
New York, New York 10022
Attention: Richard McClorey
Telecopy: (212) 605-1455
<PAGE> 145
139
THE BANK OF NOVA SCOTIA
By: /s/
---------------------------------
Name:
Title:
Address for Notices
600 Peachtree Street, NW
Suite 2700
Atlanta, GA 30308
Attn: Shannon Law
Telecopy: (404) 888-8998
With a Copy to:
181 West Madison Street
Suite 3700
Chicago, Illinois 60602
Attn: Gayne Underwood
Telecopy: (312) 201-4108
CITIBANK, N.A.
By: /s/
---------------------------------
Name:
Title:
Address for Notices
399 Park Avenue, 6th Floor, Zone 7
New York, New York 10043
Attention: R. Bruce Hall
Telecopy: (212) 559-0292
<PAGE> 146
140
THE FUJI BANK LIMITED, NEW YORK BRANCH
By: /s/
---------------------------------
Name:
Title:
Address for Notices
2 World Trade Center
79th Floor
New York, New York 10048
Attention: Mark Hanslin
Telecopy: (212) 898-2073
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/
---------------------------------
Name: David McLaughlin
Title: Vice President
Address for Notices
1251 Avenue of the Americas
New York, New York 10020
Attention: David McLaughlin
Telecopy: (212) 782-4981
BANKERS TRUST
By: /s/
---------------------------------
Name:
Title:
Address for Notices
One Liberty Plaza
New York, New York 10006
Attention: Tim Morris
Telecopy: (212) 250-7218
<PAGE> 147
141
NATIONAL WESTMINSTER BANK Plc
By: /s/
---------------------------------
Name: Elliot Jones
Title: Managing Director
By: /s/
---------------------------------
Name:
Title:
Address for Notices
175 Water Street
New York, New York 10038
Attention: Commercial Loans
Telecopy: (212) 602-4118
ABN AMRO BANK N.V.
By: /s/
---------------------------------
Its:
---------------------------------
By: /s/
---------------------------------
Its:
---------------------------------
Address for Notices
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Thomas F. Comfort
Telecopy: (312) 606-8425
<PAGE> 148
142
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/
---------------------------------
Name:
Title:
Address for Notices
One First National Plaza
Suite 0173
Chicago, Illinois 60670
Attention: William Oleferchik, Vice
President
Telecopy: (312) 732-1117
THE SAKURA BANK, LIMITED
By: /s/
---------------------------------
Name:
Title:
Address for Notices
277 Park Avenue
45th Floor
New York, New York 10172
Attention: Mickey Chadha
Telecopy: (212) 888-7651
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By: /s/
---------------------------------
Name:
Title:
Address for Notices
277 Park Avenue
New York, New York 10172
Attention: Greg Aptman
Telecopy: (212) 224-5188
<PAGE> 149
143
NATIONAL BANK OF CANADA
By: /s/
---------------------------------
Name:
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices
125 West 55th Street
New York, New York 10019
Attention: Pierre Osterrath
Telecopy: (212) 632-8545
BANQUE NATIONALE DE PARIS, NEW YORK
BRANCH
By: /s/
---------------------------------
Name:
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices
Banque Nationale de Paris (Canada)
BNP Tower
1981 McGill College Avenue
Montreal, Quebec
Canada H3A 2W8
Attention: Vincent Joli-Coeur
Telecopy: (514) 285-6009
<PAGE> 150
144
ARAB BANKING CORPORATION (B.S.C.)
By: /s/
---------------------------------
Name: Stephen A. Plauche
Title: Vice President
Address for Notices:
277 Park Avenue, 32nd Floor
New York, N.Y. 10172-3299
Attention: Loan Department Mgr.
Telecopy: (212) 583-0932
DLJ CAPITAL FUNDING, INC.
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
277 Park Avenue, 9th Floor
New York, NY 10172
Attention: Stephen Hickey
Telecopy: (212) 892-5286
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By: /s/
---------------------------------
Name:
Title:
Address for Notices
165 Broadway
49th Floor
New York, New York 10006
Attention: Koji Sasayama
Telecopy: (212) 608-2371
<PAGE> 151
145
THE BANK OF NEW YORK
By: /s/
---------------------------------
Name:
Title:
Address for Notices
One Wall Street
New York, New York 10286
Attention: Christopher Jacobs
Telecopy: (212) 635-1208
BANKBOSTON, N.A.
By: /s/
---------------------------------
Name:
Title:
Address for Notices
100 Federal Street
Mail Stop: 01-08-05
Boston, Massachusetts 02106-2016
Attention: Tim Barnes
Telecopy: (617) 434-4929
<PAGE> 152
146
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/
---------------------------------
Name:
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices
645 Fifth Avenue
20th Floor
New York, New York 10022
Attention: William Maier
Telecopy: (212) 872-5045
ALLSTATE LIFE INSURANCE COMPANY
By: /s/
---------------------------------
Name:
Title:
ALLSTATE INSURANCE COMPANY
By: /s/
---------------------------------
Name:
Title:
Address for Notices
3075 Sanders Rd
Suite 3GA
Northbrook, Illinois 60062-7127
Attention: Jerry Zinkula
Telecopy: (847) 402-3092
<PAGE> 153
147
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/
---------------------------------
Name:
Title:
Address for Notices
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attention: Jeffrey Maillett
Telecopy: (708) 684-6740
PILGRIM AMERICA PRIME RATE TRUST
By: /s/
---------------------------------
Name: Thomas C. Hunt
Title: Portfolio Analyst
Address for Notices
2 Renaissance Square
40 N. Central, Suite 1200
Phoenix, Arizona 85004-4424
Attention: Tim Hunt
Telecopy: (602) 417-8327
<PAGE> 154
148
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO,
FORMERLY CHL HIGH YIELD LOAN PORTFOLIO
(a unit of THE CHASE MANHATTAN
BANK)
By: /s/
---------------------------------
Name:
Title:
Address for Notices
380 Madison Avenue
12th Floor
New York, New York 10017
Attention: Joyce DeLucca
Telecopy: (212) 622-3797
PRIME INCOME TRUST
By: /s/
---------------------------------
Name:
Title:
Address for Notices
Prime Income Trust C/O
Dean Witter InterCapital, Inc.
New York, New York 10048
Attention: Peter Gewirtz
Telecopy: (212) 392-5345
ORIX USA CORPORATION
By: /s/
---------------------------------
Name:
Title:
Address for Notices
780 Third Avenue, 48th Floor
New York, New York 10017
Attention: G.V. Sanjay
Telecopy: (212) 418-8308
<PAGE> 155
149
PROTECTIVE LIFE INSURANCE COMPANY
By: /s/
---------------------------------
Name:
Title:
Address for Notices
13455 Noel Rd. LB #45
Two Galleria Tower, Suite 1150
Dallas, Texas 75240
Attention: Mark Okada
Telecopy: (972) 233-4343
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC.
By: /s/
---------------------------------
Name: Gilles Marchand, CFA
Title: Authorized Signatory
Address for Notices
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Gil Marchand
Telecopy: (609) 262-2756
DEBT STRATEGIES FUND, INC.
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By: /s/
---------------------------
Name: Gilles Marchand, CFA
Title: Authorized Signatory
Address for Notices
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Gil Marchand
Telecopy: (609) 262-2756
<PAGE> 156
150
KZH HOLDING CORPORATION
By: /s/
---------------------------------
Name:
Title:
Address for Notices
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Robert Goodwin / Joe Nerich
Telecopy: (212) 946-7776
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By: /s/
---------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
Address for Notices:
520 Madison Avenue
25th Floor
New York, New York 10022
Attention: Susan LeFevre
Telecopy: (212) 593-4691
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/
---------------------------------
Name: Takuya Honjo
Title: Senior Vice President
Address for Notices:
1251 Avenue of the Americas
New York, New York 10020
Attention: Ken Takehisa
Telecopy: (212) 282-4490
<PAGE> 157
151
CAISSE NATIONAL DE CREDIT AGRICOLE
By: /s/
---------------------------------
Name: Dean Balice
Title:
Address for Notices:
55 East Monroe, Suite 4700
Chicago, Illinois 60603
Attention: Dean Balice
Telecopy: (312) 372-2830
BHF BANK AKTIENGESELLSCHAFT
By: /s/
---------------------------------
Name: John Sykes
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
590 Madison Avenue
New York, New York 10022
Attention: John Sykes
Telecopy: (212) 756-5536
<PAGE> 158
152
AMARA-1 FINANCE LTD.
By: /s/
---------------------------------
Name:
Title: Director
AMARA-2 FINANCE LTD.
By: /s/
---------------------------------
Name:
Title: Director
Address for Notices
Chancellor LGT Senior Secured Management,
Inc.
1166 Avenue of the Americas
27th Floor
New York, NY 10036
Attention: Christopher A. Bondy
Telecopy: (212) 278-9619
DEEPROCK & COMPANY
By: Eaton Vance Management
as Investment Advisor
By: /s/
--------------------------
Name:
Title:
Address for Notices:
State Street Bank & Trust Company
Corporate Trust Division
One Enterprise Drive
North Quincy, MA 02171
Attention: Patrick McEnroe
Telecopy: (617) 664-5367
<PAGE> 159
153
With a copy to:
Eaton Vance Management
Attention: Prime Rate Reserves
24 Federal Street, 6th Floor
Boston, MA 02110
Telecopy: (617) 695-9594
ROYAL BANK OF CANADA
By: /s/
---------------------------------
Title: Manager, Computer Industry
Group
Address for Notices:
Royal Bank of Canada
Financial Square
23rd Floor
New York, NY 10005-3531
Attention: Manager Credit Administration
Telecopy: (213) 955-5350
CANADIAN LENDERS
BANK OF NOVA SCOTIA
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
44 King Street West
Toronto, Ontario
Canada M5H 1H1
Attention: David Torrey
Telecopy: (416) 866-7783
<PAGE> 160
154
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Commerce Court 50th Floor
Toronto, Ontario
Canada M5L 1A2
Attention: Teresa Sarte
Telecopy: (416) 980-5855
BANK OF MONTREAL
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
430 Park Avenue
New York, New York 10022
Attention: Richard McClorey
Telecopy: (212) 605-1455
FUJI BANK CANADA
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
BCE Place, Canada Trust Tower
P.O. Box 609, Suite 2800
161 Bay Street
Toronto, Ontario
Canada M5J 2S1
Attention: Daniel Lee
Telecopy: 416-865-9618
<PAGE> 161
155
ROYAL BANK OF CANADA
By: /s/
---------------------------------
Name: Ghassan Dani
Title: Senior Manager
Address for Notices:
1 Place Ville Marie
8th Floor, North Wing
Montreal, Quebec H3C 3A9
Attention: Ghassan Dani
Telecopy: (514) 874-3896
CITIBANK CANADA
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
399 Park Avenue, 6th Floor, Zone 7
New York, NY 10043
Attention: R. Bruce Hall
Telecopy: 212-559-0292
<PAGE> 162
156
BANK OF TOKYO-MITSUBISHI (CANADA)
By: /s/
---------------------------------
Name: Amos W. Simpson
Title: Vice President and General
Manager
Address for Notices:
600 De La Gauchethire West
Montreal, Quebec
Canada H3B 4L8
Attention: Amos Simpson
Telecopy: (514) 875-9392
THE SAKURA BANK (CANADA)
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Commerce Court West
Toronto, Ontario
Canada M5L 1B9
Attention: E. Langley
Telecopy: (416) 369-0268
<PAGE> 163
157
THE SUMITOMO BANK OF CANADA
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Ernst & Young Tower
Toronto Dominion Center
Suite 1400
Toronto, Ontario
Canada M5K 1H6
Attention: Alfred Lee
Telecopy: (416) 367-3565
BT BANK OF CANADA
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
One Bankers Trust Plaza
New York, NY 10006
Attention: Christopher Kinslow
Telecopy: (212) 250-7200
NATIONAL BANK OF CANADA
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
National Bank Tower
Montreal, Quebec
Canada H3B 4L2
Attention: Ross Corcoran
Telecopy: (514) 394-6073
<PAGE> 164
158
BANQUE NATIONALE DE PARIS (CANADA)
By: /s/
---------------------------------
Name:
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Banque Nationale de Paris
BNP Tower
1981 McGill College Avenue
Montreal, Quebec
Canada H3A 2W8
Attention: Vincent Joli-Coeur
Telecopy: (514) 285-6009
ABN AMRO BANK CANADA
By: /s/
---------------------------------
Name:
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
135 South LaSalle Street Suite 425
Chicago, Illinois 60674
Attention: Paul Cronin
Telecopy: (312) 904-6387
<PAGE> 165
159
FIRST CHICAGO NBD BANK, CANADA
By: /s/
---------------------------------
Name: Jeremiah A. Hynes III
Title: First Vice President
Address for Notices:
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Jeremiah A. Hynes
Phone: (416) 865-0466
Telecopy:(416) 365-5260
ENGLISH LENDERS
THE CHASE MANHATTAN BANK
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Trinity Tower
9 Thomas Moore St
London E19YT
United Kingdom
Attention: Steven Clarke
Telecopy: 011-44-171-777-2367
<PAGE> 166
160
THE BANK OF NOVA SCOTIA
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Scotia House
33 Finsbury Square
London EC2A1BB
United Kingdom
Attention: Paul Gibbon
Telecopy: 011-44-171-454-9019
BANK OF MONTREAL
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
430 Park Avenue
New York, New York 10022
Attention: Richard McClorey
Telecopy: (212) 605-1455
ROYAL BANK OF CANADA
By: /s/
---------------------------------
Name: Martin Broadhurst
Title: Manager-Multinational
Banking
Address for Notices:
Royal Bank of Canada
71 Queen Victoria Street
London EC4V 4DE
United Kingdom
Attention: Manager Loan Administration
Telecopy: 011-44-171-329-4751
<PAGE> 167
161
NATIONAL WESTMINSTER BANK Plc
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
135 Bishopsgate
London EC2M3UR
United Kingdom
Attention: Chris Allflatt
Telecopy: 011-44-171-375-5425
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/
---------------------------------
Name:
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
645 Fifth Avenue
New York, New York 10022
Attention: Kevin Dooley
Telecopy: 212-872-5045
BANQUE NATIONALE DE PARIS, LONDON BRANCH
By: /s/
---------------------------------
Name:
Title:
By: /s/
---------------------------------
Name:
Title:
<PAGE> 168
162
Address for Notices:
Banque Nationale de Paris
BNP Tower
1981 McGill College Avenue
Montreal, Quebec
Canada H3A 2W8
Attn: Vincent Joli-Coeur
Telecopy: (514) 285-6009
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
---------------------------------
Name:
Title:
Address for Notices
100 Federal Street
Mail Stop 01-08-05
Boston, Massachusetts 02106-2016
Attention: Tim Barnes
Telecopy: (617) 434-4929
CITIBANK, N.A.
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Cottons Centre
Hays Lane
London SE1 2QT
United Kingdom
Attention: Bill Ross
Telecopy: 011-44-171-500-2398
<PAGE> 169
163
BHF BANK AKTIENGESELLSCHAFT
By: /s/
---------------------------------
Name: John Sykes
Title:
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
590 Madison Avenue
New York, New York 10022
Attention: John Sykes
Telecopy: (212) 756-5536
SAKURA BANK LIMITED LONDON BRANCH
By: /s/
---------------------------------
Name:
Title:
Address for Notices:
Ground & 1st Floor
6 Broadgate
London, United Kingdom EC2M 2RQ
Attention: Mr. Ono
Telecopy: 011-44-171-638-1260
<PAGE> 170
164
CIBC WOOD GUNDY PLC
By: /s/
--------------------------------
Name:
Title:
Address for Notices:
Cotton Centre, Cotton Lane
London, England SE1 2QL
Attention: Claire Panting
Telecopy: 011-44-171-234-6433
With a copy to:
Attn: Patrick Willcocks
Telecopy: 011-44-171-234-6433
<PAGE> 171
ADMINISTRATIVE SCHEDULE TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
I. Available Currencies.
US Borrower: Dollars.
Canadian Borrower: Canadian Dollars, and, with respect to the Canadian
Revolving Credit Loans and Letters of Credit, Dollars.
English Borrower, English Bidco, ISL and Chips Limited: Pounds Sterling
II. Base Rates and Interest Payment Dates.
US Borrower: "Alternate 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 Alternate Base
<PAGE> 172
2
Rate shall be determined without regard to clause (b) or (c), or both,
of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change
in the Alternate 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
$100,000 or more.
Interest shall be payable on the last day of each March, June,
September, and December and shall be calculated on the basis of 360 days
when based on the Federal Funds Effective Rate or the CD Base Rate.
Canadian Borrower: For Canadian Dollars: "C$ Prime Rate": on any day,
the annual rate of interest (rounded upwards, if necessary, to the next
1/16 of 1%) equal to the greater of:
(a) the annual rate of interest determined by the Canadian
Agent as the annual rates of interest announced from time
to time by the Canadian Agent as its Prime Rate in effect
at its principal office in Toronto on such day for
determining interest rates on C$ denominated commercial
loans in Canada; and
(b) the annual rate of interest equal to the sum of (A) the
CDOR Rate in effect on such day and (B) 1%. To the extent
that the C$ Prime Rate as determined under (a) above is
not available, the C$ Prime Rate will be determined in
accordance with subsection (b) above.
"CDOR Rate": on any date, the annual rate of interest
which is the rate based on an average rate applicable to C$
bankers' acceptances for a term of 30 days (in the case of the
definition of "C$ Prime Rate") appearing on the "Reuters Screen
CDOR Page" (as defined in the International Swaps and Derivatives
Association, Inc. definitions, as modified and amended from time
to time) at approximately 10:00 a.m., (Toronto time), on such
date, or if such date is not a Business Day, then on the
immediately preceding Business Day; provided, however, if such
rate does not appear on the Reuters Screen CDOR Page as
contemplated, then the CDOR Rate on any date shall be calculated
as the arithmetic mean of the rates for the term referred to
above applicable to
<PAGE> 173
3
C$ bankers' acceptances quoted by the Canadian Reference Lenders
as of 10:00 a.m., (Toronto time), on such date, or if such date
is not a Business Day, then on the immediately preceding Business
Day.
Interest shall be payable on the last day of each March, June,
September, and December and shall be calculated on the basis of a 365 or
366 day year when based on the C$ Prime Rate.
Canadian Borrower: For Dollars: "Canadian Alternate Base Rate": on
any day, the annual rate of interest (rounded upwards, if necessary, to
the nearest 1/16 of 1%) equal to the greater of:
(i) the annual rate of interest determined by the Canadian
Agent as being the rate of interest announced from time to
time by the Canadian Agent as its prime reference rate in
effect on such day for determining interest rates on US$
denominated commercial loans in Canada; and
(ii) the annual rate of interest equal to the sum of (A) the
Federal Funds Effective Rate and (B) 0.5%
Interest shall be payable on the last day of each March, June,
September, and December and shall be calculated on the basis of a 365 or
366 day year when based on the Canadian Alternate Base Rate.
English Borrower, English Bidco, ISL and Chips Limited: None
III. Eurocurrency Base Rates and Interest Periods.
US 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 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.
Canadian Borrower: For Dollars only: "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
Canada is offered Dollar deposits at or about 10:00 a.m., Toronto time,
two Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency
<PAGE> 174
4
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 Canadian Lenders, nine or twelve months and
interest shall be based on a 360 day year when based on the Eurocurrency
Base Rate.
English Borrower, English Bidco, ISL and Chips Limited: "Eurocurrency
Base Rate": with respect to each day during each Interest Period
pertaining to a Loan, a rate per annum (rounded upward to the 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.
Permitted Interest Periods shall be one, two, three, six or to the
extent agreed to by the English Lenders such other periods as may be
available.
IV. Available Accommodations
US Borrower: Letters of Credit in an amount not to exceed $15,000,000
<PAGE> 175
5
Canadian Borrower: Letters of Credit in an amount not to exceed
$15,000,000 or the Equivalent Amount thereof in C$.
English Borrower: Letters of Credit and Bankers' Acceptances in an
amount not to exceed L. 5,000,000 plus the English
Bidco Loan Letter of Credit.
ISL: Letters of Credit in an amount not to exceed
L.10,000,000.
V. Swing Line Lenders
US Borrower: Chase in an amount not to exceed $10,000,000
Canadian Borrower: Chase Canada in an amount not to exceed $5,000,000
or the Equivalent Amount thereof in C$.
English Borrower, English Bidco, ISL and Chips Limited: N/A
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-2 by Standard & Poor's Corporation or P-2 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-2 by Standard &
Poor's Corporation or at least P-2 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.
Canadian Dollars. (a) marketable direct obligations issued or
unconditionally guaranteed by the Government of Canada or any agency
thereof, maturing no more than one year after the date of acquisition
thereof; (b) marketable direct obligations
<PAGE> 176
6
issued or unconditionally guaranteed by the governments of the Provinces
of Canada or any agencies thereof, maturing no more than one year after
the date of acquisition thereof and currently having a rating not lower
than R-1 (mid), A-1, Prime-2 or A-1 from any of Dominion Bond Rating
Service Inc., Canadian Bond Rating Service, Moody's Investors Service,
Inc. or Standard & Poor's Corporation, respectively; (c) commercial
paper and banker's acceptances maturing no more than 180 days after the
date of creation thereof and currently having a rating not lower than R-
1 (mid), A-1, Prime-2 or A-1 from any of Dominion Bond Rating Service
Inc., Canadian Bond Rating Service, Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively; and (d) certificates of
deposit or time deposits, maturing no more than 180 days after the date
of creation thereof, issued by commercial banks incorporated under the
laws of Canada or the United States of America, each having a rating not
lower than R-1 (mid), A-1, Prime-2 or A-1 from any of Dominion Bond
Rating Service Inc., Canadian Bond Rating Service, Moody's Investors
Service, Inc. or Standard & Poor's Corporation, respectively.
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.
VII. Specified Notice Times
US Borrower: (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.
Canadian Borrower: (a) Eurocurrency borrowings, 12:00 noon Toronto time
three Business Days prior to the applicable event, (b) Base Rate
borrowings, 12:00 noon Toronto time one Business Days prior to the
applicable event and (c) Canadian B/As, 12:00 noon Toronto time two
Business Days prior to the applicable event.
English Bidco, English Borrower, ISL and Chips Limited: 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
<PAGE> 177
7
which the US Revolving Credit Commitments are terminated (whether
pursuant to Section 9 or otherwise).
Canadian 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 Canadian Revolving Credit
Commitments are terminated (whether pursuant to Section 9 or otherwise).
English Borrower: the period from and including the Chips 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).
ISL: the period from and including the Chips Closing Date to, but not
including the Scheduled Revolving Credit Commitment Termination Date or
such earlier date on which the Chips 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.
Canadian Borrower: the Scheduled Revolving Credit Commitment
Termination Date.
English Borrower: Scheduled Revolving Credit Commitment Termination
Date.
ISL: Scheduled Revolving Credit Commitment Termination Date.
X. Conversion of Borrowings
Canadian Borrower: Conversion of Canadian B/As and Base Rate Loans:
The Canadian Borrower shall be permitted to convert Canadian B/As to
Base Rate Loans in C$ and convert Base Rate Loan in C$ to Canadian B/As
in accordance with Section 2.11 (a) and (c) of this Agreement; provided
that for this purpose: (i) Section 2.11(a) and (c) shall be read as if
all references therein to Eurocurrency Loans mean Canadian B/As and all
references therein to Interest Periods mean Canadian Contract Periods,
(ii) all such conversions shall be made in minimum aggregate amounts and
whole multiples in excess thereof as are provided for in respect of such
Loans in Section 2.2 of this Agreement, and (iii) after any partial
conversion not less than C$1,600,000 shall remain outstanding as
Canadian B/As or not less than C$500,000 shall remain outstanding as
Base Rate Loans, as applicable.
<PAGE> 178
SCHEDULE 1.1 TO
CREDIT AGREEMENT
COMMITMENTS
<TABLE>
<S> <C>
US LENDERS
THE CHASE MANHATTAN BANK
US Revolving Credit Commitment: $19,414,471.25
Chips Acquisition Term Loan Commitment: $35,500,000.00
Chips Limited Term Loan Commitment $28,231,250.00
CIBC INC.
US Revolving Credit Commitment: $15,073,493.72
Chips Limited Term Loan Commitment: $10,000,000.00
BANK OF MONTREAL
US Revolving Credit Commitment: $7,158,385.09
Chips Limited Term Loan Commitment: $10,000,000.00
THE BANK OF NOVA SCOTIA
US Revolving Credit Commitment: $10,000,000.00
Chips Limited Term Loan Commitment: $10,000,000.00
CITIBANK
US Revolving Credit Commitment: $9,521,552.36
Chips Limited Term Loan Commitment: $17,000,000.00
FUJI BANK LIMITED, NEW YORK BRANCH
US Revolving Credit Commitment: $9,540,186.00
ROYAL BANK OF CANADA
Chips Limited Term Loan Commitment: $10,000,000.00
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
US Revolving Credit Commitment: $6,487,326.42
Chips Limited Term Loan Commitment: $10,000,000.00
BANKERS TRUST
US Revolving Credit Commitment: $6,487,326.42
</TABLE>
<PAGE> 179
2
<TABLE>
<S> <C>
ABN AMRO BANK N.V.
US Revolving Credit Commitment: $8,500,000.00
Chips Limited Term Loan Commitment: $10,000,000.00
THE FIRST NATIONAL BANK OF CHICAGO
US Revolving Credit Commitment: $6,487,326.42
Chips Limited Term Loan Commitment: $10,000,000.00
SAKURA BANK
US Revolving Credit Commitment: $6,487,326.42
Chips Limited Term Loan Commitment: $17,000,000.00
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
US Revolving Credit Commitment: $1,795,031.06
Chips Limited Term Loan Commitment: $10,000,000.00
NATIONAL BANK OF CANADA
US Revolving Credit Commitment: $6,487,326.42
BANQUE NATIONALE DE PARIS,
NEW YORK BRANCH
US Revolving Credit Commitment: $2,863,354.04
Chips Limited Term Loan Commitment: $10,000,000.00
ARAB BANKING CORPORATION (B.S.C)
US Revolving Credit Commitment: $4,130,434.78
DLJ CAPITAL FUNDING, INC.
US Revolving Credit Commitment: $2,173,913.04
LONG TERM CREDIT BANK OF JAPAN,
LIMITED
US Revolving Credit Commitment: $9,130,434.78
Chips Limited Term Loan Commitment: $17,000,000.00
THE BANK OF NEW YORK
US Revolving Credit Commitment: $4,130,434.78
Chips Limited Term Loan Commitment: $17,000,000.00
</TABLE>
<PAGE> 180
3
<TABLE>
<S> <C>
FIRST NATIONAL BANK OF BOSTON
US Revolving Credit Commitment: $4,130,434.78
Chips Limited Term Loan Commitment: $10,000,000.00
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
US Revolving Credit Commitment: $5,000,000.00
Chips Limited Term Loan Commitment: $3,000,000.00
VAN KAMPEN AMERICAN
US Revolving Credit Commitment: $2,639,751.55
BHF BANK AKTIENGESELLSCHAFT
Chips Limited Term Loan Commitment: $10,000,000.00
THE MITSUBISHI TRUST AND BANKING CORPORATION
Chips Limited Term Loan Commitment: $17,000,000.00
CAISSE NATIONALE DE CREDIT AGRICOLE
Chips Limited Term Loan Commitment: $15,000,000.00
INDUSTRIAL BANK OF JAPAN
Chips Limited Term Loan Commitment: $17,000,000.00
NATIONAL WESTMINSTER
US Revolving Credit Commitment: $2,361,490.67
Chips Limited Term Loan Commitment: $18,231,250.00
DEEPROCK & COMPANY
Chips Acquisition Term Loan Commitment: $2,000,000.00
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
Chips Acquisition Term Loan Commitment: $5,000,000.00
DEBT STRATEGIES FUND, INC.
Chips Acquisition Term Loan Commitment: $5,000,000.00
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
Chips Acquisition Term Loan Commitment: $5,000,000.00
PILGRIM AMERICA PRIME RATE TRUST
Chips Acquisition Term Loan Commitment: $7,500,000.00
ALLSTATE INSURANCE COMPANY
Chips Acquisition Term Loan Commitment: $5,000,000.00
</TABLE>
<PAGE> 181
4
<TABLE>
<S> <C>
PROTECTIVE LIFE INSURANCE COMPANY
Chips Acquisition Term Loan Commitment: $5,000,000.00
CANADIAN LENDERS
THE CHASE MANHATTAN BANK OF CANADA
Canadian Revolving Credit Commitment: US$5,250,000.00
CANADIAN IMPERIAL BANK OF COMMERCE
Canadian Revolving Credit Commitment: US$2,821,428.57
BANK OF MONTREAL
Canadian Revolving Credit Commitment: US$1,785,714.29
THE BANK OF NOVA SCOTIA
Canadian Revolving Credit Commitment: US$1,785,714.29
CITIBANK CANADA
Canadian Revolving Credit Commitment: US$1,785,714.29
FUJI BANK CANADA
Canadian Revolving Credit Commitment: US$1,785,714.29
ROYAL BANK OF CANADA
Canadian Revolving Credit Commitment: US$1,785,714.29
BANK OF TOKYO-MITSUBISHI (CANADA)
Canadian Revolving Credit Commitment: US$1,214,285.71
BT BANK OF CANADA
Canadian Revolving Credit Commitment: US$1,214,285.71
FIRST CHICAGO NBD BANK, CANADA
Canadian Revolving Credit Commitment: US$1,214,285.71
SAKURA BANK (CANADA)
Canadian Revolving Credit Commitment: US$1,214,285.71
THE SUMITOMO BANK OF CANADA
Canadian Revolving Credit Commitment: US$1,214,285.71
NATIONAL BANK OF CANADA
Canadian Revolving Credit Commitment: US$1,214,285.71
BANQUE NATIONALE DE PARIS (CANADA)
Canadian Revolving Credit Commitment: US$714,285.71
</TABLE>
<PAGE> 182
5
<TABLE>
<S> <C>
ENGLISH LENDERS
THE CHASE MANHATTAN BANK (acting through
its London Branch)
English Revolving Credit Commitment: L.4,500,000
Chips Revolving Credit Commitment: L.3,800,000
BANK OF BOSTON
English Revolving Credit Commitment: L.3,500,000
Chips Revolving Credit Commitment: L.3,000,000
BANK OF MONTREAL
English Revolving Credit Commitment: L.3,500,000
BANK OF NOVA SCOTIA
English Revolving Credit Commitment: L.3,500,000
Chips Revolving Credit Commitment: L.3,750,000
BANQUE NATIONALE DE PARIS
English Revolving Credit Commitment: L.3,500,000
CITIBANK
English Revolving Credit Commitment: L.3,500,000
Chips Revolving Credit Commitment: L.3,750,000
NATIONAL WESTMINSTER PLC
English Revolving Credit Commitment: L.3,500,000
Chips Revolving Credit Commitment: L.3,800,000
ROYAL BANK OF CANADA
English Revolving Credit Commitment: L.3,500,000
Chips Revolving Credit Commitment: L.1,000,000
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
English Revolving Credit Commitment: L.3,000,000
Chips Revolving Credit Commitment: L.1,000,000
SAKURA BANK
Chips Revolving Credit Commitment: L.3,750,000
</TABLE>
<PAGE> 183
6
<TABLE>
<S> <C>
BHF BANK AKTIENGESELLSCHAFT
Chips Revolving Credit Commitment: L.3,750,000
</TABLE>
<PAGE> 184
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 or Chips Loan, as
the case may be, where (and to the extent that) English Lenders making
such Loans are subject to the Mandatory Liquid Asset requirements of the
Bank of England, 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) arrived at by
applying the following formula in relation to each Reference Bank:
Additional Cost = BY + L(Y-X) + S(Y-Z) % per annum
--------------------
100 - (B+S)
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. on the
first day of the Relevant Period for a period comparable
to the Relevant Period.
L = The average percentage of eligible liabilities which the
Bank of England from time to time requires each Reference
Bank to maintain as secured money with members of the
London Discount Market Association and/or as secured call
money with those money brokers and gilt-edged market
makers recognized by the Bank of England.
X = The rate at which secured Pounds Sterling deposits in an
amount approximately equal to the principal amount of such
Loan may be placed by such Reference Bank with members of
the London Discount Market Association and/or as secured
call money with money brokers and gilt-edged market makers
at or about 11:00 a.m. 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.
<PAGE> 185
2
Z = The percentage interest rate per annum allowed by the Bank
of England on special deposits.
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.
2 In the application of the above formula, B, Y, L, X, S, and Z 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
or Chips Loan, as the case may be, 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, Chips Limited or ISL, as the case
may be, and the English Lenders thereof and (after consultation with the
Reference Banks and the English Borrower, Chips Limited or ISL, as the
case may be) shall notify the English Borrower, Chips Limited or ISL, as
the case may be, 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) and the English Borrower, Chips Limited or ISL, as the case
may be, and the English Lenders shall be bound thereby.
<PAGE> 1
EXHIBIT 4.5
============================================================================
AMENDED AND RESTATED
GUARANTEE AND COLLATERAL AGREEMENT
made by
VIASYSTEMS, INC.
VIASYSTEMS GROUP, INC.
VIASYSTEMS TECHNOLOGIES CORP.
VIASYSTEMS INTERNATIONAL, INC.
and other future Domestic Subsidiaries of VIASYSTEMS, INC.
in favor of
THE CHASE MANHATTAN BANK,
as Collateral Agent
Dated as of April __, 1997
============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . 5
SECTION 2. GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Rights of Contribution . . . . . . . . . . . . . . . . . . . . 6
2.3 No Subrogation . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Guarantees Absolute and Unconditional . . . . . . . . . . . . 8
2.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . 11
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 12
4.1 Representations in Credit Agreement . . . . . . . . . . . . . 12
4.2 Title; No Other Liens . . . . . . . . . . . . . . . . . . . . 12
4.3 Perfected First Priority Liens . . . . . . . . . . . . . . . . 12
4.4 Chief Executive Office . . . . . . . . . . . . . . . . . . . . 13
4.5 Inventory and Equipment . . . . . . . . . . . . . . . . . . . 13
4.6 Farm Products . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Pledged Securities . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . 13
SECTION 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Covenants in Credit Agreement . . . . . . . . . . . . . . . . 14
5.2 Delivery of Instruments and Chattel Paper . . . . . . . . . . 14
5.3 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . 14
5.4 Payment of Obligations . . . . . . . . . . . . . . . . . . . . 14
5.5 Maintenance of Perfected Security Interest; Further Documentation 15
5.6 Changes in Locations, Name, etc. . . . . . . . . . . . . . . . 15
5.7 Pledged Securities . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . 16
SECTION 6. REMEDIAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Certain Matters Relating to Receivables . . . . . . . . . . . 18
6.2 Communications with Obligors; Grantors Remain Liable . . . . . 18
6.3 Pledged Securities . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Proceeds to be Turned Over to Collateral Agent . . . . . . . . 19
6.5 Application of Proceeds . . . . . . . . . . . . . . . . . . . 20
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
6.6 Code and Other Remedies . . . . . . . . . . . . . . . . . . . 20
6.7 Registration Rights . . . . . . . . . . . . . . . . . . . . . 21
6.8 Waiver; Deficiency . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7. THE COLLATERAL AGENT . . . . . . . . . . . . . . . . . . . . . 22
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc. . . . 22
7.2 Duty of Collateral Agent . . . . . . . . . . . . . . . . . . . 24
7.3 Execution of Financing Statements . . . . . . . . . . . . . . 24
7.4 Authority of Collateral Agent . . . . . . . . . . . . . . . . 24
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Amendments in Writing . . . . . . . . . . . . . . . . . . . . 25
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 No Waiver by Course of Conduct; Cumulative Remedies . . . . . 25
8.4 Enforcement Expenses; Indemnification . . . . . . . . . . . . 25
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 26
8.6 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.9 Section Headings . . . . . . . . . . . . . . . . . . . . . . . 27
8.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 27
8.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . 27
8.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . 28
8.14 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 28
8.15 Additional Grantors . . . . . . . . . . . . . . . . . . . . . 28
8.16 Releases . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
Schedules
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Securities
Schedule 3 Filings and Other Actions Required to Perfect
Security Interests
Schedule 4 Jurisdiction of Organization and Chief Executive Office
Schedule 5 Location of Inventory and Equipment
Schedule 6 Intellectual Property
Schedule 7 Existing Prior Liens
ii
<PAGE> 4
AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT
AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT, dated as
of April __, 1997 made by each of the signatories hereto (together with any
other Person that may become a party hereto as provided herein, the
"Grantors"), in favor of THE CHASE MANHATTAN BANK, as Collateral Agent (in such
capacity, the "Collateral Agent") for the Secured Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Credit Agreement
dated as of April __, 1997 (as amended, modified, supplemented, restated and in
effect from time to time, the "Credit Agreement"), among Viasystems Group,
Inc., a Delaware corporation ("Holdings"), Viasystems, Inc., a Delaware
corporation (the "US Borrower"), Circo Craft Co., Inc., a Quebec corporation
(the "Canadian Borrower"), PCB Investments plc, a corporation organized under
the laws of England and Wales ("English Bidco"), Forward Group plc, a
corporation organized under the laws of England and Wales (the "English
Borrower"), any Future Foreign Subsidiary Borrowers which may from time to time
become parties thereto, the several banks and other financial institutions from
time to time parties thereto (the "Lenders"), The Chase Manhattan Bank of
Canada ("Chase Canada"), as administrative agent for the Canadian Lenders (in
such capacity, the "Canadian Agent"), Chase Manhattan International Limited, as
administrative agent for the English Lenders (in such capacity, the "English
Agent"), any Future Foreign Agent which may from time to time be appointed
hereunder and The Chase Manhattan Bank ("Chase"), as administrative agent for
the Lenders (in such capacity, the "Administrative Agent"), the Lenders have
severally agreed to make extensions of credit to the Borrowers upon the terms
and subject to the conditions set forth therein;
WHEREAS, the US Borrower and Holdings are members of an
affiliated group of companies;
WHEREAS, the proceeds of the extensions of credit under the
Credit Agreement will be used in part to enable the US Borrower to make
valuable transfers to one or more of the other Grantors in connection with the
operation of their respective businesses;
WHEREAS, the US Borrower and the other Grantors are engaged in
related businesses, and each such Grantor will derive substantial direct and
indirect benefit from the making of the extensions of credit under the Credit
Agreement; and
WHEREAS, it is a condition precedent to the effectiveness of the
Credit Agreement and the obligation of the Lenders to make their respective
extensions of credit to the Borrowers under the Credit Agreement, that the
Grantors shall have executed and delivered this Agreement to the Collateral
Agent for the ratable benefit of the Secured Parties;
<PAGE> 5
2
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the Foreign Agents and the Lenders to enter into the
Credit Agreement and to make their respective extensions of credit to the
Borrowers thereunder, each Grantor hereby agrees with the Collateral Agent, for
the ratable benefit of the Secured Parties, that the existing guarantee and
collateral agreement dated as of November 26, 1996 made by Holdings, Viasystems
Technologies Corp. (f/k/a Circo Craft Technologies Inc.), a Delaware
corporation ("VTC"), and certain subsidiaries of VTC in favor of The Chase
Manhattan Bank, as collateral agent, shall be and hereby is amended and
restated in its entirety to read as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement, and the following terms which are defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, Farm Products, Instruments and Inventory.
(b) The following terms shall have the following meanings:
"Agreement": this Amended and Restated Guarantee and Collateral
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Collateral Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights, whether published or
unpublished; now existing or hereafter created (including, without
limitation, those listed in Schedule 6), all registration and recordings
thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in
the United States Copyright Office, and (ii) all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed on
Schedule 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date
<PAGE> 6
3
hereof and, in any event, shall include, without limitation, with
respect to any Grantor, all contracts, agreements, instruments and
indentures in any form, and portions thereof, to which such Grantor is a
party or under which such Grantor has any right, title or interest or to
which such Grantor or any property of such Grantor is subject, as the
same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (i) all rights of such Grantor
to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to
exercise all remedies thereunder, in each case to the extent the grant
by such Grantor of a security interest pursuant to this Agreement in its
right, title and interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, agreement, instrument or
indenture without the consent of any other party thereto, would not give
any other party to such contract, agreement, instrument or indenture the
right to terminate its obligations thereunder, or is permitted with
consent if all necessary consents to such grant of a security interest
have been obtained from the other parties thereto (it being understood
that the foregoing shall not be deemed to obligate such Grantor to
obtain such consents); provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Receivable or any
money or other amounts due or to become due under any such contract,
agreement, instrument or indenture.
"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) the Domestic Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or
in connection with this Agreement or any other Loan Document to which
such Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Collateral Agent or to the Secured
Parties that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other
than the US Borrower.
"Intellectual Property": the collective reference to the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses,
the Trademarks and the Trademark Licenses.
"Intercompany Note": any promissory note evidencing loans made
by any Grantor to Holdings or any of its Subsidiaries.
"Issuers": the collective reference to the Persons identified on
Schedule 2 as the issuers of the Pledged Securities and all Persons
which after the date hereof become subsidiaries of the US Borrower
(other than Foreign Subsidiaries of Foreign Subsidiaries).
<PAGE> 7
4
"Obligations": (i) in the case of the US Borrower, the Domestic
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) all letters patent of the United States or any
other country, all reissues and extensions thereof and all goodwill
associated therewith, including, without limitation, any of the
foregoing referred to in Schedule 6, and (ii) all applications for
letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof, including,
without limitation, any of the foregoing referred to in Schedule 6.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered by a Patent, including,
without limitation, any of the foregoing referred to in Schedule 6.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes and all other promissory notes issued to or held by
any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of
business).
"Pledged Securities": the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule
2, together with any other shares, stock certificates, options or rights
of any nature whatsoever in respect of the Capital Stock of any Issuer
that may be issued or granted to, or held by, any Grantor while this
Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section 9-
306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, shall include, without limitation,
all dividends or other income from the Pledged Securities, collections
thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and
Trademark
<PAGE> 8
5
Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
or otherwise, including, without limitation, any of the foregoing
referred to in Schedule 6, and (ii) all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred
to in Schedule 6.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein," "hereto" 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 and Schedule references are
to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEES
2.1 Guarantees. (a) Domestic Obligations. (i) Each Domestic
Subsidiary of the US Borrower (each, a "Subsidiary Guarantor") hereby, jointly
and severally, unconditionally and irrevocably, guarantees to the Collateral
Agent, for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the US Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Domestic Obligations.
(ii) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Subsidiary Guarantor hereunder
and under the other Loan Documents shall in no event exceed the amount which
can be guaranteed by such Subsidiary Guarantor under applicable federal and
state laws relating to the insolvency of debtors (after giving effect to the
right of contribution established in Section 2.2).
(iii) Each Subsidiary Guarantor agrees that the Domestic Obligations
may at any time and from time to time exceed the amount of the liability of
such Subsidiary Guarantor hereunder without impairing the guarantee contained
in this Section 2.1(a) or affecting the rights and remedies of the Collateral
Agent or any Secured Party hereunder.
(iv) The guarantee contained in this Section 2.1(a) shall remain in
full force and effect until all the Domestic Obligations and the obligations of
each Guarantor under the guarantee contained in this Section 2.1(a) shall have
been satisfied by payment in full, no Accommodation shall be outstanding and
the Commitments shall be terminated, notwithstanding
<PAGE> 9
6
that from time to time during the term of the Credit Agreement the US Borrower
may be free from any Domestic Obligations.
(v) No payment made by the US Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the Collateral
Agent or any Secured Party from the US Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or
any set off or appropriation or application at any time or from time to time in
reduction of or in payment of the Domestic Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Subsidiary
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Subsidiary Guarantor in respect of the Domestic
Obligations or any payment received or collected from such Subsidiary Guarantor
in respect of the Domestic Obligations), remain liable for the Domestic
Obligations up to the maximum liability of such Subsidiary Guarantor hereunder
until the Domestic Obligations are paid in full, no Accomodation shall be
outstanding and the Commitments are terminated.
(b) Foreign Obligations. (i) Except as may be expressly set
forth in any Joinder Agreement with respect to any Future Foreign Subsidiary
Borrower, the US Borrower hereby unconditionally and irrevocably guarantees to
the Collateral Agent, for the ratable benefit of the applicable Secured Parties
and their respective successors, indorsees, transferees and assigns, the prompt
and complete payment and performance by each Foreign Subsidiary Borrower when
due (whether at the stated maturity, by acceleration or otherwise) of the
Foreign Obligations.
(ii) The guarantee contained in this Section 2.1(b) shall remain in
full force and effect until all the Foreign Obligations and the obligations of
the US Borrower under the guarantee contained in this Section 2.1(b) shall have
been satisfied by payment in full, no Accommodation shall be outstanding and
the Commitments shall be terminated, notwithstanding that from time to time
during the term of the Credit Agreement any Foreign Subsidiary Borrower may be
free from any Foreign Obligations.
(iii) No payment made by any Foreign Subsidiary Borrower, any other
guarantor or any other Person or received or collected by the Collateral Agent
or any Secured Party from any Foreign Subsidiary Borrower, any other guarantor
or any other Person by virtue of any action or proceeding or any set off or
appropriation or application at any time or from time to time in reduction of
or in payment of the Foreign Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the US Borrower hereunder which
shall, notwithstanding any such payment (other than any payment made by the US
Borrower in respect of the Foreign Obligations or any payment received or
collected from the US Borrower in respect of the Foreign Obligations), remain
liable for the Foreign Obligations until the Foreign Obligations are paid in
full, no Accommodation shall be outstanding and the Commitments are terminated.
2.2 Rights of Contribution. Each Subsidiary Guarantor hereby
agrees that to the extent that a Subsidiary Guarantor shall have paid more than
its proportionate share of any
<PAGE> 10
7
payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and
receive contribution from and against any other Subsidiary Guarantor hereunder
which has not paid its proportionate share of such payment. Each Subsidiary
Guarantor's right of contribution shall be subject to the terms and conditions
of Section 2.3. The provisions of this Section 2.2 shall in no respect limit
the obligations and liabilities of any Subsidiary Guarantor to the Collateral
Agent and the Secured Parties, and each Subsidiary Guarantor shall remain
liable to the Collateral Agent and the Secured Parties for the full amount
guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. (a) Notwithstanding any payment made by
any Subsidiary Guarantor hereunder or any set-off or application of funds of
any Subsidiary Guarantor by the Collateral Agent or any Secured Party, no
Subsidiary Guarantor shall be entitled to be subrogated to any of the rights of
the Collateral Agent or any Secured Party against the US Borrower or any other
Subsidiary Guarantor or any collateral security or guarantee or right of offset
held by the Collateral Agent or any Secured Party for the payment of the
Domestic Obligations, nor shall any Subsidiary Guarantor seek or be entitled to
seek any contribution or reimbursement from the US Borrower or any other
Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor
hereunder, until all amounts owing to the Collateral Agent and the Secured
Parties by the US Borrower on account of the Domestic Obligations are paid in
full, no Accommodation shall be outstanding and the Commitments are terminated.
If any amount shall be paid to any Subsidiary Guarantor on account of such
subrogation rights at any time when all of the Domestic Obligations shall not
have been paid in full, such amount shall be held by such Subsidiary Guarantor
in trust for the Collateral Agent and the Secured Parties, segregated from
other funds of such Subsidiary Guarantor, and shall, forthwith upon receipt by
such Subsidiary Guarantor, be turned over to the Collateral Agent in the exact
form received by such Subsidiary Guarantor (duly indorsed by such Subsidiary
Guarantor to the Collateral Agent, if required), to be applied against the
Domestic Obligations, whether matured or unmatured, in accordance with the
Sharing Agreement.
(b) Notwithstanding any payment made by the US Borrower
hereunder or any set-off or application of funds of the US Borrower by the
Collateral Agent or any Secured Party, the US Borrower shall not be entitled to
be subrogated to any of the rights of the Collateral Agent or any Secured Party
against any Foreign Subsidiary Borrower or any collateral security or guarantee
or right of offset held by the Collateral Agent or any Secured Party for the
payment of the Foreign Obligations, nor shall the US Borrower seek or be
entitled to seek any contribution or reimbursement from any Foreign Subsidiary
Borrower in respect of payments made by the US Borrower hereunder, until all
amounts owing to the Collateral Agent and the Secured Parties on account of the
Foreign Obligations are paid in full, no Accommodation shall be outstanding and
the Commitments are terminated. If any amount shall be paid on account of such
subrogation rights at any time when all of the Foreign Obligations shall not
have been paid in full, such amount shall be held by the US Borrower in trust
for the Collateral Agent and the Secured Parties, segregated from other funds
of the US Borrower and shall, forthwith upon receipt by the US Borrower, be
turned over to the Collateral Agent in the exact form received by the US
Borrower (duly indorsed by the US Borrower to the Collateral Agent, if
required),
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8
to be applied against the Foreign Obligations, whether matured or unmatured, in
accordance with the Sharing Agreement.
2.4 Amendments, etc. (a) Domestic Obligations. Each
Subsidiary Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Subsidiary Guarantor and without
notice to or further assent by any Subsidiary Guarantor, any demand for payment
of any of the Domestic Obligations made by the Collateral Agent or any Secured
Party may be rescinded by the Collateral Agent or such Secured Party and any of
the Domestic Obligations continued, and the Domestic Obligations, or the
liability of any other Person 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 the
Collateral Agent or any Secured Party, and the Credit Agreement and the other
Loan Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the appropriate Secured Parties may deem advisable from time to time,
and any collateral security, guarantee or right of offset at any time held by
the Collateral Agent or any Secured Party for the payment of the Domestic
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Collateral Agent nor any Secured Party shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Domestic Obligations or for the guarantee contained in this Section 2
or any property subject thereto.
(b) Foreign Obligations. The US Borrower shall remain obligated
hereunder notwithstanding that, without any reservation of rights against the
US Borrower and without notice to or further assent by the US Borrower any
demand for payment of any of the Foreign Obligations made by the Collateral
Agent or any Secured Party may be rescinded by the Collateral Agent or such
Secured Party and any of the Foreign Obligations continued, and the Foreign
Obligations, or the liability of any other Person 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 the Collateral Agent or any Secured Party, and the Credit
Agreement, and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the appropriate Secured Parties may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Collateral Agent or any Secured Party for the
payment of the Foreign Obligations may be sold, exchanged, waived, surrendered
or released. Neither the Collateral Agent nor any Secured Party shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by
it as security for the Foreign Obligations or for the guarantee contained in
this Section 2 or any property subject thereto.
2.5 Guarantees Absolute and Unconditional. (a) Each Subsidiary
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Domestic Obligations and notice of or proof of reliance
by the Collateral Agent or any Secured Party upon
<PAGE> 12
9
the guarantee contained in this Section 2 or acceptance of the guarantee
contained in this Section 2; the Domestic Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee contained
in this Section 2; and all dealings between the Credit Parties on the one hand,
and the Collateral Agent and the Secured Parties, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
the guarantee contained in this Section 2. Each Subsidiary Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the US Borrower or any of the Subsidiary Guarantors with
respect to the Domestic Obligations. Each Subsidiary Guarantor understands and
agrees that its guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of the Credit Agreement or any other Loan
Document, any of the Domestic Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Collateral Agent or any Secured Party, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the US
Borrower against the Collateral Agent or any Secured Party, other than payment
in full of the Obligations, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the US Borrower or such Subsidiary Guarantor)
which constitutes, or might be construed to constitute, an equitable or legal
discharge of the US Borrower for the Domestic Obligations, or of such
Subsidiary Guarantor under the guarantee contained in this Section 2, in
bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Subsidiary
Guarantor, the Collateral Agent or any Secured Party may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against the US Borrower, any other Guarantor or any
other Person or against any collateral security or guarantee for the Domestic
Obligations or any right of offset with respect thereto, and any failure by the
Collateral Agent or any Secured Party to make any such demand, to pursue such
other rights or remedies or to collect any payments from the US Borrower, any
other Guarantor or any other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release
of the US Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Subsidiary Guarantor of any obligation or liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Collateral Agent or any Secured Party against any
Subsidiary Guarantor. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
(b) The US Borrower waives any and all notice of the creation,
renewal, extension or accrual of any of the Foreign Obligations and notice of
or proof of reliance by the Collateral Agent or any Secured Party upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Foreign Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Credit Parties on the one hand, and the Collateral
Agent and the
<PAGE> 13
10
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 2. The US Borrower waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon any Foreign Subsidiary
Borrower with respect to the Foreign Obligations. The US Borrower understands
and agrees that its guarantee contained in this Section 2 shall be construed as
a continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of the Credit Agreement, or any other Loan
Document, any of the Foreign Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Collateral Agent or any Secured Party, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by any
Foreign Subsidiary Borrower against the Collateral Agent or any Secured Party,
other than payment in full of the Obligations, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the US Borrower or such
Foreign Subsidiary Borrower) which constitutes, or might be construed to
constitute, an equitable or legal discharge of such Foreign Subsidiary Borrower
for the Foreign Obligations, or of the US Borrower under the guarantee
contained in this Section 2, in bankruptcy or in any other instance. When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against the US Borrower, the Collateral Agent or any Secured Party
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against any Foreign Subsidiary
Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Foreign Obligations or any right of offset with
respect thereto, and any failure by the Collateral Agent or any Secured Party
to make any such demand, to pursue such other rights or remedies or to collect
any payments from such Foreign Subsidiary Borrower, any other Guarantor or any
other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of such Foreign Subsidiary
Borrower, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve the US Borrower of
any obligation or liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Collateral Agent or any Secured Party against the US Borrower. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
2.6 Reinstatement. (a) The guarantee of the Domestic
Obligations by each Subsidiary Guarantor contained in Section 2.1(a) shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Domestic Obligations is rescinded
or must otherwise be restored or returned by the Collateral Agent or any
Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the US Borrower or any Subsidiary Guarantor, 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 or any Subsidiary Guarantor or
any substantial part of its property, or otherwise, all as though such payments
had not been made.
(b) The guarantee of any Foreign Obligations by the US Borrower
contained in Section 2.1(b) shall continue to be effective, or be reinstated,
as the case may be, if at any time
<PAGE> 14
11
payment, or any part thereof, of any of the Foreign Obligations is rescinded or
must otherwise be restored or returned by the Collateral Agent or any Secured
Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Foreign Subsidiary Borrower or the US Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, any Foreign Subsidiary Borrower or the US
Borrower or any substantial part of its property, or otherwise, all as though
such payments had not been made.
2.7 Payments. (a) Each Subsidiary Guarantor hereby guarantees
that payments hereunder will be paid to the Administrative Agent without set-
off or counterclaim in the currency in which the Specified Obligations are
denominated at the office of the Administrative Agent located at 270 Park
Avenue, New York, New York 10017.
(b) The US Borrower hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in the
currency in which the Specified Obligations are denominated at the office of
the Administrative Agent located at 270 Park Avenue, New York, New York 10017.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Collateral
Agent, and hereby grants to the Collateral Agent, for the ratable benefit of
the Secured Parties, a security interest in, all of the following property now
owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"), as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of such Grantor's Obligations,:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
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(i) all Pledged Securities;
(j) all books and records pertaining to the Collateral; and
(k) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, "Collateral" shall not include,
with respect to any Grantor, any General Intangible or Intellectual Property to
the extent the grant by such Grantor of a security interest pursuant to this
Agreement in its rights under such General Intangible or Intellectual Property,
as the case may be, is prohibited by such General Intangible or Intellectual
Property, as the case may be, and the consent of applicable Persons has not
been obtained, provided that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest pursuant to
this Agreement in any Account or any money or other amounts due or to become
due under any such General Intangible or Intellectual Property, as the case may
be, to the extent provided in Section 9-318 of the Code as in effect on the
date hereof.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into
the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrowers thereunder, each Grantor hereby
represents and warrants to the Collateral Agent and each Secured Party that:
4.1 Representations in Credit Agreement. In the case of each
Subsidiary Guarantor, the representations and warranties set forth in Section 5
of the Credit Agreement as they relate to such Subsidiary Guarantor or to the
Loan Documents to which such Subsidiary Guarantor is a party, each of which is
hereby incorporated herein by reference, are true and correct, and the
Collateral Agent and each Secured Party shall be entitled to rely on each of
them as if they were fully set forth herein, provided that each reference in
each such representation and warranty to the US Borrower's knowledge shall, for
the purposes of this Section 4.1, be deemed to be a reference to such
Subsidiary Guarantor's knowledge.
4.2 Title; No Other Liens. Except for the security interest
granted to the Collateral Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as
have been filed in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, pursuant to this Agreement or as are permitted by the
Credit Agreement.
<PAGE> 16
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4.3 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) that are capable of perfection pursuant
to the Code upon completion of the filings and other actions specified on
Schedule 3 (which, in the case of all filings and other documents referred to
on said Schedule, have been delivered to the Collateral Agent in completed and
duly executed form) will constitute valid perfected security interests in all
of the Collateral in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, as collateral security for such Grantor's Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor
and (b) are prior to all other Liens on the Collateral in existence on the date
hereof except for Liens permitted by the Credit Agreement.
4.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office is specified on Schedule 4.
4.5 Inventory and Equipment. On the date hereof, the Inventory
and the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
4.6 Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
4.7 Pledged Securities. (a) The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of each Issuer owned by such
Grantor.
(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes, to the knowledge of
the Grantor that is the payee thereof, the legal, valid and binding obligation
of the obligor with respect thereto, enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Securities pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement.
4.8 Receivables. No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
in excess of $1,000,000 which has not been delivered to the Collateral Agent.
<PAGE> 17
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4.9 Intellectual Property. (a) Schedule 6 lists all
Intellectual Property owned by such Grantor in its own name on the date hereof.
(b) To the best of such Grantor's knowledge, each material
Copyright, Patent and Trademark is on the date hereof valid, subsisting,
unexpired, enforceable and has not been abandoned.
(c) Except as set forth in Schedule 6, none of the Copyrights,
Patents or Trademarks is on the date hereof the subject of any licensing or
franchise agreement.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of
any Copyright, Patent or Trademark in any respect that could reasonably be
expected to have a Material Adverse Effect.
(e) No action or proceeding is pending on the date hereof (i)
seeking to limit, cancel or question the validity of any material Copyright,
Patent or Trademark, or (ii) which, if adversely determined, would have a
material adverse effect on the value of any material Patent or Trademark.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Collateral Agent and
the Secured Parties that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Accommodation shall be outstanding
and the Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each
Subsidiary Guarantor, such Subsidiary Guarantor shall take, or shall refrain
from taking, as the case may be, each action that is necessary to be taken or
not taken, as the case may be, so that no Default or Event of Default is caused
by the failure to take such action or to refrain from taking such action by
such Subsidiary Guarantor or any of its Subsidiaries.
5.2 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper in excess of $1,000,000, such
Instrument or Chattel Paper shall be immediately delivered to the Collateral
Agent, duly indorsed in a manner reasonably satisfactory to the Collateral
Agent, to be held as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance. Such Grantor will maintain
insurance policies insuring the Inventory and Equipment pursuant to and in
accordance with the Credit Agreement.
5.4 Payment of Obligations. Such Grantor will pay and discharge
or otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of
<PAGE> 18
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income or profits therefrom, as well as all claims of any kind (including,
without limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings, reserves in conformity with GAAP with respect thereto
have been provided on the books of such Grantor and such proceedings could not
reasonably be expected to result in the sale, forfeiture or loss of any
material portion of the Collateral or any interest therein.
5.5 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Upon reasonable request of the Collateral Agent, such
Grantor will furnish to the Collateral Agent and the Secured Parties from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request
of the Collateral Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Collateral Agent may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby.
5.6 Changes in Locations, Name, etc. Such Grantor will not,
except upon not less than 15 days' prior written notice to the Collateral Agent
and delivery to the Collateral Agent of (a) all additional executed financing
statements and other documents reasonably requested by the Collateral Agent to
maintain the validity, perfection and priority of the security interests
provided for herein and (b) if applicable, a written supplement to Schedule 5
showing any additional location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule 5;
(ii) change the location of its chief executive office from
that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Collateral Agent in
connection with this Agreement would become misleading.
<PAGE> 19
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5.7 Pledged Securities. (a) If such Grantor shall become
entitled to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Collateral Agent and the Secured Parties, hold the
same in trust for the Collateral Agent and deliver the same forthwith to the
Collateral Agent in the exact form received, duly indorsed by such Grantor to
the Collateral Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor to be held by
the Collateral Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any Issuer shall be paid over
to the Collateral Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant
to the reorganization thereof, the property so distributed shall, unless
otherwise subject to a perfected security interest in favor of the Collateral
Agent, be delivered to the Collateral Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Collateral Agent, hold such money or property in trust
for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.
(b) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Collateral Agent promptly
in writing of the occurrence of any of the events described in Section 5.7(a)
with respect to the Pledged Securities issued by it and (iii) the terms of
Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Pledged Securities issued by it.
5.8 Receivables. (a) Other than in the ordinary course of
business, or as otherwise permitted by the Loan Documents, such Grantor will
not (i) grant any extension of the time of payment of any Receivable, (ii)
compromise or settle any Receivable for less than the full amount thereof,
(iii) release, wholly or partially, any Person liable for the payment of any
Receivable, (iv) allow any credit or discount whatsoever on any Receivable or
(v) amend, supplement or modify any Receivable in any manner that could
materially or adversely affect the value thereof.
(b) Such Grantor will take all actions necessary to give notice
pursuant to the U.S. Assignment of Claims Act or such other analogous law if a
material portion of the total amount of the Receivables is owing to
Governmental Authorities.
<PAGE> 20
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5.9 Intellectual Property. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) employ such Trademark with the appropriate notice of
registration, (iv) not adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless the Collateral Agent, for the
ratable benefit of the Secured Parties, shall obtain a perfected security
interest in such mark pursuant to this Agreement, and (v) not (and not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby such material Trademark may become invalidated.
(b) Such Grantor will not do any act, or omit to do any act,
whereby any material Patent may become abandoned or dedicated.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated. Such
Grantor will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights may become injected into the public domain.
(d) Such Grantor will notify the Collateral Agent immediately if
it knows, or has reason to know, that any application or registration relating
to any material Patent or Trademark may become abandoned or dedicated, or of
any adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or any court or tribunal in any
country) regarding such Grantor's ownership of any material Patent or Trademark
or its right to register the same or to keep and maintain the same.
(e) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(f) In the event that any material Patent or Trademark is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark and (ii) if such Patent or
Trademark is of material economic value, promptly notify the Collateral Agent
and the Secured Parties after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and
to recover any and all damages for such infringement, misappropriation or
dilution.
<PAGE> 21
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SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The
Collateral Agent hereby authorizes each Grantor to collect such Grantor's
Receivables, subject to the Collateral Agent's direction and control, and the
Collateral Agent may curtail or terminate said authority at any time after the
occurrence and during the continuance of an Event of Default. If required by
the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Receivables, when collected
by any Grantor, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Collateral Agent if required, in a Collateral Account
maintained under the sole dominion and control of the Collateral Agent, subject
to withdrawal by the Collateral Agent for the account of the Secured Parties
only as provided in Section 6.5, and (ii) until so turned over, shall be held
by such Grantor in trust for the Collateral Agent and the Secured Parties,
segregated from other funds of such Grantor. Each such deposit of Proceeds of
Receivables shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
(b) At the Collateral Agent's request, each Grantor shall
deliver to the Collateral Agent all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders, invoices and
shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a)
The Collateral Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Collateral Agent's reasonable satisfaction the existence, amount and terms of
any Receivables.
(b) Upon the request of the Collateral Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables that the Receivables have been
assigned to the Collateral Agent for the ratable benefit of the Secured Parties
and that payments in respect thereof shall be made directly to the Collateral
Agent.
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Collateral Agent nor any Secured Party shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any Secured Party of any payment relating thereto, nor
shall the Collateral Agent or any Secured Party be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) to make any payment, to make
any inquiry as to the nature or the sufficiency of any
<PAGE> 22
19
payment received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3 Pledged Securities. (a) Unless an Event of Default shall
have occurred and be continuing and the Collateral Agent shall have exercised
its right under Section 6.3(b), each Grantor shall be permitted to receive all
cash dividends paid in respect of the Pledged Stock and all payments made in
respect of the Pledged Notes, to the extent permitted in the Credit Agreement,
the Canadian Credit Agreement and to exercise all voting and corporate rights
with respect to the Pledged Securities; provided, however, that no vote shall
be cast or corporate right exercised or other action taken which, in the
Collateral Agent's reasonable judgment, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing, (i)
the Collateral Agent shall have the right to receive any and all cash
dividends, payments or other Proceeds paid in respect of the Pledged Securities
and make application thereof to the Obligations in accordance with the Sharing
Agreement, and (ii) any or all of the Pledged Securities may be registered in
the name of the Collateral Agent or its nominee, and the Collateral Agent or
its nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange, subscription and any other rights, privileges or options
pertaining to such Pledged Securities as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by any Grantor or the Collateral Agent of any
right, privilege or option pertaining to such Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Collateral Agent
may determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of
any Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Collateral Agent in writing that (x) states
that an Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Collateral Agent.
<PAGE> 23
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6.4 Proceeds to be Turned Over to Collateral Agent. In addition
to the rights of the Collateral Agent and the Secured Parties specified in
Section 6.1 with respect to payments of Receivables, if an Event of Default
shall occur and be continuing, unless otherwise agreed by the Collateral Agent
all Proceeds received by any Grantor consisting of cash, checks and other near-
cash items shall be held by such Grantor in trust for the Collateral Agent and
the Secured Parties, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Collateral Agent
in the exact form received by such Grantor (duly indorsed by such Grantor to
the Collateral Agent, if required). All Proceeds received by the Collateral
Agent hereunder shall be held by the Collateral Agent in a Collateral Account
maintained under its sole dominion and control. All Proceeds while held by the
Collateral Agent in a Collateral Account (or by such Grantor in trust for the
Collateral Agent and the Secured Parties) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed
upon by the US Borrower and the Collateral Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Collateral Agent's
election, the Collateral Agent may apply all or any part of Proceeds held in
any Collateral Account in payment of the Obligations in accordance with the
Sharing Agreement. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Accommodations shall be
outstanding and the Commitments shall have terminated shall be paid over to the
US Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur
and be continuing, the Collateral Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code or any other applicable law. Without limiting the generality of the
foregoing, the Collateral Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Collateral Agent or any Secured Party
or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Collateral Agent or any Secured
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived or released.
Each Grantor further agrees, at the Collateral Agent's request, to assemble the
Collateral and make it available to the Collateral Agent at places which the
Collateral Agent
<PAGE> 24
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shall reasonably select, whether at such Grantor's premises or elsewhere. The
Collateral Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Collateral Agent and the Secured Parties hereunder,
including, without limitation, reasonable attorneys' fees and disbursements of
the Collateral Agent, to the payment in whole or in part of the Obligations, in
accordance with the Sharing Agreement, and only after such application and
after the payment by the Collateral Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Collateral Agent account for the surplus, if any, to any
Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Collateral Agent or any
Secured Party arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
6.7 Registration Rights. (a) If the Collateral Agent shall
determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 6.6, and if in the opinion of the Collateral Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as
may be, in the reasonable opinion of the Collateral Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its best efforts to cause
the registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering
of the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the reasonable
opinion of the Collateral Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto. Each Grantor agrees
to cause such Issuer to comply with the provisions of the securities or "Blue
Sky" laws of any and all jurisdictions which the Collateral Agent shall
designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
<PAGE> 25
22
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales
of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid
and binding and in compliance with any and all other applicable Requirements of
Law. Each Grantor further agrees that a breach of any of the covenants
contained in this Section 6.7 will cause irreparable injury to the Collateral
Agent and the Secured Parties, that the Collateral Agent and the Secured
Parties have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
Code. Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Collateral Agent or any Secured Party to collect such deficiency.
SECTION 7. THE COLLATERAL AGENT
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be reasonably necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Collateral Agent the power and right,
on behalf of such Grantor, without notice to or assent by such Grantor, to do
any or all of the following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment
of moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the
<PAGE> 26
23
Collateral Agent for the purpose of collecting any and all such
moneys due under any Receivable or with respect to any other
Collateral whenever payable;
(ii) in the case of any Copyright, Patent or Trademark,
execute and deliver any and all agreements, instruments,
documents and papers as the Collateral Agent may request to
evidence the Collateral Agent's and the Secured Parties' security
interest in such Copyright, Patent or Trademark and the goodwill
and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral, effect any repairs or
any insurance called for by the terms of this Agreement and pay
all or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for
in Section 6.6 or 6.7, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
(v) (1) direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Collateral Agent or
as the Collateral Agent shall direct; (2) ask or demand for,
collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (3) sign and indorse
any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any
of the Collateral; (4) commence and prosecute any suits, actions
or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and
to enforce any other right in respect of any Collateral; (5)
defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (6) settle, compromise or
adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Collateral
Agent may deem appropriate; (7) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any
such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Collateral Agent
were the absolute owner thereof for all purposes, and do, at the
Collateral Agent's option and such Grantor's expense, at any
time, or from time to time, all acts and things which the
Collateral Agent deems necessary to protect, preserve or realize
upon the Collateral and the Collateral Agent's and the Secured
Parties' security interests
<PAGE> 27
24
therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due ABR Loans under the Credit Agreement, from the date
of payment by the Collateral Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Collateral Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Collateral Agent. The Collateral Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Collateral Agent deals with
similar property for its own account. Neither the Collateral Agent, any
Secured Party nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Collateral Agent
and the Secured Parties hereunder are solely to protect the Collateral Agent's
and the Secured Parties' interests in the Collateral and shall not impose any
duty upon the Collateral Agent or any Secured Party to exercise any such
powers. The Collateral Agent and the Secured Parties shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct or their
breach of the Loan Documents.
7.3 Execution of Financing Statements. Pursuant to Section 9-
402 of the Code and any other applicable law, each Grantor authorizes the
Collateral Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the
<PAGE> 28
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Collateral Agent reasonably determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.
7.4 Authority of Collateral Agent. Each Grantor acknowledges
that the rights and responsibilities of the Collateral Agent under this
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Collateral Agent and the
Secured Parties, be governed by the Sharing Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. Subject to the terms of the Credit
Agreement, the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified by a written instrument executed by each
affected Grantor and the Collateral Agent, provided that any provision of this
Agreement imposing obligations on any Grantor may be waived by the Collateral
Agent in a written instrument executed by the Collateral Agent.
8.2 Notices. All notices, requests and demands to or upon the
Collateral Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 12.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1 and any such notice,
received or demand to or upon the Collateral Agent shall be addressed to the
Collateral Agent at: One Chase Manhattan Plaza, New York, New York 10081
Attention: Janet Belden Telecopy: (212) 552-5658.
8.3 No Waiver by Course of Conduct; Cumulative Remedies.
Neither the Collateral Agent nor any Secured Party shall by any act (except by
a written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Collateral Agent or any Secured Party,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Collateral Agent or any Secured
Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Collateral Agent or such
Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are
<PAGE> 29
26
cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay or reimburse each Secured Party and the Collateral Agent for all
its costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including, without limitation, the fees and disbursements
of counsel to the Collateral Agent.
(b) Each Guarantor agrees to pay, and to save the Collateral
Agent and the Secured Parties harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Collateral
Agent and the Secured Parties harmless from, any and all 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 (collectively, the "indemnified liabilities") to the extent the US
Borrower would be required to do so pursuant to Section 12.5 of the Credit
Agreement.
(d) The agreements in this Section 8.4 shall survive repayment
of the Obligations and all other amounts payable under the Credit Agreement and
the other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Collateral Agent and the Secured Parties and their successors and
assigns; provided that no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Collateral Agent.
8.6 Set-Off. Each Guarantor hereby irrevocably authorizes the
Collateral Agent and each Secured Party at any time and from time to time while
an Event of Default pursuant to Section 9(a) of the Credit Agreement shall have
occurred and be continuing, without notice to such Guarantor, any other
Guarantor or the US Borrower, any such notice being expressly waived by each
Guarantor and by the US Borrower, to set-off and appropriate and apply 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 the Collateral Agent or such Secured
Party to or for the credit or the account of such Guarantor, or any part
thereof in such amounts as the Collateral Agent or such Secured Party may
elect, against and on account of the obligations and liabilities of such
Guarantor to the Collateral Agent or such Secured Party hereunder and claims of
every nature and description of the Collateral Agent or such Secured
<PAGE> 30
27
Party against such Guarantor, in any currency, whether arising hereunder, under
the Credit Agreement, any other Loan Document or otherwise, as the Collateral
Agent or such Secured Party may elect, whether or not the Collateral Agent or
any Secured Party has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
Collateral Agent and each Secured Party shall notify such Guarantor promptly of
any such set-off and the application made by the Collateral Agent or such
Secured Party of the proceeds thereof, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of the Collateral Agent and each Secured Party under this Section 8.6
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Collateral Agent or such Secured Party may
have.
8.7 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.
8.8 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.
8.9 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Collateral Agent and the Secured
Parties with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Collateral Agent or any
Secured Party relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Subsidiary
Guarantor 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;
<PAGE> 31
28
(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 Subsidiary Guarantor at its address referred to in
Section 8.2 or at such other address of which the Collateral Agent shall
have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.
8.13 Acknowledgements. Each Subsidiary Guarantor hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents to which it
is a party;
(b) neither the Collateral Agent nor any Secured Party has any
fiduciary relationship with or duty to any Subsidiary Guarantor arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Subsidiary Guarantors, on
the one hand, and the Collateral Agent and Secured Parties, on the other
hand, in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Secured Parties or among the Subsidiary Guarantors and
the Secured Parties.
8.14 WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
8.15 Additional Grantors. Each Subsidiary of the US Borrower
that is required to become a party to this Agreement pursuant to Section 7.12
of the Credit Agreement shall become a Grantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.
<PAGE> 32
29
8.16 Releases. (a) At such time as the Obligations shall have
been paid in full, the Commitments have been terminated and no Accommodations
shall be outstanding, the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Collateral Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor
following any such termination, the Collateral Agent shall deliver to such
Grantor any Collateral held by the Collateral Agent hereunder, and execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Collateral Agent, at the request and sole expense of such
Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral. At the request and sole expense of the US
Borrower, a Subsidiary Guarantor shall be released from its obligations
hereunder in the event that all the Capital Stock of such Subsidiary Guarantor
shall be sold, transferred or otherwise disposed of in a transaction permitted
by the Credit Agreement; provided that the US Borrower shall have delivered to
the Collateral Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the US Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
<PAGE> 33
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
VIASYSTEMS, INC., as a Grantor
By: /s/
---------------------------
Title:
VIASYSTEMS, GROUP, INC., as a Grantor
By: /s/
---------------------------
Title:
VIASYSTEMS TECHNOLOGIES CORP., as a
Subsidiary Guarantor and a Grantor
By: /s/
---------------------------
Title:
VIASYSTEMS INTERNATIONAL, INC., as a
Subsidiary Guarantor and a Grantor
By: /s/
---------------------------
Title:
<PAGE> 34
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
c/o Mills & Partners, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
<PAGE> 35
Schedule 2
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
<TABLE>
<CAPTION>
Stock Certificate No.
Grantor Issuer Class of Stock No. of Shares
---------------- ----------------------- -------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
Holdings Viasystems, Inc. Common 001 1,000
US Borrower Viasystems Common [002] 1,000
Technologies Corp.
US Borrower Viasystems Common 002 1,000
International,
Inc.
</TABLE>
===============================================================================
PLEDGED NOTES:
<TABLE>
<CAPTION>
Issuer Payee Principal Amount
----------------------------------------------- ---------------------------- ----------------------------
<S> <C> <C>
PCB Investments plc Viasystems, Inc. L.80,000,000
Circo Craft Co. Inc. Viasystems, Inc. C$65,000,000
Viasystems Technologies Corp. Viasystems, Inc. $175,000,000
</TABLE>
<PAGE> 36
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UCC FILING JURISDICTIONS
<TABLE>
<CAPTION>
============================================================================================================
Grantor's Name and Address Filing Office(s) and State
<S> <C>
============================================================================================================
Viasystems Group, Inc. Delaware Secretary of State
c/o Mills & Partners, Inc. Missouri Secretary of State
101 South Hanley Road St. Louis City, Missouri
Suite 400 St. Louis County, Missouri
St. Louis, Missouri 63105 Texas Secretary of State
- ------------------------------------------------------------------------------------------------------------
Viasystems, Inc. Delaware Secretary of State
c/o Mills & Partners, Inc. Missouri Secretary of State
101 South Hanley Road St. Louis City, Missouri
Suite 400 St. Louis County, Missouri
St. Louis, Missouri 63105 Texas Secretary of State
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
============================================================================================================
Grantor's Name and Address Filing Office(s) and State
<S> <C>
============================================================================================================
Viasystems Technologies Corp. Delaware Secretary of State
c/o Mills & Partners, Inc. Colorado Secretary
101 South Hanley Road Adams County, Colorado
Suite 400 Massachusetts Secretary of State
St. Louis, Missouri 63105 Lawrence Town Clerk, Massachusetts
Missouri Secretary of State
St. Louis City, Missouri
St. Louis County, Missouri
Ohio Secretary
Franklin County, Ohio
Oklahoma County, Oklahoma
Virginia Secretary of State
Richmond Independent City, Virginia
Texas Secretary of State
============================================================================================================
Viasystems International, Inc. Delaware Secretary of State
c/o Mills & Partners, Inc. Missouri Secretary of State
101 South Hanley Road St. Louis City, Missouri
Suite 400 St. Louis County, Missouri
St. Louis, Missouri 63105 Texas Secretary of State
============================================================================================================
</TABLE>
<PAGE> 38
Patent and Trademark Filings
US Patent and Trademark Office
Actions with respect to Pledged Stock
NONE
Other Actions
NONE
<PAGE> 39
Schedule 4
JURISDICTION OF CHIEF EXECUTIVE OFFICE LOCATIONS
<TABLE>
<CAPTION>
====================================================================================================================================
Chief
Executive Books and Chattel
Grantor's Name Office Records Paper Inventory Equipment Fixtures
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Viasystems Group, Inc.
c/o Mills & Partners, Inc.
101 South Hanley Road X X
Suite 400
St. Louis, Missouri 63105
- ------------------------------------------------------------------------------------------------------------------------------------
Viasystems, Inc.
c/o Mills & Partners, Inc.
101 South Hanley Road X X
Suite 400
St. Louis, Missouri 63105
- ------------------------------------------------------------------------------------------------------------------------------------
Viasystems Technologies Corp.
c/o Mills & Partners, Inc.
101 South Hanley Road X X
Suite 400
St. Louis, Missouri 63105
- ------------------------------------------------------------------------------------------------------------------------------------
Viasystems International, Inc.
c/o Mills & Partners, Inc.
101 South Hanley Road X X
Suite 400
St. Louis, Missouri 63105
- ------------------------------------------------------------------------------------------------------------------------------------
Viasystems Technologies Corp.
4500 South Laburnum Avenue X X X X
Richmond, Virginia 23231
- ------------------------------------------------------------------------------------------------------------------------------------
Circo Craft Co. Inc.
1501 McGill College Avenue
26th Floor X X
Montreal, Quebec H3A 3N9
- ------------------------------------------------------------------------------------------------------------------------------------
Circo Craft Co. Inc.
17600 Trans-Canada Highway X X X X
Kirkland, Quebec H9J 3A3
- ------------------------------------------------------------------------------------------------------------------------------------
Circo Craft Co. Inc.
205 Blvd. Brunswick X X X X
Pointe Clarie, Quebec H9R 1A5
- ------------------------------------------------------------------------------------------------------------------------------------
Circo Craft Co. Inc.
379 Brignon X X X X
Granbury, Quebec J2G 8N5
- ------------------------------------------------------------------------------------------------------------------------------------
Circo Caribe Corporation
Road 362 KM 0.1
Frente URG LEL Convento X X
Saint Germain, Puerto Rico 00683
- ------------------------------------------------------------------------------------------------------------------------------------
Circo Technologies, S.A.
c/o Mills & Partners, Inc. X
101 South Hanley Road
Suite 400
St. Louis, MO 63106
====================================================================================================================================
</TABLE>
<PAGE> 40
Schedule 5
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
------- ---------
Viasystems Technologies Corp. Richmond, Virginia
Viasystems Group, Inc. None
Viasystems, Inc. None
Viasystems International, Inc. None
<PAGE> 41
Schedule 6
INTELLECTUAL PROPERTY
Tradenames
(unregistered)
None.
U.S. Unregistered Trademark
R
U.S. Patents and Applications
1. U.S. Patent No. 4,340,092: Methods of and Apparatus for Straightening
Backplane Supported Pins.
2. U.S. Patent No. 4,340,093: Method of Straightening Backplane-Supported
Pins.
3. U.S. Patent No. 4,340,094: Method of Straightening Backplane-Supported
Pins.
4. U.S. Patent No. 4,365,398: Method and Apparatus for Assembling
Intermediate-Web Held Terminals.
5. U.S. Patent No. 4,398,628: Methods of Inserting Pins into an Apparatus
and a Pin Supporting Shuttle Used Therefor.
6. U.S. Patent No. 4,467,523: Methods and Apparatus for Inserting Pins into
a Substrate.
7. U.S. Patent No. 4,793,052: Method for Positioning a Panel.
8. U.S. Patent No. 4,978,423: Selective Solder Formation on Printed Circuit
Boards.
9. U.S. Patent No. 5,110,036: Method and Apparatus for Solder Leveling of
Printed Circuit Boards.
10. U.S. Patent No. 5,206,820: Metrology System for Analyzing Panel
Misregistration in a Panel Manufacturing Process and Providing
Appropriate Information for Adjusting Panel Manufacturing Processes.
<PAGE> 42
2
11. U.S. Patent No. 5,335,405: Method and Apparatus for Aligning Phototools
for Photoprocessing of Printed Circuit Boards.
12. U.S. Patent Application No. 08/520192: Innerlayer Surface Treating Rack.
Licensed U.S. Patents
1. U.S. Patent No. 4,205,769: Method of and Systems for Counting Holes For
and Detecting Missing Holes in a Web.
2. U.S. Patent No. 4,206,543: Pin Insertion Tool.
3. U.S. Patent No. 4,216,580: Methods of and Apparatus for Assembling
Articles with a Support.
4. U.S. Patent 4,268,172: Method of and System for Automatically Adjusting
a Threshold Level of a Pulse Generating Circuit to Inspect a Web.
5. U.S. Patent 4,285,123: Pin Removal Tool.
6. U.S. Patent 4,372,044: Method and Apparatus for Straightening Pins.
7. U.S. Patent 4,373,656: Method of Preserving Solderability of Copper.
8. U.S. Patent 4,556,903: Inspection Scanning System.
9. U.S. Patent 4,600,951: Scanning Sample Signal Generation, Data
Digitizing and Retiming System.
10. U.S. Patent 4,628,022: Multilayer Circuit Board Fabrication Process and
Polymer Insulator Used Therein.
11. U.S. Patent 4,759,667: Twist Drill for Drilling Printed Circuit Board
Laminates and Having Drill Point Geometry.
12. U.S. Patent 4,974,335: Identification of Workpiece Information.
13. U.S. Patent 5,014,413: Method of Apparatus for Solder Leveling of
Printed Circuit Boards.
14. U.S. Patent 5,116,718: Contact Printing Process.
15. U.S. Patent 5,201,584: Mechanism for Preloading Linear Baring Slides.
<PAGE> 43
3
16. U.S. Patent 5,388,756: Method and Apparatus For Removing Solder
Contaminants from Solder.
17. U.S. Patent 5,557,690: Method and System for Locating Objects with
Subpixel Precession.
18. U.S. Patent Application 08/497120: Device for Extracting, Sorting,
Handling Drill Bit Cassettes.
<PAGE> 44
ACKNOWLEDGEMENT AND CONSENT1
The undersigned hereby acknowledges receipt of a copy of the Amended and
Restated Guarantee and Collateral Agreement dated as of April __, 1997 (the
"Agreement"), made by the Grantors parties thereto for the benefit of The Chase
Manhattan Bank, as Collateral Agent. The undersigned agrees for the benefit of
the Collateral Agent and the Secured Parties as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Collateral Agent promptly in writing
of the occurrence of any of the events described in Section 5.8(a) of the
Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(a) or 6.7 of the Agreement.
[NAME OF ISSUER]
By
---------------------------------
Title
------------------------------
Address for Notices:
------------------------------------
------------------------------------
Fax:
-------------------------------
- -----------------
1. This consent is necessary only with respect to any Issuer which is
not also a Grantor. This consent may be modified or eliminated with respect to
any Issuer that is not controlled by a Grantor. If a consent is required, its
execution and delivery should be included among the conditions to the initial
borrowing specified in the Amended and Restated Credit Agreement.
<PAGE> 45
Annex 1 to
Amended and Restated Guarantee and
Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, ____, made by
______________________________, a ______________ (the "Additional Grantor"), in
favor of The Chase Manhattan Bank, as administrative agent (in such capacity,
the "Collateral Agent"), for the Secured Parties (as defined below). All
capitalized terms not defined herein shall have the meaning ascribed to them in
the Credit Agreement referred to below.
W I T N E S E T H :
WHEREAS, pursuant to the Amended and Restated Credit Agreement
dated as of April __, 1997 (as amended, modified, supplemented, restated and in
effect from time to time, the "Credit Agreement"), among Viasystems Group,
Inc., a Delaware corporation ("Holdings"), Viasystems, Inc., a Delaware
corporation (the "US Borrower"), Circo Craft Co., Inc., a Quebec corporation
(the "Canadian Borrower"), PCB Investments plc, a corporation organized under
the laws of England and Wales ("English Bidco"), Forward Group plc, a
corporation organized under the laws of England and Wales (the "English
Borrower"), any Future Foreign Subsidiary Borrowers which may from time to time
become parties thereto, the several banks and other financial institutions from
time to time parties thereto (the "Lenders"), The Chase Manhattan Bank of
Canada ("Chase Canada"), as administrative agent for the Canadian Lenders (in
such capacity, the "Canadian Agent"), Chase Manhattan International Limited, as
administrative agent for the English Lenders (in such capacity, the "English
Agent"), any Future Foreign Agent which may from time to time be appointed
hereunder and The Chase Manhattan Bank ("Chase"), as administrative agent for
the Lenders (in such capacity, the "Administrative Agent"), the Lenders have
severally agreed to make extensions of credit to the Borrowers upon the terms
and subject to the conditions set forth therein;
WHEREAS, in connection with the Credit Agreement, Holdings, the
US Borrower and certain of their Subsidiaries (other than the Additional
Grantor) have entered into the Amended and Restated Guarantee and Collateral
Agreement, dated as of April __, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Guarantee and Collateral Agreement") in favor
of the Collateral Agent for the benefit of the Secured Parties;
<PAGE> 46
2
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby (a) guarantees the Domestic
Obligations as set forth in Section 2 of the Guarantee and Collateral
Agreement, (b) grants to the Collateral Agent for the benefit of the Secured
Parties a security interest in the Collateral on the terms and conditions of
the Guarantee and Collateral Agreement and (c) expressly assumes all
obligations and liabilities of a Grantor thereunder. The information set forth
in Annex 1-A hereto is hereby added to the information set forth in Schedules
____________2 to the Guarantee and Collateral Agreement. The Additional
Grantor hereby represents and warrants that each of the representations and
warranties contained in Section 4 of the Guarantee and Collateral Agreement is
true and correct on and as the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
--------------------------------
Name:
Title:
- -----------------
2. Refer to each Schedule which needs to be supplemented.
<PAGE> 1
EXHIBIT 4.6
GUARANTEE AND COLLATERAL AGREEMENT SUPPLEMENT
GUARANTEE AND COLLATERAL AGREEMENT SUPPLEMENT, dated as of
June __, 1997 (this "Supplement"), made by Viasystems, Inc., a Delaware
corporation (the "US Borrower"), in favor of The Chase Manhattan Bank, as
administrative agent (in such capacity, the "Collateral Agent"), for the
Secured Parties (as defined below). All capitalized terms not defined herein
shall have the meaning ascribed to them in the Credit Agreement referred to
below.
W I T N E S S E T H :
WHEREAS, pursuant to the Second Amended and Restated Credit
Agreement dated as of June 5, 1997 (as amended, modified, supplemented,
restated and in effect from time to time, the "Credit Agreement"), among
Viasystems Group, Inc., a Delaware corporation ("Holdings"), the US Borrower,
Circo Craft Co., Inc., a Quebec corporation (the "Canadian Borrower"), PCB
Investments plc, a corporation organized under the laws of England and Wales
("English Bidco"), Forward Group plc, a corporation organized under the laws of
England and Wales (the "English Borrower"), Chips Acquisition Limited, a
private limited company organized under the laws of England and Wales ("Chips
Limited"), Interconnection Systems (Holdings) Limited, a private limited
company organized under the laws of England and Wales ("ISL"), any Future
Foreign Subsidiary Borrowers which may from time to time become parties
thereto, the several banks and other financial institutions from time to time
parties thereto (the "Lenders"), The Chase Manhattan Bank of Canada ("Chase
Canada"), as administrative agent for the Canadian Lenders (in such capacity,
the "Canadian Agent"), Chase Manhattan International Limited, as administrative
agent for the English Lenders (in such capacity, the "English Agent"), any
Future Foreign Agent which may from time to time be appointed hereunder and The
Chase Manhattan Bank ("Chase"), as administrative agent for the Lenders (in
such capacity, the "Administrative Agent"), the Lenders have severally agreed
to make extensions of credit to the Borrowers upon the terms and subject to the
conditions set forth therein;
WHEREAS, in connection with the Credit Agreement, Holdings,
the US Borrower and certain of their Subsidiaries have entered into the Amended
and Restated Guarantee and Collateral Agreement, dated as of April 11, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
and Collateral Agreement") in favor of the Collateral Agent for the benefit of
the Secured Parties;
<PAGE> 2
2
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Supplement, the US Borrower, grants to the Collateral Agent for
the benefit of the Secured Parties a security interest in the Collateral on the
terms and conditions of the Guarantee and Collateral Agreement. The
information set forth in Annex 1-A hereto is hereby added to the information
set forth in Schedule 2 to the Guarantee and Collateral Agreement. The US
Borrower hereby represents and warrants that each of the representations and
warranties contained in Section 4 of the Guarantee and Collateral Agreement is
true and correct on and as the date hereof (after giving effect to this
Supplement) as if made on and as of such date.
2. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE> 3
3
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
and Collateral Agreement Supplement to be duly executed and delivered as of the
date first above written.
VIASYSTEMS, INC.
By:/s/
---------------------------------
Title:
Acknowledged and Consented to:
VIASYSTEMS GROUP, INC.
By:/s/
-------------------------
Title:
VIASYSTEMS TECHNOLOGIES CORP.
By:/s/
-------------------------
Title:
VIASYSTEMS INTERNATIONAL, INC.
By:/s/
-------------------------
Title:
<PAGE> 4
4
ANNEX 1-A TO
GUARANTEE AND COLLATERAL
AGREEMENT SUPPLEMENT
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED NOTES:
<TABLE>
<CAPTION>
Issuer Payee Principal Amount
- -------------------------------------------------------------------------
<S> <C> <C>
Chips Acquisition Limited Viasystems, Inc. L.185,200,000
</TABLE>
<PAGE> 1
EXHIBIT 10.3
WTM REDRAFT 6/18/97
BLACK-LINED
AMENDED AND RESTATED
VIASYSTEMS GROUP, INC.
1997 STOCK OPTION PLAN
1. Purpose. The Viasystems Group, Inc. 1997 Stock Option Plan (the
"Plan") is intended to provide incentives which will attract, retain and
motivate highly competent persons as employees of Viasystems Group, Inc. (the
"Company") and of any parent corporation or subsidiary corporation now existing
or hereafter formed or acquired, by providing them opportunities to acquire
shares of the common stock, par value $.01 per share, of the Company ("Common
Stock") or to receive monetary payments based on the value of such shares
pursuant to the Benefits (as defined below) described herein. Furthermore, the
Plan is intended to assist in aligning the interests of the Company's employees
to those of its stockholders.
2. Administration.
(a) The Plan will be administered by a committee of the Board of
Directors of the Company (the "Board") or a subcommittee of a committee of the
Board (which may be the Company's Compensation Committee), appointed by the
Board from among its members (the "Committee"), and whenever the Company shall
have a class of equity securities registered pursuant to Section 12 of the
Exchange Act (as hereinafter defined), each member of the Committee shall be
comprised solely of not less than two members who shall be "Non-Employee
Directors" within the meaning of Rule 16b-3(b)(3) (or any successor rule (Rule
16b-3")) promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Committee is authorized, subject to the provisions of the
Plan, to establish such rules and regulations as it deems necessary for the
proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan and any
Benefits (as defined below) granted hereunder as it deems necessary or
advisable. All determinations and interpretations made by the Committee shall
be binding and conclusive on all participants and their legal representatives.
No member of the Board of Directors, no member of the Committee and no employee
of the Company shall be liable for any act or failure to act hereunder, except
in circumstances involving his or her bad faith, or for any act or failure to
act hereunder by any other member or employee or by any agent to whom duties in
connection with the administration of this Plan have been delegated. The
Company shall indemnify members of the Committee and any agent of the Committee
who is an employee of the Company, against any and all liabilities or expenses
to which they may be subjected by reason of any act or failure to act with
respect to their duties on behalf of the Plan, except in circumstances
involving such person's bad faith.
(b) The Committee may delegate to one or more of its members, or to
one or more agents, such administrative duties as it may deem advisable, and
the Committee, or any person to whom it has delegated duties as aforesaid, may
employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan. The Committee may
<PAGE> 2
employ such legal or other counsel, consultants and agents as it may deem
desirable for the administration of the Plan and may rely upon any opinion or
computation received from any such counsel, consultant or agent. Expenses
incurred by the Committee in the engagement of such counsel, consultant or
agent shall be paid by the Company, or the subsidiary or affiliate whose
employees have benefitted from the Plan, as determined by the Committee.
3. Participants. Participants will consist of such employees of the
Company and any parent corporation or subsidiary corporation of the Company as
the Committee in its sole discretion determines to be in a position to impact
the success and future growth and profitability of the Company and whom the
Committee may designate from time to time to receive Benefits under the Plan.
Designation of a participant in any year shall not require the Committee to
designate such person to receive a Benefit in any other year or, once
designated, to receive the same type or amount of Benefit as granted to the
participant in any other year. The Committee shall consider such factors as it
deems pertinent in selecting participants and in determining the type and
amount of their respective Benefits.
4. Type of Benefits. Benefits under the Plan may be granted in any
one or a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c)
Stock Awards, (d) Performance Awards, and (e) Stock Units (each as described
below, and collectively, the "Benefits"). Stock Awards, Performance Awards,
and Stock Units may, as determined by the Committee in its discretion,
constitute Performance-Based Awards, as described in Section 11 below.
Benefits shall be evidenced by agreements (which need not be identical) in such
forms as the Committee may from time to time approve; provided, however, that
in the event of any conflict between the provisions of the Plan and any such
agreements, the provisions of the Plan shall prevail.
5. Common Stock Available Under the Plan. The aggregate number of
shares of Common Stock that may be subject to Benefits, including Stock
Options, granted under this Plan shall be 8,409,782 shares of Common Stock,
which may be authorized and unissued or treasury shares, subject to any
adjustments made in accordance with Section 12 hereof. Other than those shares
of Common Stock subject to Benefits that are cancelled or terminated as a
result of the Committee's exercise of its discretion with respect to
Performance-Based Awards as provided for in Section 11, any shares of Common
Stock subject to a Stock Option or Stock Appreciation Right which for any
reason is cancelled or terminated without having been exercised, any shares
subject to Stock Awards, Performance Awards or Stock Units which are forfeited,
any shares subject to Performance Awards settled in cash or any shares
delivered to the Company as part of full payment for the exercise of a Stock
Option or Stock Appreciation Right shall again be available for Benefits under
the Plan. The preceding sentence shall apply only for purposes of determining
the aggregate number of shares of Common Stock subject to Benefits and shall
not apply for purposes of determining the maximum number of shares of Common
Stock subject to Benefits (including the maximum number of shares of Common
Stock subject to Stock Options and Stock Appreciation Rights) that any
individual participant may receive.
6. Stock Options. Stock Options will consist of awards from the
Company that will enable the holder to purchase a specific number of shares of
Common Stock, at set terms and at a fixed purchase price. Stock Options may be
"incentive stock options" ("Incentive Stock Options"), within
2
<PAGE> 3
the meaning of Section 422 of the Code, or Stock Options which do not
constitute Incentive Stock Options ("Nonqualified Stock Options"). The
Committee will have the authority to grant to any participant one or more
Incentive Stock Options, Nonqualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Each Stock
Option shall be subject to such terms and conditions consistent with the Plan
as the Committee may impose from time to time, subject to the following
limitations:
(a) Exercise Price. Each Stock Option granted hereunder shall
have such per-share exercise price as the Committee may determine at
the date of grant; provided, however, subject to subsection (d) below,
that the per- share exercise price shall not be less than 100% of the
Fair Market Value (as defined below) of the Common Stock on the date
the option is granted.
(b) Payment of Exercise Price. The option exercise price may be
paid in cash or, in the discretion of the Committee determined at the
date of grant, by the delivery of shares of Common Stock of the
Company then owned by the participant, by the withholding of shares of
Common Stock for which a Stock Option is exercisable, or by a
combination of these methods. In the discretion of the Committee
determined at the date of grant, payment may also be made by
delivering a properly executed exercise notice to the Company together
with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the
exercise price. To facilitate the foregoing, the Company may enter
into agreements for coordinated procedures with one or more brokerage
firms. The Committee may prescribe any other method of paying the
exercise price that it determines to be consistent with applicable law
and the purpose of the Plan, including, without limitation, in lieu of
the exercise of a Stock Option by delivery of shares of Common Stock
of the Company then owned by a participant, providing the Company with
a notarized statement attesting to the number of shares owned, where,
upon verification by the Company, the Company would issue to the
participant only the number of incremental shares to which the
participant is entitled upon exercise of the Stock Option. In
determining which methods a participant may utilize to pay the
exercise price, the Committee may consider such factors as it
determines are appropriate.
(c) Exercise Period. Stock Options granted under the Plan shall
be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee; provided, however,
that no Stock Option shall be exercisable later than ten years after
the date it is granted. All Stock Options shall terminate at such
earlier times and upon such conditions or circumstances as the
Committee shall in its discretion set forth in such option agreement
at the date of grant.
(d) Limitations on Incentive Stock Options. Incentive Stock
Options may be granted only to participants who are employees of the
Company or subsidiary corporation of the Company at the date of grant.
The aggregate market value (determined as of the time the option is
granted) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by a participant during any
calendar year (under all option plans of the Company) shall not exceed
$100,000; provided that to the extent stock options issued
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<PAGE> 4
as Incentive Stock Options first become exercisable during a calendar
year in excess of such $100,000 limitation, such excess Stock Option
shall be treated as Nonqualified Stock Options. For purposes of the
preceding sentence, (i) Incentive Stock Options will be taken into
account in the order in which they are granted and (ii) Incentive
Stock Options granted before 1987 shall not be taken into account.
Incentive Stock Options may not be granted to any participant who, at
the time of grant, owns stock possessing (after the application of the
attribution rules of Section 424(d) of the Code) more than 10% of the
total combined voting power of all outstanding classes of stock of the
Company or any subsidiary corporation of the Company, unless the
option price is fixed at not less than 110% of the Fair Market Value
of the Common Stock on the date of grant and the exercise of such
option is prohibited by its terms after the expiration of five years
from the date of grant of such option. Notwithstanding anything to
the contrary contained herein, no Incentive Stock Option may be
exercised later than ten years after the date it is granted. In
addition, no Incentive Stock Option shall be issued to a participant
in tandem with a Nonqualified Stock Option.
7. Stock Appreciation Rights. The Committee may, in its discretion,
grant Stock Appreciation Rights to the holders of any Stock Options granted
hereunder. In addition, Stock Appreciation Rights may be granted independently
of, and without relation to, options. A Stock Appreciation Right means a right
to receive a payment, in cash, Common Stock or a combination thereof, in an
amount equal to the excess of (x) the Fair Market Value, or other specified
valuation, of a specified number of shares of Common Stock on the date the
right is exercised over (y) the Fair Market Value, or other specified valuation
(which shall be no less than the Fair Market Value), of such shares of Common
Stock on the date the right is granted, all as determined by the Committee;
provided, however, that if a Stock Appreciation Right is granted retroactively
in tandem with or in substitution for a Stock Option, the designated Fair
Market Value in the award agreement may be the Fair Market Value on the date
such Stock Option was granted. Each Stock Appreciation Right shall be subject
to such terms and conditions as the Committee shall impose from time to time.
8. Stock Awards. The Committee may, in its discretion, grant Stock
Awards (which may include mandatory payment of bonus incentive compensation in
stock) consisting of Common Stock issued or transferred to participants with or
without other payments therefor as additional compensation for services to the
Company. Stock Awards may be subject to such terms and conditions as the
Committee determines appropriate, including, without limitation, restrictions
on the sale or other disposition of such shares, the right of the Company to
reacquire such shares for no consideration upon termination of the
participant's employment within specified periods, and may constitute
Performance-Based Awards, as described below. The Committee may require the
participant to deliver a duly signed stock power, endorsed in blank, relating
to the Common Stock covered by such an Award. The Committee may also require
that the stock certificates evidencing such shares be held in custody or bear
restrictive legends until the restrictions thereon shall have lapsed. The
Stock Award shall specify whether the participant shall have, with respect to
the shares of Common Stock subject to a Stock Award, all of the rights of a
holder of shares of Common Stock of the Company, including the right to receive
dividends and to vote the shares.
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<PAGE> 5
9. Performance Awards.
(a) Performance Awards may be granted to participants at any time and
from time to time, as shall be determined by the Committee. Performance Awards
may, as determined by the Committee in its sole discretion, constitute
Performance-Based Awards. The Committee shall have complete discretion in
determining the number, amount and timing of awards granted to each
participant. Such Performance Awards may be in the form of shares of Common
Stock or Stock Units. Performance Awards may be awarded as short-term or
long-term incentives. With respect to those Performance Awards that are
intended to constitute Performance-Based Awards, the Committee shall set
performance targets at its discretion which, depending on the extent to which
they are met, will determine the number and/or value of Performance Awards that
will be paid out to the participants, and may attach to such Performance Awards
one or more restrictions. Performance targets may be based upon, without
limitation, Company-wide, divisional and/or individual performance.
(b) With respect to those Performance Awards that are not intended to
constitute Performance-Based Awards, the Committee shall have the authority at
any time to make adjustments to performance targets for any outstanding
Performance Awards which the Committee deems necessary or desirable unless at
the time of establishment of goals the Committee shall have precluded its
authority to make such adjustments.
(c) Payment of earned Performance Awards shall be made in accordance
with terms and conditions prescribed or authorized by the Committee. The
participant may elect to defer, or the Committee may require or permit the
deferral of, the receipt of Performance Awards upon such terms as the Committee
deems appropriate.
10. Stock Units.
(a) The Committee may, in its discretion, grant Stock Units to
participants hereunder. Stock Units may, as determined by the Committee in its
sole discretion, constitute Performance-Based Awards. The Committee shall
determine the criteria for the vesting of Stock Units. A Stock Unit granted by
the Committee shall provide payment in shares of Common Stock at such time as
the award agreement shall specify. Shares of Common Stock issued pursuant to
this Section 10 may be issued with or without other payments therefor as may be
required by applicable law or such other consideration as may be determined by
the Committee. The Committee shall determine whether a participant granted a
Stock Unit shall be entitled to a Dividend Equivalent Right (as defined below).
(b) Upon vesting of a Stock Unit, unless the Committee has determined
to defer payment with respect to such unit or a Participant has elected to
defer payment under subsection (c) below, shares of Common Stock representing
the Stock Units shall be distributed to the participant unless the Committee,
with the consent of the participant, provides for the payment of the Stock
Units in cash or partly in cash and partly in shares of Common Stock equal to
the value of the shares of Common Stock which would otherwise be distributed to
the participant.
5
<PAGE> 6
(c) Prior to the year with respect to which a Stock Unit may vest, the
participant may elect not to receive Common Stock upon the vesting of such
Stock Unit and for the Company to continue to maintain the Stock Unit on its
books of account. In such event, the value of a Stock Unit shall be payable in
shares of Common Stock pursuant to the agreement of deferral.
(d) A "Stock Unit" means a notational account representing one share
of Common Stock. A "Dividend Equivalent Right" means the right to receive the
amount of any dividend paid on the share of Common Stock underlying a Stock
Unit, which shall be payable in cash or in the form of additional Stock Units.
11. Intentionally Omitted
12. Adjustment Provisions; Change in Control.
(a) If there shall be any change in the Common Stock of the Company,
through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, reverse stock split, split up, spinoff, combination of
shares, exchange of shares, dividend in kind or other like change in capital
structure or distribution (other than normal cash dividends) to stockholders of
the Company, an adjustment shall be made to each outstanding Stock Option and
Stock Appreciation Right such that each such Stock Option and Stock
Appreciation Right shall thereafter be exercisable for such securities, cash
and/or other property as would have been received in respect of the Common
Stock subject to such Stock Option or Stock Appreciation Right had such Stock
Option or Stock Appreciation Right been exercised in full immediately prior to
such change or distribution, and such an adjustment shall be made successively
each time any such change shall occur. In addition, in the event of any such
change or distribution, in order to prevent dilution or enlargement of
participants' rights under the Plan, the Committee will have authority to
adjust, in an equitable manner, the number and kind of shares that may be
issued under the Plan, the exercisability and vesting pensions of such
Benefits, the number and kind of shares subject to outstanding Benefits, the
exercise price applicable to outstanding Benefits, and the Fair Market Value of
the Common Stock and other value determinations applicable to outstanding
Benefits. Appropriate adjustments may also be made by the Committee in the
terms of any Benefits under the Plan to reflect such changes or distributions
and to modify any other terms of outstanding Benefits on an equitable basis,
including modifications of performance targets and changes in the length of
performance periods. In addition, other than with respect to Stock Options,
Stock Appreciation Rights and other awards intended to constitute
Performance-Based Awards, the Committee is authorized to make adjustments to
the terms and conditions of, and the criteria included in, Benefits in
recognition of unusual or nonrecurring events affecting the Company or the
financial statements of the Company, or in response to changes in applicable
laws, regulations, or accounting principles. Notwithstanding the foregoing,
(i) any adjustment with respect to an Incentive Stock Option shall comply with
the rules of Section 424(a) of the Code, and (ii) in no event shall any
adjustment be made which would render any Incentive Stock Option granted
hereunder other than an incentive stock option for purposes of Section 422 of
the Code.
6
<PAGE> 7
(b) In the event of a Change in Control (as defined below), the
Committee, in its discretion, may take such actions as it deems appropriate
with respect to outstanding Benefits, including, without limitation,
accelerating the exercisability or vesting of such Benefits.
The Committee, in its discretion, may determine that, upon the
occurrence of a Change in Control of the Company, each Stock Option and Stock
Appreciation Right outstanding hereunder shall terminate within a specified
number of days after notice to the holder, and such holder shall receive, with
respect to each share of Common Stock subject to such Stock Option or Stock
Appreciation Right, an amount equal to the excess of the Fair Market Value of
such shares of Common Stock immediately prior to the occurrence of such Change
in Control over the exercise price per share of such Stock Option or Stock
Appreciation Right; such amount to be payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or in a
combination thereof, as the Committee, in its discretion, shall determine.
For purposes of this Section 12(b), a "Change in Control" of the
Company shall be deemed to have occurred if, subsequent to the Effective Date
of this Plan, (A) any "person" (as such term is defined in Section 13(d) of the
Exchange Act), other than Hicks, Muse, Tate & Furst Equity Fund III, L.P.
and/or Mills & Partners Inc., and/or their respective affiliates, employees,
officers, directors or successors (the "HMTF Group"), is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing a majority of the combined voting power of the Company's then
outstanding voting securities, or (B) a majority of the Board of Directors
shall consist of persons who are not continuing Directors.
For purposes of this Agreement, a "Continuing Director" shall mean, as
of the date of determination, any Person who (i) was a member of the Board of
Directors of the Company on the date of adoption of this Plan, (ii) was
nominated for election or elected to the Board of Directors of the Company with
the affirmative vote of a majority of the Continuing Directors who were members
of such Board of Directors at the time of such nomination or election, or (iii)
is a member of the HMTF Group.
13. Transferability. Each Benefit granted under the Plan to a
participant shall not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable, during the participant's
lifetime, only by the participant. In the event of the death of a participant,
each Stock Option or Stock Appreciation Right theretofore granted to him or her
shall be exercisable during such period after his or her death as the Committee
shall in its discretion set forth in such option or right at the date of grant
and then only by the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased participant's rights
under the Stock Option or Stock Appreciation Right shall pass by will or the
laws of descent and distribution. Notwithstanding the foregoing, at the
discretion of the Committee, an award of a Benefit other than an Incentive
Stock Option may permit the transferability of a Benefit by a participant
solely to the participant's spouse, siblings, parents, children and
grandchildren or trusts for the benefit of such persons or partnerships,
corporations, limited liability companies or other entities owned solely by
such persons, including trusts for such persons, subject to any restriction
included in the award of the Benefit.
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<PAGE> 8
14. Other Provisions. The award of any Benefit under the Plan may
also be subject to such other provisions (whether or not applicable to the
Benefit awarded to any other participant) as the Committee determines, at the
date of grant, appropriate, including, without limitation, for the installment
purchase of Common Stock under Stock Options, for the installment exercise of
Stock Appreciation Rights, to assist the participant in financing the
acquisition of Common Stock, for the forfeiture of, or restrictions on resale
or other disposition of, Common Stock acquired under any form of Benefit, for
the acceleration of exercisability or vesting of Benefits in the event of a
change in control of the Company, for the payment of the value of Benefits to
participants in the event of a change in control of the Company, or to comply
with federal and state securities laws, or understandings or conditions as to
the participant's employment in addition to those specifically provided for
under the Plan.
15. Fair Market Value. For purposes of this Plan and any Benefits
awarded hereunder, Fair Market Value shall be the closing price of the
Company's Common Stock on the date of calculation (or on the last preceding
trading date if Common Stock was not traded on such date) if the Company's
Common Stock is readily tradeable on a national securities exchange or other
market system, and if the Company's Common Stock is not readily tradeable, Fair
Market Value shall mean the amount determined in good faith by the Committee as
the fair market value of the Common Stock of the Company.
16. Withholding. All payments or distributions of Benefits made
pursuant to the Plan shall be net of any amounts required to be withheld
pursuant to applicable federal, state and local tax withholding requirements.
If the Company proposes or is required to distribute Common Stock pursuant to
the Plan, it may require the recipient to remit to it or to the corporation
that employs such recipient an amount sufficient to satisfy such tax
withholding requirements prior to the delivery of any certificates for such
Common Stock. In lieu thereof, the Company or the employing corporation shall
have the right to withhold the amount of such taxes from any other sums due or
to become due from such corporation to the recipient as the Committee shall
prescribe. The Committee may, in its discretion and subject to such rules as
it may adopt (including any as may be required to satisfy applicable tax and/or
non-tax regulatory requirements), permit an optionee or award or right holder
to pay all or a portion of the federal, state and local withholding taxes
arising in connection with any Benefit consisting of shares of Common Stock by
electing to have the Company withhold shares of Common Stock having a Fair
Market Value equal to the amount of tax to be withheld, such tax calculated at
rates required by statute or regulation.
17. Tenure. A participant's right, if any, to continue to serve the
Company as a director, officer, employee, or otherwise, shall not be enlarged
or otherwise affected by his or her designation as a participant under the
Plan.
18. Unfunded Plan. Participants shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater
8
<PAGE> 9
than the right of an unsecured general creditor of the Company. All payments
to be made hereunder shall be paid from the general funds of the Company and no
special or separate fund shall be established and no segregation of assets
shall be made to assure payment of such amounts except as expressly set forth
in the Plan. The Plan is not intended to be subject to the Employee Retirement
Income Security Act of 1974, as amended.
19. No Fractional Shares. No fractional shares of Common Stock shall
be issued or delivered pursuant to the Plan or any Benefit. The Committee
shall determine whether cash, or Benefits, or other property shall be issued or
paid in lieu of fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
20. Duration, Amendment and Termination. No Benefit shall be granted
more than ten years after the Effective Date; provided, however, that the terms
and conditions applicable to any Benefit granted prior to such date may
thereafter be amended or modified by mutual agreement between the Company and
the participant or such other persons as may then have an interest therein.
The Committee may amend the Plan from time to time or suspend or terminate the
Plan at any time. However, no action authorized by this Section 20 shall
reduce the amount of any existing Benefit or change the terms and conditions
thereof without the participant's consent. No amendment of the Plan shall,
without approval of the stockholders of the Company, (i) increase the total
number of shares which may be issued under the Plan or the maximum number of
shares with respect to Stock Options, Stock Appreciation Rights and other
Benefits that may be granted to any individual under the Plan or (ii) modify
the requirements as to eligibility for Benefits under the Plan; provided,
however, that no amendment may be made without approval of the stockholders of
the Company if the amendment will disqualify any Incentive Stock Options
granted hereunder.
21. Governing Law. This Plan, Benefits granted hereunder and actions
taken in connection herewith shall be governed and construed in accordance with
the laws of the State of Delaware (regardless of the law that might otherwise
govern under applicable Delaware principles of conflict of laws).
22. Effective Date. (a) The Plan shall be effective as of February
4, 1997, the date on which the Plan was adopted by the Committee (the
"Effective Date"), provided that the Plan is approved by the stockholders of
the Company at an annual meeting or any special meeting of stockholders of the
Company within 12 months of the Effective Date, and such approval of
stockholders shall be a condition to the right of each participant to receive
any Benefits hereunder. Any Benefits granted under the Plan prior to such
approval of stockholders shall be effective as of the date of grant (unless,
with respect to any Benefit, the Committee specifies otherwise at the time of
grant), but no such Benefit may be exercised or settled and no restrictions
relating to any Benefit may lapse prior to such stockholder approval, and if
stockholders fail to approve the Plan as specified hereunder, any such Benefit
shall be cancelled.
(b) This Plan shall terminate on February 4, 2007 (unless sooner
terminated by the Committee).
9
<PAGE> 10
VIASYSTEMS GROUP, INC.
By: /s/ W. THOMAS MCGHEE
-----------------------------------
W. Thomas McGhee, Secretary
10
<PAGE> 1
EXHIBIT 10.16
VIASYSTEMS, INC.
$400,000,000
9-3/4% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
June 2, 1997
CHASE SECURITIES INC.
NATWEST CAPITAL MARKETS LIMITED
SCHRODER WERTHEIM & CO., INCORPORATED
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
VIASYSTEMS, INC., a Delaware corporation (the "Company"),
proposes to issue and sell $400,000,000 aggregate principal amount of its
9-3/4% Senior Subordinated Notes due 2007 (the "Securities"). The Securities
will be issued pursuant to an Indenture to be dated as of June 6, 1997 (the
"Indenture") between the Company and The Bank of New York, as trustee (the
"Trustee"). The Company hereby confirms its agreement with Chase Securities
Inc. ("CSI"), NatWest Capital Markets Limited and Schroder Wertheim & Co. Inc.
(together with CSI, the "Initial Purchasers") concerning the purchase of the
Securities from the Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon exemptions therefrom. The
Company has prepared a preliminary offering memorandum dated May 14, 1997 (the
"Preliminary Offering Memorandum") and a final offering memorandum dated the
date hereof (the "Final Offering Memorandum"; and, together with the
Preliminary Offering Memorandum, the "Offering Memoranda") setting forth
information concerning the Company and the Securities. Copies of the
Preliminary Offering Memorandum have been, and copies of the Final Offering
Memorandum will be, delivered by the Company to the Initial Purchasers pursuant
to the terms of this Agreement. Any references herein to the Preliminary
Offering Memorandum and the Final Offering Memorandum shall be deemed to
include all amendments and supplements thereto, unless otherwise noted. The
Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum and the Final Offering
<PAGE> 2
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits of
an Exchange and Registration Rights Agreement, substantially in the form
attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to
which the Company will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the Securities
Act (the "Exchange Offer Registration Statement") registering an issue of
senior subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
In connection with the acquisition of Forward Group PLC ("Forward
Group") from an affiliate of Hicks, Muse, Tate & Furst Incorporated, the
Company amended and restated its senior credit facility and reorganized its
corporate structure to permit the incurrence of a $216.0 million subordinated
credit facility (the "Subordinated Credit Facility"). Concurrently with the
consummation of the Offering, Chips Holdings, Inc. ("Chips Holding") will merge
with and into Viasystems Group, Inc. ("Viasystems Group") and Chips
Acquisition, Inc., a wholly-owned subsidiary of Chips Holding, will merge with
and into the Company (collectively, the "Chips Merger"). Contemporaneously
with the Chips Merger, the Company will enter into a Second Amended and
Restated Credit Agreement dated as of June 5, 1997 (the "Senior Credit
Facilities") to permit the incurrence of reimbursement obligations assumed by
the Company in connection with the Chips Merger and certain other indebtedness
(the "Credit Amendment"). The proceeds of the Offering will be applied to
repay the Subordinated Credit Facility and certain term loans and revolving
loans made under the Senior Credit Facilities. The Chips Merger, the Credit
Amendment, the Offering and the application of the proceeds therefrom and each
of the related transactions are herein collectively referred to as the
"Transactions."
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Final Offering Memorandum.
1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the several Initial
Purchasers that:
(a) Each of the Preliminary Offering Memorandum, as of its
date, and the Final Offering Memorandum, as of the date hereof and as
of the Closing Date (as defined in Section 3) did not (or will not),
contain any 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, however, that the Company makes no
representation or warranty as to information contained in or omitted
from the Preliminary Offering Memorandum or the Final Offering
Memorandum in reliance upon and in conformity with written information
furnished to the Company
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<PAGE> 3
by or on behalf of any Initial Purchaser relating to such Initial
Purchaser specifically for use therein (the "Initial Purchasers'
Information"). The parties hereto acknowledge and agree that, for all
purposes of this Agreement, the Initial Purchasers' Information
consists solely of the last paragraph on the front cover page
concerning the terms of the Offering by the Initial Purchasers, the
first paragraph of the legends on page "i" concerning over-allotments
and the statements relating to the Initial Purchasers in the third,
fourth, sixth, seventh, eighth, tenth, and eleventh paragraphs under
the heading "Plan of Distribution" in the Preliminary Offering
Memorandum and the Final Offering Memorandum.
(b) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth herein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchasers and the offer, resale and delivery of the
Securities by the Initial Purchasers in the manner contemplated by
this Agreement and the Final Offering Memorandum, to register the
Securities under the Securities Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(c) The Company and each of its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its respective ownership or
lease of property or the conduct of its respective businesses requires
such qualification, and has all power and authority necessary to own
or hold its respective properties and to conduct the businesses in
which it is engaged, except where the failure to so qualify or have
such power or authority would not, singularly or in the aggregate,
have a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole (a "Material Adverse
Effect").
(d) On the Closing Date, the authorized capital stock of the
Company will consist of 1,000 shares of common stock, $0.01 par value
per share, of which 1,000 shares will be issued and outstanding; all
of the outstanding shares of capital stock of the Company are duly and
validly authorized and issued and fully paid and non-assessable. All
of the outstanding shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security
interest, restriction upon voting or transfer or any other claim of
any third party (other than liens and security interests created
pursuant to the Senior Credit Facilities, the Indenture or applicable
law); provided that the Company owns at least 99% of the capital stock
of the Forward Group.
(e) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement, the Securities
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<PAGE> 4
and any other agreement or instrument entered into or to be entered
into in connection with the Transactions, contemplated hereby or
thereby, including, without limitation, the Agreement and Plan of
Merger of Chips Acquisition, Inc. and the Company and the Credit
Amendment (collectively, the "Transaction Documents") and to perform
its obligations hereunder and thereunder.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except (i) to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and (ii) to the extent
that the enforceability of rights to indemnification and contribution
thereunder may be limited by federal or state securities laws or
regulations or the public policy underlying such laws or regulations.
(g) The Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
(i) to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law) and (ii) to the extent that the enforceability of
rights to indemnification and contribution thereunder may be limited
by federal or state securities laws or regulations or the public
policy underlying such laws or regulations.
(h) The Indenture has been duly authorized by the Company
and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(i) The Securities have been duly authorized by the Company
and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will be
duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company entitled to the benefits of
the Indenture and enforceable against the Company in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
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<PAGE> 5
(j) The Exchange Securities have been duly authorized by
the Company and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and the Registration Rights
Agreement, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(k) Each of the Transaction Documents not referred to in the
preceding clauses (f) through (j) has been duly authorized by the
Company and, when duly executed, authenticated, issued and delivered
will constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, except
to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
(l) Each Transaction Document that is described in the Final
Offering Memorandum conforms in all material respects to the
description thereof contained in the Final Offering Memorandum.
(m) The execution, delivery and performance by the Company of
each of the Transaction Documents, the issuance, authentication, sale
and delivery of the Securities by the Company and compliance by the
Company with the terms thereof and the consummation by the Company and
its subsidiaries of the transactions contemplated by the Transaction
Documents including, without limitation, the use of the proceeds from
the sale of the Securities as described in the Final Offering
Memorandum under the caption "Use of Proceeds" do not and will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except for any such
conflict, breach, violation, default, lien, charge or encumbrance that
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect or any material adverse effect on the
ability of the Company to perform its obligations under the
Transaction Documents; nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of
any court or arbitrator or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for any such conflict,
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<PAGE> 6
breach, violation, default, lien, charge or encumbrance that could
not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect or any material adverse effect on the ability
of the Company to perform its obligations under the Transaction
Documents; and, except for such consents, approvals, authorizations,
registrations or qualifications which have been obtained or as may be
required under (i) applicable Blue Sky or securities laws in
connection with the purchase and resale of the Notes by the Initial
Purchasers, (ii) the Trust Indenture Act of 1939 in connection with
the Exchange Securities or (iii) the Securities Act and state Blue Sky
laws or securities laws in connection with the actions contemplated by
the Registration Rights Agreement, no consent, approval, authorization
or order of, or filing or registration with, any such court or
arbitrator or governmental agency or body is required for the
execution, delivery and performance by the Company of each of the
Transaction Documents, the issuance, authentication, sale and delivery
of the Securities and compliance by the Company with the terms thereof
and the consummation of the transactions contemplated by the
Transaction Documents, except for such consents, approvals,
authorizations, filings, registrations or qualifications (i) which
have been obtained or made prior to the Closing Date and (ii) as may
be required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration
Rights Agreement.
(n) (a)(i) Coopers & Lybrand L.L.P. are independent
accountants with respect to the Company and its subsidiaries,
Viasystems Group and its subsidiaries, Circo Craft and its
subsidiaries and the net assets sold of Viasystems Technologies of the
Interconnection Business of the Microelectronics Group,
Interconnection Technologies Unit of Lucent Technologies Inc., (ii)
Deloitte & Touche are independent accountants with respect to Circo
Craft and its subsidiaries, (iii) KPMG Audit Plc are independent
accountants with respect to Forward Group and its subsidiaries and
(iv) Ernst & Young are independent accountants with respect to Chips
and its subsidiaries, each within the meaning of Rule 101 of the Code
of Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder
and (b) the financial statements (including the related notes)
contained in the Offering Memorandum have been prepared in conformity
with U.S. generally accepted accounting principles other than the
financial statements of Forward Group and Chips which have been
prepared in conformity with U.K. generally accepted accounting
principles and the financial statements of Circo Craft which have been
prepared in conformity with Canadian generally accepted accounting
principles, each consistently applied throughout the periods covered
thereby and fairly present in all material respects the financial
condition and the results of operations of the entities purported to
be covered thereby for the respective periods indicated except as
otherwise disclosed therein. The financial information contained in
the Offering Memorandum under the headings "Summary--Summary
Supplemental Historical Combined and Pro Forma Financial Data,"
"Capitalization," "Selected Financial Data," "Management's Discussion
and Analysis of Results of Operations and Financial Condition" are
derived from the accounting records of the entities purported to be
covered thereby and fairly present the information
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<PAGE> 7
purported to be shown thereby. The pro forma financial information
and statistical data contained in the Final Offering Memorandum has
been prepared on a basis consistent with the historical financial
statements contained in the Final Offering Memorandum and the pro
forma adjustments specified therein include all material adjustments
to the historical financial information required by Rule 11-02 of
Regulation S-X under the Securities Act to fairly reflect the
transactions described in the Final Offering Memorandum, and utilizes
assumptions made on a reasonable basis to give effect to the
historical and proposed transactions described in the Final Offering
Memorandum.
(o) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company or any of its subsidiaries or
affiliates is the subject which, singularly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries or
affiliates, could reasonably be expected to have a Material Adverse
Effect; and to the best knowledge of the Company, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others.
(p) No injunction, restraining order or order of any nature
by any federal or state court of competent jurisdiction has been
issued with respect to the Company or any of its subsidiaries which
would prevent or suspend the issuance or sale of the Securities or the
use of the Preliminary Offering Memorandum or the Final Offering
Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries before any
court or arbitrator or any governmental agency, body or official,
domestic or foreign, which could reasonably be expected to interfere
with or adversely affect the issuance of the Securities or in any
manner draw into question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant
thereto.
(q) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is
a party or by which it is bound or to which any of its property or
assets is subject except for any such default that could not, singly
or in the aggregate, reasonably be expected to have a Material Adverse
Effect or (iii) in violation of any applicable law, ordinance, court
decree, governmental rule or regulation to which it or its property or
assets may be subject except for any such violation that could not,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(r) The Company and each of its subsidiaries possess all
material licenses, orders, certificates, authorizations, approvals and
permits issued by, and have made all declarations and filings with,
the appropriate federal, state or foreign regulatory agencies
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<PAGE> 8
or bodies that are necessary or desirable for the ownership of their
respective properties or the conduct of their respective businesses as
described in the Final Offering Memorandum, except where the failure
to possess or make the same would not, singularly or in the aggregate,
have a Material Adverse Effect, and neither the Company nor any of its
subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or permit
that is generally renewable in the ordinary course or has any reason
to believe that any such license, certificate, authorization or permit
will not be renewed in the ordinary course.
(s) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the rules and
regulations thereunder.
(t) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (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 the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(u) The Company and each of its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such
losses and risks as are in the Company's opinion adequate to protect
the Company and its subsidiaries and their respective businesses.
Neither the Company nor any of its subsidiaries has received notice
from any insurer or agent of such insurer that material capital
improvements or other expenditures are required or necessary to be
made in order to continue such insurance.
(v) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses; and the
conduct of their respective businesses does not conflict in any
material respect with, and the Company and its subsidiaries have not
received any notice of any claim of conflict with, any such rights of
others.
(w) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are
material to the business of the Company and its subsidiaries, taken as
a whole, in each case free and clear of all liens, encumbrances and
defects other
-8-
<PAGE> 9
than (i) liens and encumbrances to be granted pursuant to the Senior
Credit Facilities and (ii) liens, encumbrances and defects that do not
materially interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries or could not reasonably
be expected to have a Material Adverse Effect.
(x) No labor disturbance by or dispute with the employees
of the Company or any of its subsidiaries exists or, to the best
knowledge of the Company, is imminent, which could reasonably be
expected to have a Material Adverse Effect.
(y) No "prohibited transaction" (as defined in Section 406
of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
the Company or any of its subsidiaries which could have a Material
Adverse Effect; each such employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the
Code; neither the Company nor any of its subsidiaries has incurred or
expects to incur material liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any "pension plan";
no event has occurred and, to the best knowledge of the Company, after
reasonable inquiry, there exists no condition or set of circumstances,
in connection with which the Company or any of its subsidiaries could
be subject, by reason of its affiliation with any member of its
Controlled Group (defined as any entity which is a member of a
controlled group of organizations within the meaning of Sections
414(b), (c), (m), or (o) of the Code) or the Controlled Group of the
Hicks, Muse, Tate & Furst Equity Fund III, L.P., to any liability
under ERISA, the Code or any other applicable law which, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect on the Company or any of its subsidiaries; and each
"pension plan" (as defined in ERISA) for which the Company or any of
its subsidiaries would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which could cause the loss of such qualification.
(z) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release or
threatened release of any kind of toxic or other wastes or other
hazardous substances by, due to or caused by the Company or any of its
subsidiaries (or, to the best knowledge of the Company, any other
entity (including any predecessor) for whose acts or omissions the
Company or any of its subsidiaries is or could reasonably be expected
to be liable) upon any property now or previously owned or leased by
the Company or any of its subsidiaries, or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule
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<PAGE> 10
of common law), regulation, order, judgment, decree or permit, give
rise to any liability except for any violation or liability which
would not have, singularly or in the aggregate with all such
violations and liabilities, a Material Adverse Effect; and there has
been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such property
of any toxic or other wastes or other hazardous substances with
respect to which the Company has knowledge, except for any such
disposal, discharge, emission or other release of any kind which would
not have, singularly or in the aggregate with all such disposal,
discharge, emission and other release, a Material Adverse Effect.
(aa) The Company and each of its subsidiaries have filed all
material federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
material taxes due thereon, and no tax deficiency has been determined
adversely to the Company or any of the Company's subsidiaries which
has had (nor do the Company or any of the Company's subsidiaries have
any knowledge of any tax deficiency which, if determined adversely to
the Company or any of its subsidiaries, might reasonably be expected
to have) a Material Adverse Effect.
(bb) On the Closing Date, the Company and its subsidiaries,
taken as a whole, (after giving effect to the issuance of the
Securities, the Amendment, the Chips Merger and each of the other
Transactions) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date
(i) the aggregate fair value (or present fair saleable value) of the
assets of the Company and its subsidiaries, taken as a whole, is not
less than their total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured in the
normal course of business and (ii) the Company and its subsidiaries,
taken as a whole, do not have an unreasonably small amount of capital
with which to conduct their businesses. In computing the amount of
such contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in the light of all
the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
(cc) There are no outstanding subscriptions, rights,
warrants, calls or options to acquire, or instruments convertible into
or exchangeable for, or agreements or understandings with respect to
the sale or issuance of, any shares of capital stock of or other
equity or other ownership interest in the Company.
(dd) No holder of securities of the Company or any of its
subsidiaries will be entitled to have such securities registered under
the registration statements required to be filed by the Company
pursuant to the Registration Rights Agreement, other than as expressly
permitted thereby.
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<PAGE> 11
(ee) The statistical and market-related data included in the
Final Offering Memorandum are based on or derived from sources which
the Company believes to be reliable and accurate.
(ff) None of the proceeds of the sale of the Securities will
be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry
any margin security or for any other purpose which might cause any of
the Securities to be considered a "purpose credit" within the meanings
of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
(gg) Neither the Company nor any Affiliate (as defined in
Rule 501(b) of Regulation D under the Securities Act ("Regulation D"))
has directly, or through any agent (provided that no representation is
made as to the Initial Purchasers or any Person acting on their
behalf) (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) which is or will be integrated with the sale of the
Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used
in Regulation D) in connection with the offering of the Securities.
(hh) When the Securities are delivered pursuant to this
Agreement, none of the Securities will be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities of
the Company or any subsidiary of the Company that are listed on a
national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(ii) Neither the Company nor the Company's affiliates has
taken, and the Company will not take, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or
result in stabilization or manipulation of the price of the
Securities.
(jj) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Final Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(kk) Since the date as of which information is given in the
Final Offering Memorandum, except as otherwise stated therein, (i)
there has been no material adverse change or any development involving
a prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or
business prospects of the Company, whether or not arising in the
ordinary course of business, (ii) neither the Company nor any of its
subsidiaries has incurred any liability or obligation, direct or
contingent, other than in the ordinary course of business, which
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<PAGE> 12
would, singly or in the aggregate, have a Material Adverse Effect,
(iii) neither the Company nor any of its subsidiaries has entered into
any material transaction other than in the ordinary course of business
and (iv) there has not been any change in the capital stock or
long-term debt of the Company, or any dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(ll) The subsidiaries of the Company which constitute
"significant subsidiaries," as defined in Rule 1- 02 of Regulation
S-X, promulgated pursuant to the Securities Act are set forth on
Schedule II hereto.
2. Purchase and Resale of the Securities. (a) On the basis
of the representations, warranties and agreements contained herein, and subject
to the terms and conditions set forth herein, the Company agrees to issue and
sell to each of the Initial Purchasers, severally and not jointly, and each of
the Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.0% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Final Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company that (i) it is purchasing the Securities pursuant to a
private sale exempt from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of its initial offering, only to persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act as such
rule may be amended from time to time ("Rule 144A"), or if any such person is
buying for one or more institutional accounts for which such person is acting
as fiduciary or agent, only when such person has represented to it that each
such account is a Qualified Institutional Buyer to whom notice has been given
that such sale or delivery is being made in reliance on Rule 144A and in each
case, in transactions in accordance with Rule 144A. Each Initial Purchaser,
severally and not jointly, agrees that, prior to or simultaneously with the
confirmation of sale by such Initial Purchaser to any purchaser of any of the
Securities purchased by such Initial Purchaser from the Company pursuant
hereto, such Initial Purchaser shall furnish to that purchaser a copy of the
Final Offering Memorandum (and any amendment or supplement thereto that the
Company shall have furnished to such Initial Purchaser prior to the date of
such confirmation of sale). In addition to the foregoing, each Initial
Purchaser acknowledges and agrees that the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections 5(d)
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<PAGE> 13
and (g), counsel for the Company and for the Initial Purchasers, respectively,
may rely upon the accuracy of the representations and warranties of the Initial
Purchasers and their compliance with their agreements contained in this Section
2, and each Initial Purchaser hereby consents to such reliance.
(c) The Company acknowledges and agrees that the Initial
Purchasers may sell Securities to any affiliate of an Initial Purchaser and
that any such affiliate may sell Securities purchased by it to an Initial
Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery
of and payment for the Securities shall be made at the offices of Simpson
Thacher & Bartlett, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchasers and the Company, at 10:00 A.M., New York
City time, on June 6, 1997 or at such other time or date, not later than seven
full business days thereafter, as shall be agreed upon by the Initial
Purchasers and the Company (such date and time of payment and delivery being
referred to herein as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for
the Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior
to the Closing Date or by such other means as the parties hereto shall agree
prior to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligations of the Initial Purchasers hereunder. Upon
delivery, the Securities shall be in global form, registered in such names and
in such denominations as CSI on behalf of the Initial Purchasers shall have
requested in writing not less than two full business days prior to the Closing
Date. The Company agrees to make one or more global certificates evidencing
the Securities available for inspection by CSI on behalf of the Initial
Purchasers in New York, New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees
with each of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Final
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Final Offering Memorandum (as amended
or supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchasers promptly of any order
preventing or suspending the use of the Preliminary Offering
Memorandum or the Final Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its reasonable best efforts to
prevent the issuance of any such order preventing or suspending the
use of the Preliminary
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<PAGE> 14
Offering Memorandum or the Final Offering Memorandum or suspending any
such qualification and, if any such suspension is issued, to obtain
the lifting thereof at the earliest possible time;
(b) to furnish to each of the Initial Purchasers, without
charge, as many copies of the Final Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Final
Offering Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect
any such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to the Company after a reasonable period
to review, which shall not be in any case longer than five business
days after receipt of such copy;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or
condition exist as a result of which it is necessary, in the opinion
of counsel for the Initial Purchasers or counsel for the Company, to
amend or supplement the Final Offering Memorandum in order that the
Final Offering Memorandum 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
existing at the time it is delivered to a purchaser, not misleading,
or if it is necessary to amend or supplement the Final Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission so that the Final Offering Memorandum, as so
amended or supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and
prospective purchasers of the Securities designated by such holders,
upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act;
(f) for a period of five years following the Closing Date, to
furnish to the Initial Purchasers copies of any annual reports,
quarterly reports and current reports filed by the Company with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports
and information as shall be furnished by the Company to the Trustee or
to the holders of the Securities pursuant to the Indenture;
(g) to use its reasonable best efforts to qualify the
Securities for sale under the state securities or Blue Sky laws of
such jurisdictions as the Initial Purchasers may
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<PAGE> 15
reasonably designate and to continue such qualifications in effect for
so long as required for the distribution of the Securities; provided,
however, that the Company and its subsidiaries shall not be obligated
to qualify as foreign corporations or to file a general consent to
service of process in any jurisdiction or to subject itself to
taxation in any jurisdiction;
(h) to use their reasonable best efforts to assist the
Initial Purchasers in arranging for the Securities to be designated
Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to trading in the PORTAL Market and for the
Securities to be eligible for clearance and settlement through the
Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the
case may be, not to, and to cause its affiliates as such term is
defined in Rule 501(b) of Regulation D not to, and not to authorize or
knowingly permit any person acting on its behalf to, solicit any offer
to buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D
or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act; and not to offer, sell, contract
to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offering and sale of
the Securities as contemplated by this Agreement and the Final
Offering Memorandum;
(k) for a period of 90 days from the date of the Final
Offering Memorandum, not to offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration
statement (except as required by the Registration Rights Agreement)
for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by the Company
or any of its subsidiaries (other than the Securities or the Exchange
Securities) without the prior written consent of the Initial
Purchasers;
(l) in connection with the Offering, until CSI on behalf of
the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, neither the Company nor
any of its affiliated purchasers (as defined in Regulation M under the
Exchange Act), either alone or with one or more other persons, will
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest,
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<PAGE> 16
any Securities, or attempt to induce any person to purchase any
Securities; and neither it nor any of its affiliated purchasers will
make bids or purchase for the purpose of creating actual, or apparent,
active trading in or of raising the price of the Securities;
(m) in connection with the offering of the Securities, to make
its officers, employees, independent accountants and legal counsel
reasonably available upon request by the Initial Purchasers;
(n) to not take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture;
(o) to not take any action prior to the Closing Date which
would require the Final Offering Memorandum to be amended or
supplemented pursuant to Section 4(d);
(p) to apply the net proceeds from the sale of the Securities
substantially as set forth in the Final Offering Memorandum under the
heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The
respective obligations of the several Initial Purchasers hereunder are subject
to the accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company and its officers made in any certificates
delivered pursuant hereto, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Final Offering Memorandum (and any amendments or
supplements thereto) shall have been printed and copies distributed to
the Initial Purchasers as promptly as practicable on or following the
date of this Agreement or at such other date and time as to which the
Initial Purchasers may agree; and no stop order suspending the sale of
the Securities in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the
Final Offering Memorandum or any amendment or supplement thereto
contains an untrue statement of a fact which is material or omits to
state any fact which, in the opinion of Simpson Thacher & Bartlett,
counsel for the Initial Purchasers, is material and is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of each of the
Transaction Documents and the Final Offering Memorandum, and all other
legal matters relating to the Transaction Documents and the
transactions contemplated thereby, shall be reasonably satisfactory in
all material respects to the Initial Purchasers, and the Company shall
have furnished to the Initial
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<PAGE> 17
Purchasers all documents and information that they or their counsel
may reasonably request to enable them to pass upon such matters.
(d) Weil, Gotshal & Manges LLP shall have furnished to the
Initial Purchasers their written opinion, as counsel for the Company,
addressed to the Initial Purchasers and dated the Closing Date,
substantially to the effect set forth in Annex B hereto.
(e) Goodman, Phillips & Vineberg, as Canadian counsel to
Circo Craft, Weil, Gotshal & Manges LLP as United Kingdom counsel to
Forward Group and Chips and counsel to Viasystems Technologies Corp.,
shall have each furnished to the Initial Purchasers their written
opinion, addressed to the Initial Purchasers and dated the Closing
Date, substantially to the effect set forth in Annex C hereto.
(f) W. Thomas McGhee shall have furnished to the Initial
Purchasers their written opinion, as General Counsel to the Company,
addressed to the Initial Purchasers and dated the Closing Date,
substantially to the effect set forth in Annex D hereto.
(g) The Initial Purchasers shall have received from Simpson
Thacher & Bartlett, counsel for the Initial Purchasers, such opinion
or opinions, dated the Closing Date, with respect to such matters as
the Initial Purchasers may reasonably require, and the Company shall
have furnished to such counsel such documents and information as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(h) With respect to the letters (the "Initial Letters") of
Coopers & Lybrand L.L.P., Deloitte & Touche, KPMG Audit Plc and Ernst
& Young delivered to the Initial Purchasers concurrently with the
execution of this Agreement (which letters shall be in form and
substance satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers), the Company shall have caused each of Coopers &
Lybrand L.L.P., Deloitte & Touche, KPMG Audit Plc and Ernst & Young to
furnish to the Initial Purchasers a letter (the "Bring-Down Letter")
addressed to the Initial Purchasers and dated the Closing Date (i)
confirming that they are independent public accountants with respect
to the entities listed in Section 1(o) hereof within the meaning of
Rule 101 of the Code of Professional Conduct of the AICPA and its
interpretations and rulings thereunder, (ii) stating, as of the date
of the Bring-Down Letter (or, with respect to matters involving
changes or developments since the respective dates as of which
specified financial information is given in the Final Offering
Memorandum, as of a date not more than three business days prior to
the date of the Bring-Down Letter), that the conclusions and findings
of such accountants with respect to the financial information and
other matters covered by the Initial Letter are accurate and (iii)
confirming in all material respects the conclusions and findings set
forth in the Initial Letter.
(i) The Company shall have furnished to the Initial
Purchasers a certificate, dated the Closing Date, of the chief
executive officer or president of the Company and the chief financial
officer of the Company in their respective capacities as officers of
the
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<PAGE> 18
Company and not as an individual stating that (A) such officers have
carefully examined the Final Offering Memorandum, (B) in their
opinion, the Final Offering Memorandum, as of its date, did not
include any untrue statement of a material fact and did not omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, and since the date of the Final Offering Memorandum,
no event has occurred which should have been set forth in a supplement
or amendment to the Final Offering Memorandum so that the Final
Offering Memorandum (as so amended or supplemented) would not include
any untrue statement of a material fact and would not omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading and (C) as of the Closing Date,
the representations and warranties of the Company in this Agreement
are true and correct, the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder on or prior to the Closing Date, and subsequent to the date
of the most recent financial statements contained in the Final
Offering Memorandum, there has been no material adverse change in the
financial position or results of operations of the Company or any of
its subsidiaries, or any material change, or any development including
a prospective material change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole, except as set
forth in the Final Offering Memorandum.
(j) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(k) The Initial Purchasers shall have received a counterpart
of the Registration Rights Agreement which shall have been executed
and delivered by a duly authorized officer of the Company.
(l) The Indenture shall have been duly executed and delivered
by the Company and the Trustee, and the Securities shall have been
duly executed and delivered by the Company and duly authenticated by
the Trustee.
(m) If any event shall have occurred that requires the
Company under Section 4(d) to prepare an amendment or supplement to
the Final Offering Memorandum, such amendment or supplement shall have
been prepared, the Initial Purchasers shall have been given a
reasonable opportunity to comment thereon, and copies thereof shall
have been delivered to the Initial Purchasers reasonably in advance of
the Closing Date.
(n) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the reasonable
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<PAGE> 19
judgment of the Initial Purchasers would materially impair the ability
of the Initial Purchasers to purchase, hold or effect resales of the
Securities as contemplated hereby.
(o) The Credit Amendment and all documents to be executed in
connection therewith shall have been duly executed and delivered by
the Company and the requisite lenders and other parties thereto and
the Company shall have satisfied, or ensured the satisfaction of, all
conditions precedent to the Credit Amendment.
(p) At the Closing Date, after giving effect to the
consummation of the transactions contemplated by the Transaction
Documents, there shall exist no default or event of default under the
Indenture or the Senior Credit Facilities.
(q) The Chips Merger and each of the other Transactions
(excluding the Offering) shall have been consummated and there shall
not be any pending or threatened legal or governmental proceedings
with respect to the Transactions other than as described in the Final
Offering Memorandum (exclusive of any amendment or supplement
thereto).
(r) Other than as contemplated by the Final Offering
Memorandum, since the dates as of which information is given in the
Final Offering Memorandum (exclusive of any amendment or supplement
thereto), there shall not have been any change in the capital stock or
long-term debt or any change, or any development involving a
prospective change, in or affecting the condition (financial or
otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, the effect of which, in
any such case described above, is, in the judgment of CSI, so material
and adverse as to make it impracticable or inadvisable to proceed with
the sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement in the Final Offering Memorandum.
(s) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance, sale or resale of the
Securities.
(t) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Securities or any of the Company's other debt securities
or preferred stock by any "nationally recognized statistical rating
organization," as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible
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<PAGE> 20
upgrading), its rating of the Securities or any of the Company's other
debt securities or preferred stock.
(u) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the over-the-counter market shall have been
suspended or limited, or minimum prices shall have been established on
any such exchange or market by the Commission, by any such exchange or
by any other regulatory body or governmental authority having
jurisdiction, or trading in any securities of the Company on any
exchange or in the over-the-counter market shall have been suspended
or (ii) any moratorium on commercial banking activities shall have
been declared by federal or New York state authorities or (iii) an
outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) the effect of which, in the case of this
clause (iv), is, in the judgment of CSI, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or the
delivery of the Securities on the terms and in the manner contemplated
by this Agreement and in the Final Offering Memorandum (exclusive of
any amendment or supplement thereto).
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers, in their absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(u) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing
Date, any Initial Purchaser defaults in the performance of its obligations
under this Agreement, the non-defaulting Initial Purchasers may make
arrangements for the purchase of the Securities which such defaulting Purchaser
agreed but failed to purchase by other persons satisfactory to the Company and
the non-defaulting Initial Purchasers, but if no such arrangements are made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of the non-defaulting Initial Purchasers or the Company,
except that the Company will continue to be liable for the payment of expenses
to the extent set forth in Sections 8 and 12 and except that the provisions of
Sections 9, 10, 14 and 16 shall not terminate and shall remain in effect. As
used in this Agreement, the term "Initial Purchasers" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 7, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
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<PAGE> 21
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company or any
non-defaulting Initial Purchaser for damages caused by its default. If other
persons agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the reasonable opinion of counsel for the Company or counsel for the
Initial Purchasers may be necessary in the Offering Memorandum or in any other
document or arrangement, and the Company agrees to reasonably promptly prepare
any amendment or supplement to the Final Offering Memorandum that effects any
such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a)
this Agreement shall have been terminated pursuant to Section 6, (b) the
Company shall fail to tender the Securities for delivery to the Initial
Purchasers for any reason permitted under this Agreement or (c) the Initial
Purchasers shall decline to purchase the Securities for any reason permitted
under this Agreement, the Company shall reimburse the Initial Purchasers for
such out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase and resale of the
Securities. If this Agreement is terminated pursuant to Section 7 by reason of
the default of one or more of the Initial Purchasers, the Company shall not be
obligated to reimburse any defaulting Initial Purchaser on account of such
expenses.
9. Indemnification. (a) The Company shall indemnify and
hold harmless each Initial Purchaser, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls any Initial Purchaser within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
9(a) and Section 10 as an Initial Purchaser), from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, without limitation, any loss, claim, damage, liability or action
relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Final Offering Memorandum or in any amendment or
supplement thereto or in any information provided by the Company pursuant to
Section 4(e) or (ii) the omission or alleged omission to state therein 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 shall
reimburse each Initial Purchaser promptly upon demand for any legal or other
expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with any Initial
Purchasers' Information; and provided, further, that with
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<PAGE> 22
respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any such Initial Purchaser to the extent that
such sale to the person asserting any such loss, claim, damage, liability or
action was an initial resale by such Initial Purchaser and any such loss,
claim, damage, liability or action of or with respect to such Initial Purchaser
results from the fact that both (A) a copy of the Final Offering Memorandum was
not sent or given to such person at or prior to the written confirmation of the
sale of such Securities to such person and (B) the untrue statement in or
omission from the Preliminary Offering Memorandum was corrected in the Final
Offering Memorandum unless, in either case, such failure to deliver the Final
Offering Memorandum was a result of non-compliance by the Company with Section
4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(b) and
Section 10 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Final Offering Memorandum or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the Initial Purchasers' Information,
and shall reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 9(a) or 9(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 9 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After
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<PAGE> 23
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) a conflict or potential
conflict exists (based upon advice of counsel to the indemnified party) between
the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (3) the indemnifying party has not in
fact employed counsel reasonably satisfactory to the indemnified party to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the reasonable
fees, disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party
unless such settlement (i) does not contain an admission of fault or wrongdoing
and (ii) includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
The obligations of the Company and each Initial Purchaser in
this Section 9 and in Section 10 are in addition to any other liability that
the Company or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an indemnified party
under Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchasers on the
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<PAGE> 24
other from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Initial Purchasers on the other with respect to the statements or omissions
that resulted in such loss, claim, damage or liability, or action in respect
thereof, 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 with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
purchased under this Agreement (before deducting expenses) received by or on
behalf of the Company, on the one hand, and the total discounts and commissions
received by the Initial Purchasers with respect to the Securities purchased
under this Agreement, on the other, bear to the total gross proceeds from the
sale of the Securities under this Agreement, in each case as set forth in the
table on the cover page of the Final Offering Memorandum. The relative fault
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 the Company or information supplied by the
Company on the one hand or to any Initial Purchasers' Information on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be 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 that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total discounts and
commissions received by such Initial Purchaser with respect to the Securities
purchased by it under this Agreement exceeds the amount of any damages which
such Initial Purchaser has otherwise paid or become liable to pay by reason of
any 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 Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute as provided in this Section 10 are
several in proportion to their respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company and
the Initial Purchasers and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is
intended or shall be construed to give any person,
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<PAGE> 25
other than the persons referred to in this Section 11, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
12. Expenses. The Company agrees with the Initial Purchasers
to pay (a) the costs incident to the authorization, issuance, sale, preparation
and delivery of the Securities and any taxes payable in that connection; (b)
the costs incident to the preparation, printing and distribution of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and
distributing each of the Transaction Documents; (d) the costs incident to the
preparation, printing and delivery of the certificates evidencing the
Securities, including stamp duties and transfer taxes, if any, payable upon
issuance of the Securities; (e) the fees and expenses of the Company's and its
subsidiaries' counsel and independent accountants; (f) the fees and expenses of
qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 4(g) and of preparing, printing and
distributing Blue Sky Memoranda (including reasonable related fees and expenses
of counsel for the Initial Purchasers); (g) any fees charged by rating agencies
for rating the Securities; (h) the fees and expenses of the Trustee and any
paying agent (including related fees and expenses of any counsel to such
parties); (i) all expenses and application fees incurred in connection with the
application for the inclusion of the Securities on the PORTAL Market and the
approval of the Securities for book-entry transfer by DTC; and (j) all other
costs and expenses incident to the performance of the obligations of the
Company under this Agreement which are not otherwise specifically provided for
in this Section 12; provided, however, that except as provided in this Section
12 and Section 8, the Initial Purchasers shall pay their own costs and expenses
(including the costs and expenses of their counsel).
13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Initial Purchasers contained in this Agreement or made by or on behalf of the
Company or the Initial Purchasers pursuant to this Agreement shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them.
14. Notices, etc.. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or telecopy transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: Gerry Murray (telecopier
no.: (212) 270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company at Viasystems,
Inc., 101 S. Hanley Road, Suite 400, St. Louis, Missouri 63105
Attention: James N. Mills (telecopier no.: (314) 746-2299) and to
Lawrence D. Stuart Jr., Hicks, Muse, Tate & Furst Incorporated, 200
Crescent Court, Suite 1600, Dallas, Texas (telecopier no: (214)
740-7355);
-25-
<PAGE> 26
provided, however, that any notice to an Initial Purchaser pursuant to Section
9(c) shall also be delivered or sent by mail to such Initial Purchaser at its
address set forth on the signature page hereof. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof. The
Company shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
16. 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 CONFLICTS OF LAW PROVISIONS THEREOF TO THE EXTENT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
17. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
18. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
[Remainder of Page Intentionally Left Blank]
-26-
<PAGE> 27
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon
this instrument will become a binding agreement between the Company and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
VIASYSTEMS, INC.
By /s/
-------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By /s/
------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
NATWEST CAPITAL MARKETS LIMITED
By /s/
------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
135 Bishopsgate
London EC2M 3UR
Attention: Legal Department
-27-
<PAGE> 28
SCHRODER WERTHEIM & CO. INCORPORATED
By /s/
------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
787 Seventh Avenue
New York, New York 10019
Attention: Legal Department
-28-
<PAGE> 29
SCHEDULE 1
<TABLE>
<CAPTION>
Principal
Amount
Initial Purchasers of Securities
- ------------------ -------------
<S> <C>
Chase Securities Inc. $275,000,000
NatWest Capital Markets Limited 85,000,000
Schroder Wertheim & Co. Incorporated 40,000,000
-----------
Total $400,000,000
============
</TABLE>
<PAGE> 30
SCHEDULE 2
Circo Craft Co. Inc.
Exacta Circuits Limited
Interconnection Systems Limited
Viasystems Technologies Corp.
<PAGE> 31
ANNEX A
[Form of Exchange and Registration Rights Agreement]
See Tab 4
<PAGE> 32
ANNEX B
[Please note that with respect to subsidiaries for which Weil Gotshal is able
to deliver the opinion, such opinion in Annex C may be included in the Company
counsel opinion]
[Form of Opinion of Counsel for the Company]
<PAGE> 33
ANNEX C
[Form of Opinion of Counsel for Subsidiaries]
(i) the Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its
businesses requires such qualification, and has all power and
authority necessary to own or hold its properties and to conduct the
businesses in which it is engaged (except where the failure to so
qualify or have such power or authority would not, singularly or in
the aggregate, have a Material Adverse Effect); all of the issued and
outstanding capital stock of the Subsidiary has been duly authorized
and validly issued and is fully paid and non-assessable; except as
otherwise described in the Final Offering Memorandum, all of the
issued and outstanding capital stock of the Subsidiary is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(ii) to the best knowledge of such counsel, there are no
pending actions or suits or judicial, arbitral, rule-making,
administrative or other proceedings to which the Subsidiary is a party
or of which any property or assets of the Subsidiary are the subject
which singularly or in the aggregate, if determined adversely to the
Subsidiary, could reasonably be expected to have a Material Adverse
Effect and to the best knowledge of such counsel, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others.
(iii) (A) the Subsidiary is not in violation of its charter or
by-laws, (B) in default in any material respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject or (C) in violation
in any material respect of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject;
<PAGE> 34
ANNEX D
[Form of Opinion of W. Thomas McGhee]
<PAGE> 1
EXHIBIT 10.17
Viasystems, Inc.
$400,000,000
9 3/4% Senior Subordinated Notes due 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
June 6, 1997
CHASE SECURITIES INC.
NATWEST CAPITAL MARKETS LIMITED
SCHRODER WERTHEIM & CO. INCORPORATED
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Viasystems, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Chase Securities Inc. ("CSI"), Natwest Capital
Markets Limited and Schroder Wertheim & Co. Incorporated (collectively, the
"Initial Purchasers"), upon the terms and subject to the conditions set forth
in a purchase agreement dated June 2, 1997 (the "Purchase Agreement"),
$400,000,000 aggregate principal amount of its 9 3/4% Senior Subordinated Notes
due 2007 (the "Securities"). Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Purchase Agreement.
In satisfaction of a condition to the obligations of the
Initial Purchasers to purchase the Securities under the Purchase Agreement, the
Company agrees with the Initial Purchasers, for the benefit of the holders
(including the Initial Purchasers) of the Transfer Restricted Securities and
the Exchange Securities (as defined herein) (collectively, the "Holders"), as
follows:
1. Registered Exchange Offer. The Company shall (i) prepare and, not
later than 60 days following the date of original issuance of the Securities
(the "Issue Date"), file with the Commission a registration statement (the
"Exchange Offer Registration Statement") on an appropriate form under the
Securities Act with respect to a proposed offer to the Holders of the Transfer
Restricted Securities (the "Registered Exchange Offer") to issue and deliver to
such Holders, in exchange for the Transfer Restricted Securities, a like
aggregate principal amount of debt securities of the Company (the "Exchange
Securities") that are identical in all material respects to the Transfer
Restricted Securities, except for the transfer restrictions relating to the
Securities, (ii) use its reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act no later
than 160 days
<PAGE> 2
2
after the Issue Date and the Registered Exchange Offer to be consummated no
later than 190 days after the Issue Date and (iii) keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is first mailed to the Holders (such period being called the
"Exchange Offer Registration Period"). The Exchange Securities and Private
Exchange Securities (as defined below, if any) will be issued under the
Indenture or an indenture (the "Exchange Securities Indenture") between the
Company and the Trustee or such other bank or trust company that is reasonably
satisfactory to the Initial Purchasers, as trustee (the "Exchange Securities
Trustee"), such indenture to be identical in all material respects to the
Indenture, except for the transfer restrictions relating to the Transfer
Restricted Securities.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for Exchange Securities (assuming that such
Holder (a) is not an affiliate of the Company or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b)
an Initial Purchaser with Securities that have the status of an unsold
allotment in an initial distribution, (c) acquires the Exchange Securities in
the ordinary course of such Holder's business and (d) has no arrangements or
understandings with any person to participate in the distribution of the
Exchange Securities) and to trade such Exchange Securities from and after their
receipt without any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of the several states
of the United States. The Company, the Initial Purchasers and each Exchanging
Dealer acknowledge that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, (i) each Holder that is
a broker-dealer electing to exchange Securities, acquired for its own account
as a result of market-making activities or other trading activities, for
Exchange Securities (an "Exchanging Dealer"), is required to deliver a
prospectus containing substantially the information set forth in Annex A hereto
on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and
the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan
of Distribution" section of such prospectus in connection with a sale of any
such Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) if any Initial Purchaser elects to sell
Private Exchange Securities acquired in exchange for Securities constituting
any portion of an unsold allotment, it is required to deliver a prospectus
containing the information required by Items 507 or 508 of Regulation S-K under
the Securities Act and the Exchange Act ("Regulation S-K").
Upon consummation of the Registered Exchange Offer in accordance with
this Section 1, the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Transfer Restricted Securities that
are Private Exchange Securities. Exchange Securities as to which clause (v) of
the first paragraph of Section 2 is applicable and Exchange Securities held by
Participating Broker-Dealers (as defined), and the Company shall have no
further obligations to register Transfer Restricted Securities (other than
Private Exchange Securities and other than in respect of any Exchange
Securities as to which clause (v) of the first paragraph of Section 2 hereof
applies) pursuant to Section 2 hereof.
<PAGE> 3
3
If, prior to the consummation of the Registered Exchange
Offer, any Holder holds any Securities acquired by it that have, or that are
reasonably likely to be determined to have, the status of an unsold allotment
in the initial distribution of the Securities, or any Holder is not entitled to
participate in the Registered Exchange Offer, the Company shall, upon the
request of any such Holder, simultaneously with the delivery of the Exchange
Securities in the Registered Exchange Offer, issue and deliver to any such
Holder, in exchange for the Securities held by such Holder (the "Private
Exchange"), a like aggregate principal amount of debt securities of the Company
(the "Private Exchange Securities") that are identical in all material respects
to the Exchange Securities, except for the transfer restrictions relating to
such Private Exchange Securities. The Private Exchange Securities will be
issued under the same indenture as the Exchange Securities, and the Company
shall use its reasonable best efforts to cause the Private Exchange Securities
to bear the same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is first mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange Offer
with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York City time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are applicable to
the Registered Exchange Offer.
As soon as practicable after the close of the Registered
Exchange Offer and any Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(b) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee,
as the case may be, promptly to authenticate and deliver to each
Holder, Exchange Securities or
<PAGE> 4
4
Private Exchange Securities, as the case may be, equal in principal
amount to the Securities of such Holder so accepted for exchange.
The Company shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Company shall make such prospectus and any amendment or supplement
thereto available to any broker- dealer for use in connection with any resale
of any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Securities, the Exchange Securities and the
Private Exchange Securities shall vote and consent together on all matters as
one class and that none of the Securities, the Exchange Securities or the
Private Exchange Securities will have the right to vote or consent as a
separate class on any matter.
Interest on each Exchange Security and Private Exchange
Security issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accrue from the last interest payment date on which interest was
paid on the Securities surrendered in exchange therefor or, if no interest has
been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act, (iii) such Holder is not an affiliate
of the Company or, if it is such an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable and (iv) if an Exchanging Dealer, such person shall comply
with the prospectus delivery requirements of the Securities Act.
Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (iii) any prospectus forming part of any Exchange Offer
Registration Statement, and any supplement to such prospectus, does not, as of
the consummation of the Registered Exchange
<PAGE> 5
5
Offer, 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.
2. Shelf Registration. If (i) because of any change in law or applicable
interpretations thereof by the Commission's staff the Company is not permitted
to effect the Registered Exchange Offer as contemplated by Section 1 hereof, or
(ii) any Securities validly tendered pursuant to the Registered Exchange Offer
are not exchanged for Exchange Securities within 190 days after the Issue Date,
or (iii) any Initial Purchaser so requests with respect to Securities or
Private Exchange Securities not eligible to be exchanged for Exchange
Securities in the Registered Exchange Offer and held by it following the
consummation of the Registered Exchange Offer, or (iv) any applicable law or
interpretations do not permit any Holder to participate in the Registered
Exchange Offer, or (v) any Holder that participates in the Registered Exchange
Offer does not receive freely transferable Exchange Securities in exchange for
tendered Securities (the obligation to comply with a prospectus delivery
requirement being understood not to constitute a restriction on
transferability), then the following provisions shall apply:
(a) The Company shall use its reasonable best efforts to
file as promptly as practicable (but in no event more than 30 days after so
required or requested pursuant to this Section 2) with the Commission, and
thereafter shall use its reasonable best efforts to cause to be declared
effective, a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined) by the Holders thereof from time to time in accordance
with the methods of distribution set forth in such registration statement
(hereafter, a "Shelf Registration Statement" and, together with any Exchange
Offer Registration Statement, a "Registration Statement"); provided, however,
that no Holder of Securities or Exchange Securities (other than any Initial
Purchaser) shall be entitled to have Securities or Exchange Securities held by
it covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all the provisions of this Agreement applicable to such
Holder.
(b) The Company shall use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective in order to permit
the prospectus forming part thereof to be used by Holders of Transfer
Restricted Securities for a period ending on the earlier of (i) two years from
the Issue Date or such shorter period that will terminate when all the Transfer
Restricted Securities covered by the Shelf Registration Statement have been
sold pursuant thereto and (ii) the date all of the Securities become eligible
for resale without volume restrictions pursuant to Rule 144 under the
Securities Act (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would
result in Holders of Transfer Restricted Securities covered thereby not being
able to offer and sell such Transfer Restricted Securities during that period,
unless such action is required by applicable law; provided however, that the
foregoing shall not apply to actions taken by the Company in good faith and for
valid business reasons (not including avoidance of their obligations
hereunder), including, without limitation, the acquisition or divestiture of
assets, so long as the Company
<PAGE> 6
6
within 30 days thereafter complies with the requirements of Section 4(j)
hereof. Any such period during which the Company fails to keep the
registration statement effective and usable for offers and sales of Securities
and Exchange Securities is referred to as a "Suspension Period." A Suspension
Period shall commence on and include the date that the Company gives notice
that the Shelf Registration Statement is no longer effective or the prospectus
included therein is no longer usable for offers and sales of Securities and
Exchange Securities and shall end on the date when each Holder of Securities
and Exchange Securities covered by such registration statement either receives
the copies of the supplemented or amended prospectus contemplated by Section
4(j) hereof or is advised in writing by the company that use of the prospectus
may be resumed. If one or more Suspension Periods occur, the two-year time
period referenced above shall be extended by the aggregate of the number of
days included in each such Suspension Period.
(c) Notwithstanding any other provisions hereof, the
Company will ensure that (i) any Shelf Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Shelf Registration Statement
and any amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with written
information furnished to the Company by or on behalf of any Holder specifically
for use therein (the "Holders' Information")) does not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Shelf Registration Statement, and any
supplement to such prospectus (in either case, other than with respect to
Holders' Information), does 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.
3. Liquidated Damages. (a) The parties hereto agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations under Section 1 or Section 2, as applicable, and that
it would not be feasible to ascertain the extent of such damages. Accordingly,
if (i) the applicable Registration Statement is not filed with the Commission
on or prior to 60 days after the Issue Date, (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective within 160 days after the Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of Commission's staff, if later,
within 45 days after publication of the change in law or interpretation), (iii)
the Registered Exchange Offer is not consummated on or prior to 190 days after
the Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective within 160 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 45 days
after publication of the change in law or interpretation) but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain
the effectiveness thereof) without being succeeded within 60 days by an
additional Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the Company
will be obligated to pay
<PAGE> 7
7
liquidated damages to each Holder of Transfer Restricted Securities, during the
period of one or more such Registration Defaults, in an amount equal to $0.10
per week per $1,000 principal amount of Transfer Restricted Securities held by
such Holder until (i) the applicable Registration Statement is filed, (ii) the
Exchange Offer Registration Statement is declared effective and the Registered
Exchange Offer is consummated, (iii) the Shelf Registration Statement is
declared effective or (iv) the Shelf Registration Statement again becomes
effective, as the case may be. Following the cure of all Registration
Defaults, the accrual of liquidated damages will cease. As used herein, the
term "Transfer Restricted Securities" means (i) each Security until the date on
which such Security has been exchanged for a freely transferable Exchange
Security (the obligation to comply with a prospectus delivery requirement being
understood not to constitute a restriction on transferability) in the
Registered Exchange Offer, (ii) each Security or Private Exchange Security
until the date on which it has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or
(iii) each Security or Private Exchange Security until the date on which it is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act. Notwithstanding
anything to the contrary in this Section 3(a), the Company shall not be
required to pay liquidated damages to a Holder of Transfer Restricted
Securities if such Holder failed to comply with its obligations to make the
representations set forth in the second to last paragraph of Section 1 or
failed to provide the information required to be provided by it, if any,
pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying
Agent under the Indenture immediately upon the happening of each and every
Registration Default. The Company shall pay the liquidated damages due on the
Transfer Restricted Securities by depositing with the Paying Agent (which may
not be the Company for these purposes), in trust, for the benefit of the
Holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the liquidated damages then due. The liquidated damages due shall be
payable on each interest payment date specified by the Indenture and the
Securities to the record holder of the Transfer Restricted Securities entitled
to receive the interest payment to be made on such date. Each obligation to
pay liquidated damages shall be deemed to accrue from and including the date of
the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Transfer Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement to be
filed, (ii) the Shelf Registration Statement to remain effective or (iii) the
Exchange Offer Registration Statement to be declared effective and the
Registered Exchange Offer to be consummated, in each case to the extent
required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
<PAGE> 8
8
(a) The Company shall (i) furnish to each Initial
Purchaser, prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement, if any,
to the prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such comments
as any Initial Purchaser may reasonably propose; (ii) include the information
set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange
Offer Procedures" section and the "Purpose of the Exchange Offer" section and
in Annex C hereto in the "Plan of Distribution" section of the prospectus
forming a part of the Exchange Offer Registration Statement, and include the
information set forth in Annex D hereto in the Letter of Transmittal delivered
pursuant to the Registered Exchange Offer; and (iii) if requested by any
Initial Purchaser, include the information required by Items 507 or 508 of
Regulation S-K, as applicable, in the prospectus forming a part of the Exchange
Offer Registration Statement.
(b) The Company shall advise each Initial Purchaser, each
Exchanging Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use of
the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities, the Exchange
Securities or the Private Exchange Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement or the prospectus included therein in
order that the statements therein (in light of the circumstances in which made,
in the case of the prospectus) are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) The Company will make every reasonable effort to
obtain the withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
<PAGE> 9
9
(d) The Company will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company will, during the Shelf Registration
Period, promptly deliver to each Holder of Transfer Restricted Securities
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request; and the Company
consents to the use of such prospectus or any amendment or supplement thereto
by each of the selling Holders of Transfer Restricted Securities in connection
with the offer and sale of the Transfer Restricted Securities covered by such
prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Initial Purchaser
and each Exchanging Dealer, and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any Initial Purchaser or Exchanging Dealer or
any such Holder so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).
(g) The Company will, during the Exchange Offer
Registration Period or the Shelf Registration Period, as applicable, promptly
deliver to each Initial Purchaser, each Exchanging Dealer and such other
persons that are required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus included
in the Exchange Offer Registration Statement or the Shelf Registration
Statement and any amendment or supplement thereto as such Initial Purchaser,
Exchanging Dealer or other persons may reasonably request; and the Company
consents to the use of such prospectus or any amendment or supplement thereto
by any such Initial Purchaser, Exchanging Dealer or other persons, as
applicable, as aforesaid.
(h) Prior to the effective date of any Registration
Statement, the Company will use its reasonable best efforts to register or
qualify, or cooperate with the Holders of Securities, Exchange Securities or
Private Exchange Securities included therein and their respective counsel in
connection with the registration or qualification of, such Securities, Exchange
Securities or Private Exchange Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holder reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Securities,
Exchange Securities or Private Exchange Securities covered by such Registration
Statement; provided that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process or to taxation
in any such jurisdiction where it is not then so subject.
<PAGE> 10
10
(i) The Company will cooperate with the Holders of
Securities, Exchange Securities or Private Exchange Securities to facilitate
the timely preparation and delivery of certificates representing Securities,
Exchange Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders thereof may request
in writing prior to sales of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Registration Statement.
(j) If (i) any event contemplated by Section 4(b)(ii)
through (v) occurs during the period for which the Company is required to
maintain an effective Registration Statement or (ii) any Suspension Period
remains in effect more than 30 days after the occurrence thereof, the Company
will promptly prepare and file with the Commission a post-effective amendment
to the Registration Statement or a supplement to the related prospectus or file
any other required document so that, as thereafter delivered to purchasers of
the Securities, Exchange Securities or Private Exchange Securities from a
Holder, the prospectus 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.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities, the Exchange Securities and the Private Exchange Securities, as the
case may be, and provide the applicable trustee with certificates for the
Securities, the Exchange Securities or the Private Exchange Securities, as the
case may be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of
Section 11(a) of the Securities Act; provided that in no event shall such
earning statement be delivered later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of the applicable Registration Statement, which statement shall cover such
12-month period.
(m) The Company will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.
(n) The Company may require each Holder of Transfer
Restricted Securities to be registered pursuant to any Shelf Registration
Statement to furnish to the Company such information concerning the Holder and
the distribution of such Transfer Restricted Securities as the Company may from
time to time reasonably require for inclusion in such Shelf Registration
Statement, and the Company may exclude from such registration the Transfer
Restricted Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
<PAGE> 11
11
(o) In the case of a Shelf Registration Statement, each
Holder of Transfer Restricted Securities to be registered pursuant thereto
agrees by acquisition of such Transfer Restricted Securities that, upon receipt
of any notice from the Company pursuant to Section 4(b)(ii) through (v), such
Holder will discontinue disposition of such Transfer Restricted Securities
until such Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) or until advised in writing (the "Advice") by the
Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date
of the giving of such notice to and including the date when each seller of
Transfer Restricted Securities covered by such Registration Statement shall
have received (x) the copies of the supplemental or amended prospectus
contemplated by Section 4(j) (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental prospectus is
required).
(p) In the case of a Shelf Registration Statement, the
Company shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action, if
any, as Holders of a majority in aggregate principal amount of the Securities,
Exchange Securities and Private Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by a representative
of, and Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and Private
Exchange Securities being sold and any underwriter participating in any
disposition of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement, all relevant financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries and (ii) use its reasonable best efforts to have its officers,
directors, employees, accountants and counsel supply all relevant information
reasonably requested by such representative, Special Counsel or any such
underwriter (an "Inspector") in connection with such Shelf Registration
Statement.
(r) In the case of a Shelf Registration Statement, the
Company shall, if requested by the managing underwriters (if any) in connection
with such Shelf Registration Statement, use its reasonable best efforts to
cause (i) its counsel to deliver an opinion relating to the Shelf Registration
Statement and the Securities, Exchange Securities or Private Exchange
Securities, as applicable, in customary form, (ii) its officers to execute and
deliver all customary documents and certificates requested by Holders of a
majority in aggregate principal amount of the Securities, Exchange Securities
and Private Exchange Securities being sold, their Special Counsel or the
managing underwriters (if any) and (iii) its independent public accountants to
provide a comfort letter or letters in customary form,
<PAGE> 12
12
subject to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
5. Registration Expenses. The Company will bear all expenses incurred in
connection with the performance of its obligations under Sections 1, 2, 3 and 4
and the Company will reimburse the Initial Purchasers and the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal
amount of the Securities, the Exchange Securities and the Private Exchange
Securities to be sold pursuant to each Registration Statement (the "Special
Counsel") acting for the Initial Purchasers or Holders in connection therewith.
6. Indemnification.
(a) In the event of a Shelf Registration Statement
or in connection with any prospectus delivery pursuant to an Exchange Offer
Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company shall indemnify and hold harmless each Holder
(including, without limitation, any such Initial Purchaser or Exchanging
Dealer), its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls such Holder
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 6 and Section 7 as a Holder) from and
against any loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, without limitation, any loss, claim, damage,
liability or action relating to purchases and sales of Securities, Exchange
Securities or Private Exchange Securities), to which that Holder may become
subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Holder promptly upon demand for any legal
or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with any Holders'
Information; and provided, further, that with respect to any such untrue
statement in or omission from any related preliminary prospectus, the indemnity
agreement contained in this Section 6(a) shall not inure to the benefit of any
Holder from whom the person asserting any such loss, claim, damage, liability
or action received Securities, Exchange Securities or Private Exchange
Securities to the extent that such loss, claim, damage, liability or action of
or with respect to such Holder results from the fact that both (A) a copy of
the final prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities, Exchange Securities or
Private Exchange Securities to such person and (B) the untrue statement in or
omission from the related preliminary prospectus was
<PAGE> 13
13
corrected in the final prospectus unless, in either case, such failure to
deliver the final prospectus was a result of non-compliance by the Company with
Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each
Holder, severally and not jointly, shall indemnify and hold harmless the
Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 6(b) and Section 7 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming
part thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Holders' Information, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that no such Holder shall be liable
for any indemnity claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Securities, Exchange Securities or
Private Exchange Securities pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 6(a) or 6(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 6 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 6. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 6 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than the reasonable costs of
investigation; provided, however, that an indemnified party shall
<PAGE> 14
14
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) a conflict or potential conflict exists (based upon advice of counsel to
the indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (3) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 6(a) and 6(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
(i) does not contain an admission of fault or wrongdoing and (ii) includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in
respect thereof, (i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company from the offering and sale of the
Securities, on the one hand, and a Holder with respect to the sale by such
Holder of Securities, Exchange Securities or Private Exchange Securities, on
the other, 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 such Holder on the other with
respect to the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and a Holder on the other with respect to such offering
and such sale shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (before deducting expenses)
received by or on behalf of
<PAGE> 15
15
the Company as set forth in the table on the cover of the Offering Memorandum,
on the one hand, bear to the total proceeds received by such Holder with
respect to its sale of Securities, Exchange Securities or Private Exchange
Securities, on the other. The relative fault 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 the Company or information supplied by the Company on the one hand
or to any Holders' Information on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7
were to be determined by pro rata allocation (even if the Holders were treated
as one entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 7 shall be deemed to include, for purposes of this Section 7, any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, an indemnifying party that is a Holder of
Securities, Exchange Securities or Private Exchange Securities shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Securities, Exchange Securities or Private Exchange
Securities sold by such indemnifying party to any purchaser exceeds the amount
of any damages which such indemnifying party has otherwise paid or become
liable to pay by reason of any 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute as provided in this
Section 7 are several in proportion to their respective obligations and not
joint.
8. Rules 144 and 144A. If at any time the Company is not required to
file such reports, it will, upon the written request of any Holder of Transfer
Restricted Securities, make publicly available other information so long as
necessary to permit sales of such Holder's securities pursuant to Rules 144 and
144A. The Company covenants that it will take such further action as any
Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)). Upon the written request of
any Holder of Transfer Restricted Securities, the Company shall deliver to such
Holder a written statement as to whether it has complied with such
requirements. Notwithstanding the foregoing, nothing in this Section 8 shall
be deemed to require the Company to register any of its securities pursuant to
the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Company,
subject to the consent of the Holders of a majority in aggregate principal
amount of such Transfer Restricted Securities included in such offering (which
shall
<PAGE> 16
16
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements 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.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company
has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 10(b), which address initially is, with respect to each
Holder, the address of such Holder maintained by the Registrar under
the Indenture, with a copy in like manner to Chase Securities Inc.,
NatWest Capital Markets Limited and Schroder Wertheim & Co.
Incorporated;
(2) if to an Initial Purchaser, initially at its address
set forth in the Purchase Agreement; and
(3) if to the Company, initially at the address of the
Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the
recipient's telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be
binding upon the Company and its successors and assigns.
<PAGE> 17
17
(d) Counterparts. This Agreement may be executed in any
number of counterparts (which may be delivered in original form or by
telecopier) 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.
(e) Definition of Terms. For purposes of this Agreement,
(a) the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) 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 conflicts of law provisions thereof to the extent the application
of the laws of another jurisdiction would be required thereby.
(h) Remedies. In the event of a breach by the Company or
by any holder of Transfer Restricted Securities of any of their obligations
under this Agreement, each holder of Transfer Restricted Securities or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery
of damages for a breach by the Company of its obligations under Sections 1 or 2
hereof for which liquidated damages have been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. The Company represents,
warrants and agrees that (i) it has not entered into, shall not, on or after
the date of this Agreement, enter into any agreement that is inconsistent with
the rights granted to the holders of Transfer Restricted Securities in this
Agreement or otherwise conflicts with the provisions hereof, (ii) it has not
previously entered into any agreement which remains in effect granting any
registration rights with respect to any of its debt securities to any person
and (iii) without limiting the generality of the foregoing, without the written
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Transfer Restricted Securities, it shall not grant to any person
the right to request the Company to register any debt securities of the Company
under the Securities Act unless the rights so granted are not in conflict or
inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company
nor any of its security holders (other than the Holders of Transfer Restricted
Securities in such capacity)
<PAGE> 18
18
shall have the right to include any securities of the Company in any Shelf
Registration or Registered Exchange Offer other than Transfer Restricted
Securities.
(k) Severability. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable best efforts
to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
<PAGE> 19
19
Please confirm that the foregoing correctly sets forth the
agreement among the Company and the Initial Purchasers.
Very truly yours,
VIASYSTEMS, INC.
By /s/
-------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By /s/
---------------------------
Authorized Signatory
NATWEST CAPITAL MARKETS LIMITED
By /s/
---------------------------
Authorized Signatory
SCHRODER WERTHEIM & CO. INCORPORATED
By /s/
---------------------------
Authorized Signatory
<PAGE> 20
ANNEX A
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities pursuant to the Registered Exchange
Offer, where such Securities 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
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of Exchange Securities received in exchange
for Securities where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities. The Company
has agreed that, for a period of 90 days after the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
- 20 -
<PAGE> 21
ANNEX B
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities 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 Securities. See "Plan of Distribution."
- 21 -
<PAGE> 22
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities pursuant to the Registered Exchange
Offer, where such Securities were acquired by such broker-dealer as a result of
market making activities other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such Securities were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that, for a period of 90 days after the Expiration Date,
it will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
_______________, 1997, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered 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 Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one
counsel for the Holders of the Securities) other than commissions or
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
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(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer
prospectus.
<PAGE> 23
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
---------------------------------------------------
Address:
------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account, in exchange for Securities that it represents
and warrants were acquired as a result of market-making activities or other
trading activities, and it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Securities; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
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<PAGE> 1
EXHIBIT 10.25
ENVIRONMENTAL, HEALTH AND SAFETY AGREEMENT
This ENVIRONMENTAL, HEALTH AND SAFETY AGREEMENT ("Agreement") is made
and entered into as of the 26th day of November 1996, between LUCENT
TECHNOLOGIES INC., a Delaware corporation ("Seller") and CIRCO CRAFT
TECHNOLOGIES, INC., a Delaware corporation ("Purchaser").
RECITALS
A. Seller, through its Microelectronics Group, Interconnection Technologies
Unit, presently conducts, primarily in its facility at its Richmond Works, 4500
South Laburnum Avenue, Richmond, Virginia 23231 (the "Facility"), the business
of designing, manufacturing and marketing printed circuit boards, backplanes
and related products and components (the "Products") for telecommunications and
other applications (the "Business").
B. Seller desires to sell or transfer and Purchaser desires to purchase or
acquire assets of the Business on the terms and subject to the conditions set
forth in the Acquisition Agreement made on November 26, 1996, between Seller
and Purchaser (the "Acquisition Agreement").
C. Seller wishes to assign or transfer to Purchaser, and Purchaser is
willing to assume liabilities of the Business, on the terms and subject to the
conditions set forth in the Acquisition Agreement.
D. Seller and Purchaser wish to enter into certain collateral agreements,
as hereinafter specified, namely a Technology Transfer Agreement, a Transition
Agreement, an Environmental Health and Safety Agreement, a Supply Agreement and
a Trademark License Agreement (collectively, the "Related Agreements"), each in
connection with the transactions contemplated by the Acquisition Agreement.
E. This is the Environmental, Health and Safety Agreement. In the event of
a conflict between this Agreement and a Related Agreement, this Agreement shall
control.
F. Unless defined herein, capitalized terms shall have the meanings
contained in the Acquisition Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE> 2
ARTICLE I - GENERAL PRINCIPLES
1. Except as expressly stated herein, after the date of Closing, Purchaser
will have complete responsibility for all liabilities and obligations to the
extent relating to, resulting from or arising out of the environmental, health,
and safety operations at the Facility after the Closing Date, including all
responsibility for groundwater contamination caused by Purchaser after the
Closing Date, which includes, but is not limited to, Purchaser's aggravation of
groundwater contamination conditions that exist at the time of the Closing (but
only to the extent such aggravation results in the imposition of new or
additional liabilities or obligations). Seller shall retain responsibility for
all liabilities and obligations to the extent relating to, resulting from or
arising out of the conduct of the Business or ownership or lease of any of the
assets or any properties used in Business including, but not limited to, the
Facility, prior to the Closing, including, but not limited to, any liability or
obligation to remediate any Hazardous Materials or contribute or otherwise pay
any amount under or in respect of any Environmental Law, and this obligation
and responsibility shall include without limitation, the investigation and
remediation of the groundwater at the Facility, pursuant to RCRA-III-76-CA and
RCRA-III-84-CA and any subsequent modifications thereto (collectively, the
"Order") and the operation and maintenance of the remediation system required
to implement the Order.
ARTICLE II - DEFINITIONS
"Acquisition Agreement" shall have the meaning set forth in the
Recitals
"Agreement" means this Environmental, Health and Safety
Agreement.
"Business" shall have the meaning set forth in the Recitals.
"Environmental Claim" means any notice of violation, action,
claim, lien, demand, abatement or other order or directive (conditional or
otherwise) by any person or governmental authority for personal injury
(including sickness, disease or death), tangible or intangible property damage,
damage to the environment (including natural resources), nuisance, pollution,
contamination, trespass or other adverse effects on the environment, or for
fines, penalties or restrictions resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden accidental or non-accidental
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Releases) of, or exposure to, any Hazardous Material, odor or audible noise in,
into or onto the environment at, in, by, from or related to the real Property
(including, but not limited to the Facility) or the Business or any activities
or operations thereon; (ii) the transportation, storage, treatment or disposal
of Hazardous Materials in connection with the Business; or (iii) the violation,
or alleged violation, of any Environmental Laws or Environmental Permits.
"Environmental Costs and Liabilities" means any and all claims, actions,
suits, proceedings, liabilities (whether absolute or contingent), obligations,
losses, damages (including any penalty or punitive damages), amounts paid in
settlement, interest, costs and expenses (including the reasonable fees of
attorneys, consultants, engineers and other experts), and court costs (and
other out-of-pocket expenses incurred in investigating, preparing, or defending
the foregoing) arising under any Environmental Law or from a breach of this
Agreement.
"Environmental Law" means any local, county, state, federal, and/or
foreign law (including common law), statute, code, ordinance, rule, regulation
or other legal obligation whose purpose is to protect and/or promote human
health and the environment, including without limitation the Comprehensive
Environmental Response Compensation and Liability Act (42 U.S.C, Sect. 9601 et
seq.), as amended, the Resource Conservation and Recovery Act ("RCRA") (42
U.S.C. Sect. 6901 et seq.), as amended, the Federal Water Pollution Control Act
(33 U.S.C. Sect, 125 1, et seq.), as amended, the Clean Air Act (42 U.S.C.
Sect. 7401 et seq.), as amended, the Toxic Substances Control Act (15 U.S.C.
Sect. 2601 et seq.), as amended, the Occupational Safety and Health Act (29
U.S.C. Sect. 651 et seq.), as amended, the Hazardous Materials Transportation
Act (49 U.S.C. Sect. 1801 et seq.), as amended, Oil Pollution Act (33 U.S.C.
Sect. 2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42
U.S.C. Sect. 11001, et seq.), as amended, the National Environmental Policy Act
(42 U.S.C. Sect. 4231 et seq.), as amended, the Safe Drinking Water Act (42
U.S.C. Sect. 300(f) et seq.), as amended, and any similar, implementing or
successor law, and any amendment, rule, regulation, or directive issued
thereunder or, with respect to representations and warranties made on the date
hereof, those in effect on or prior to the date hereof. As used in this
Agreement the term "Environmental Law" also means any consent order in RCRA
Docket III-227 and the unilateral order in RCRA Docket III076CA and III-084-CA
referenced in Articles III and IV.
"Environmental Permit" means any permit, approval, authorization,
license, variance, registration, or permission required under any applicable
Environmental Law for the operation
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of the Business or the use and occupancy of the Real Property owned, operated
or leased by or for the Business.
"Facility" shall have the meaning set forth in the Recitals.
"Hazardous Material" means any substance, material or waste which is
regulated by any governmental authority having jurisdiction over the operations
of the Business, including, without limitation, any material, substance or
waste that is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law, which includes, but is not limited to, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"Purchaser" means Circo Technologies, Inc.
"Real Estate" shall have the meaning set forth in the Acquisition
Agreement.
"Release" means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching, or migration on or into the indoor or outdoor environment.
"Remedial Action" means all actions, including, without limitation, any
capital expenditures required to be taken to (i) clean up remove, treat, or in
any other way address any Hazardous Material or other substance; (ii) prevent
the Release or threat of Release, or minimize the further Release, of any
Hazardous Material so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; (iii) perform
pre-remedial studies and investigations or post-remedial monitoring and care;
or (iv) bring the Facility and operations of the Business into compliance with
all Environmental Laws and Environmental Permits.
"Seller" shall mean Lucent Technologies, Inc. and for purposes of access
and other cooperative arrangements referenced in Article III of this Agreement,
Seller's outside contractors.
ARTICLE III - RCRA CORRECTIVE ACTION III-76 CA AND III-84 CA
1. On October 24, 1994, the United States Environmental Protection Agency
("USEPA") issued a unilateral order pursuant to RCRA 3008h, 42 U.S.C. Section
6928, to Seller to investigate and remediate the groundwater under and in the
vicinity of the Facility. A copy of that Order is attached as Exhibit 1. This
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Final Administrative Order was superseded by an Initial Unilateral Order III-
84-CA on or about September 20, 1996. A copy of the Initial Order is attached
as Exhibit 2. Collectively the two orders and any subsequent modifications
shall be considered the "Order". Seller at the present time is the sole
Respondent to the Order. Accordingly, after Closing, Seller will retain all
responsibility for the groundwater contamination, including those activities
necessary to comply with the Order, except as may be expressly stated to the
contrary in subparagraphs A-M of this Article.
Purchaser will permit Seller to manage the Project in such a way as to
ensure that Seller is not prevented from complying with the terms of the Order
and any subsequent modifications thereto. To this end, Purchaser shall afford
Seller all reasonable cooperation, including but not limited to reasonable
access to the Facility, relevant records, and plant personnel.
Reasonable cooperation from Purchaser as described above also
specifically includes but is not necessarily limited to the following:
A. Purchaser will provide Seller with access to water, telephone
lines, compressed air, electricity, and steam reasonably necessary to
run the remediation system. Seller will pay a reasonable rate for the
foregoing services based on gallonage of remediation water pumped. This
reasonable rate will be agreed upon by the parties within 45 days of the
Closing and shall be reviewed annually.
B. To the extent allowed by current Environmental Permits and not
inconsistent with Environmental Laws and where required by the Order,
Purchaser will permit Seller to discharge treated groundwater from the
remediation system to Purchaser's cooling towers, scrubbers, boilers and
wastewater treatment facility up to 84 g.p.m. Seller will monitor the
quality of this discharge and will take immediate corrective action if
the total iron concentration of the discharge exceeds 3 mg/l or the
total toxic organic ("TTO") concentration of the discharge exceeds 3
mg/l. Seller shall be responsible for any damage to Purchaser's cooling
towers, scrubbers, boilers and wastewater treatment system resulting
from the operation of the groundwater remediation system. If Purchaser
determines modifications are necessary to ensure continued operation of
Purchaser's equipment, Seller and Purchaser will negotiate in good faith
to achieve a solution that satisfies the legitimate needs of both
Parties and Seller will pay the reasonable costs of such modifications.
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C. Within three months (or more for good cause shown) after the
Closing, Seller shall install or cause to be installed a separate
security alarm system(s) for the remediation system, which shall notify
Seller and Purchaser of any emergency or malfunction of the remediation
system. Until Seller's security system is installed, Purchaser will
permit Seller to utilize Purchaser's security alarm system and, during
that time period, Purchaser will use reasonable and prudent efforts to
insure that its security personnel notify Seller forthwith if the
remediation system goes into an alarm status.
D. Normal operation of the groundwater remediation system includes
periodic backwash of iron removal filters. Filter backwash water, which
contains iron and some volatile organics, is produced at the rate of
approximately 200 to 300 gallons per day, and historically has been
discharged to the Facility's wastewater treatment plant. To the extent
allowed by current Environmental Permits and not inconsistent with
Environmental Laws and required by the Order, Purchaser will allow
Seller to continue to discharge this waste to the wastewater treatment
plant in support of the Order. Purchaser shall have no obligation to
upgrade the system to accommodate Seller unless such upgrades are
required to comply with the terms of the Order, in which case Seller
shall reimburse Purchaser for the costs of such upgrades.
E. Purchaser shall lease to Seller for the sum of one dollar ($1)
per year Buildings 31 and 33, which Buildings shall be used for the
operation and maintenance of the remediation system. Seller shall have
full and exclusive use of Buildings 31 and 33. Seller shall exercise
such use with reasonable and prudent care. Purchaser will provide
maintenance and upkeep of such Buildings, for which Seller will pay a
reasonable rate. Notwithstanding this, Purchaser shall have the right
to inspect Buildings 31 and 33.
F. Seller is entitled to reasonable access (including motor vehicle
access where necessary) to monitoring wells, extraction wells,
production wells and various and assorted piping and wiring associated
with the remediation system. To this end, Purchaser will use reasonable
efforts to maintain the perimeter roads and clearings around the
monitoring and extraction wells.
G. Pursuant to the terms of the Order, as between Seller and
Purchaser, Seller shall be solely responsible (except as expressly
stated to the contrary in subparagraphs A through L of this article) for
the operation and maintenance of the
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remediation system or any additional systems, including monitoring or
additional investigatory or remedial work, required by USEPA to address
the known groundwater contamination and any additional contamination, to
the extent such contamination relates to, results from or arises out of
pre-Closing operations at the Facility. When Purchaser becomes aware of
any emergency or malfunction in the remediation system, Purchaser shall
promptly notify Seller. Where no representative of Seller is on-site or
readily available, Purchaser agrees to perform emergency temporary work
where necessary to prevent environmental damage or mitigate further
environmental damage. Purchaser shall use its best judgment in
undertaking such work, which shall be at Seller's sole cost and expense
unless the emergency or malfunction results from Purchaser's negligence
or willful misconduct, in which case the costs shall be equitably
allocated. Purchaser recognizes that Seller may need the assistance of
Purchaser even if Seller's representative is on-site. In all cases
where Purchaser's assistance is required, Seller shall reimburse
Purchaser for any reasonable costs incurred by Purchaser in responding
to an emergency or malfunction in the remediation system.
H. Seller may choose to manage this Project in whole or in part
through outside contractors. To the extent Seller exercises its option
hereunder, Purchaser shall have right to approve Seller's choice of
outside contractors, which approval shall not be unreasonably withheld
(except it is understood that Seller remains the sole Respondent to the
Order).
I. Purchaser will notify Seller in advance of any changes in
Purchaser's operations or of work to be performed by Purchaser in the
vicinity of the groundwater remediation system that, in either case,
could reasonably be expected to adversely affect the operation of the
remediation system or damage or otherwise materially interfere with
Seller's continuing obligation under the Order. Seller is entitled to
review and approve Purchaser's plans for such changes or work, which
approval shall not be unreasonably withheld.
J. To the extent allowed by current Environmental Permits and not
inconsistent with Environmental Laws and required by the Order, Seller
may discharge to the Facility's wastewater treatment plant, acid and
alkaline wastes developed during extraction well and stripping tower
cleaning operations (said wastes will result from the use of chemicals
commonly used in the maintenance of wells and jointly approved by
Purchaser and Seller). Purchaser shall have no obligation to upgrade
the wastewater treatment system to accommodate
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the Seller unless such upgrades are required to comply with the terms of
the Order, in which case Seller shall reimburse Purchaser for the costs
of such upgrades.
K. Purchaser will allow Seller and Seller's contractors and
representatives to bring certain chemicals on site, to the extent
required for the periodic maintenance of the groundwater wells,
stripping towers and associated piping; provided, that prior to bringing
such chemicals on-site, Seller shall notify Purchaser of the chemicals
and quantities to be brought on site and provide Purchaser with material
safety data sheets for those chemicals in compliance with Environmental
Laws, including those regulations promulgated by the Occupational Safety
and Health Administration ("OSHA"), and the state, and the Facility's
health and safety procedures in effect at the time. Seller shall insure
that all chemicals brought on-site by Seller, its employees, contractors
or agents are labelled and handled in compliance with OSHA's Hazard
Communication Standard, 29 C.F.R.Section 1910.1200.
L. Purchaser will permit Seller to operate, maintain and upgrade all
equipment, associated piping, monitoring and extraction wells (not
production wells), and other items and appurtenances necessary to
operate and maintain the groundwater remediation system in support of
the Order. A description of the groundwater remediation system is
attached hereto as Exhibit 3.
M. Purchaser shall notify Seller as soon as practicable by
telephone, to be followed by written notification, of any event or
environmental condition at the Facility that Purchaser reasonably
believes could adversely affect Seller's continuing obligations under
the Order. Seller shall respond promptly to any such notification in a
time period and manner appropriate to the condition or event identified.
2. In the event that Purchaser proceeds to implement the ISO 14001
Environmental Management System, Seller agrees to conduct groundwater
remediation in a manner that supports third party certification.
3. Prior to Closing (or within a reasonable period of time after the
Closing), Seller and Purchaser shall each designate in writing a contact person
for groundwater remediation matters. After Closing, any changes in contact
person shall be accomplished by means of a written notification.
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4. Unless required to comply with the Order, Purchaser shall have no
obligation to undertake any acts that require or would require Purchaser to
obtain additional Environmental Permits, including but not limited to a permit
authorizing treatment of Hazardous Materials under RCRA, or that would impair
Purchaser's ability to conduct its own operations. To the extent additional
Environmental Permits are required, Purchaser shall cooperate with Seller to
obtain such Permits and Seller shall indemnify Purchaser for any additional
liabilities Purchaser may incur.
5. The foregoing terms and conditions of Article III are valid so long as
Seller is a Respondent to the Order. In the event that EPA or the Virginia
Department of Environmental Quality ("VDEQ") names Purchaser as a co-Respondent
to the Order or to any other a separate order or directive relating to
environmental or health and safety issues governed by this Agreement, the
parties agree to negotiate in good faith any additional terms necessary to
ensure that compliance is maintained and those additional terms will be
incorporated into this Article. These additional terms shall include but are
not necessarily limited to a fair allocation of responsibilities based on the
principle that each party is responsible for its own operations and the
consequences of its own acts and omissions. Such additional terms, however,
shall not alter the allocation of liabilities set forth in Articles VI and VII.
ARTICLE IV - RCRA DOCKET III-227
1. On July 31, 1991, the USEPA filed a complaint before an Administrative
Law Judge seeking $4,184,304 in penalties against Seller for alleged RCRA
violations. On October 3, 1991, Seller answered the complaint, denying most of
the allegations. Since that time the case has been in litigation.
2. Purchaser and Seller agree that the conduct of this litigation and
resolution of the claims is solely the responsibility of Seller. If this
litigation is still pending after the date of Closing, Purchaser agrees to
cooperate with Seller in providing reasonable access to records and witnesses
relating to such litigation. Purchaser will, when requested by Seller, provide
documentation and information to Seller pertaining to certain supplemental
environmental projects completed or begun by Seller before Closing in
connection with this litigation.
3. Seller shall bear all Environmental Costs and Liabilities, including,
but not limited to, the cost of any Supplemental Environmental Projects,
associated with resolving this litigation.
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ARTICLE V - REPRESENTATIONS AND WARRANTIES
1. Except as set forth on Schedule X hereto and since January 1, 1991, and
to Seller's knowledge, Seller represents and warrants that:
a. Seller and the operations of the Business are and have been in
material compliance with Environmental Laws.
b. (i) Seller has obtained and currently maintains all Environmental
Permits necessary for the operation of the Business and the use
and occupancy of the Facility and is in material compliance with
such Environmental Permits, (ii) there are no judicial or
administrative actions, proceedings or investigations pending or,
to Seller's knowledge, threatened to revoke or modify in any
material respect any such Environmental Permits, and (iii) Seller
has not received any notice from any person to the effect that
there is lacking any Environmental Permit;
c. There are no judicial or administrative actions, proceedings or
investigations pending or threatened against Seller, to the
extent they relate to the Business or the Facility alleging the
violation of or seeking to impose liability pursuant to any
Environmental Law, which could result in the Purchaser incurring
material Environmental Costs and Liabilities;
d. Neither Seller nor any real property currently or formerly owned,
operated or leased by or for the Business is subject to any
outstanding written order, injunction, judgment, decree, ruling,
assessment or arbitration award or any agreement with any person,
or to any federal, state, local or foreign investigation
respecting (i) Environmental Laws, (ii) Remedial Action, (iii)
any Environmental Claim or (iv) the Release or threatened Release
of any Hazardous Material, in each case to the extent it relates
to the ownership or operation of the Business or the Facility;
2. Each of the representations and warranties contained in this Article V
shall survive the Closing and remain in effect for the statute of limitations
period applicable thereto. Any claim by a party with respect to any of such
matters which is not asserted by notice as provided for in Article VII of the
Acquisition Agreement relating thereto within such specified period of survival
(the "Claim Period") may not be pursued and is hereby irrevocably waived after
such time. Any claim for an
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Indemnifiable Losses (as defined in the Acquisition Agreement) asserted within
the Claim Period as herein provided will be timely made for the purposes
hereof.
ARTICLE VI - SELLER'S INDEMNITY
1. Except as specifically stated to the contrary herein, Seller agrees to
defend, hold harmless and indemnify Purchaser its affiliates and their
respective officers, directors, employees and agents (collectively, "Purchaser
Indemnified Parties") for and from any and all Environmental Costs and
Liabilities, Environmental Claims or Remedial Actions to the extent relating
to, resulting from or arising out of (a) the operation of the Business prior to
the Closing, (b) the operation of the remediation system pursuant to the terms
of the Order, including without limitation any fines or penalties incurred by
Purchaser as a result of the operation of the remediation system, and (c) any
breaches by Seller of any representation, warranty or covenant contained in
this Agreement or the Acquisition Agreement.
2. Seller's indemnity shall not apply to Environmental Costs and
Liabilities, Environmental Claims or Remedial Actions that relate to, result
from, or arise out of Purchaser's operations of the Business, including acts or
omissions by Purchaser (other than as governed by Article III of this
Agreement) that aggravate conditions existing at the Facility at the time of
Closing, but only to the extent Purchaser's acts or omissions actually result
in Seller incurring additional Environmental Costs and Liabilities and, then
only, those Environmental Costs and Liabilities that exceed those attributable
to any pre-Closing conditions. Further, with respect to Environmental Costs
and Liabilities, Environmental Claims, or Remedial Actions that relate to,
result from or arise out of pre-closing operations of the Business, but exist
only because of changes in Environmental Laws after the Closing, Seller shall
not be liable hereunder for bringing the Facility into compliance with
Environmental Laws other than those that were in existence as of the Closing;
provided, however, that Seller's obligation hereunder shall include any
obligation to investigate, remediate or otherwise address the presence of
Hazardous Materials at, on or under the Facility as of the Closing.
3. Seller's obligation pursuant to paragraphs 1(a) and (b) of this Article
shall not be subject to any basket or cap, although Seller's obligation to
indemnify with respect to the Order shall terminate at the time USEPA and/or
VDEQ determines that no further actions are necessary and/or issues to Seller a
certificate of completion or its functional equivalent. Notwithstanding any
other provision hereof or of any applicable
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Law, Seller's obligation with respect of any breach of a representation or
warranty under Article V of this Agreement shall not be triggered unless and
until the aggregate amount of such claims in respect of breaches of
representations being asserted under Article V of the Agreement and Section
7.3(a)(i) of the Acquisition Agreement exceeds $500,000, in which event
Purchaser Indemnified Parties shall be entitled to make a claim against Seller
Indemnifying Party to the extent of the full amount of Indemnifiable Losses.
4. Except as specifically provided for in this Agreement, a party's rights,
duties and obligations regarding indemnification shall be governed by the
provisions of Section 7.4 of the Acquisition Agreement.
ARTICLE VII - PURCHASER'S INDEMNITY
1. Purchaser agrees to defend, hold harmless and indemnify Seller, its
officers, directors, employees and agents (collectively, "Seller Indemnified
Parties") for all Environmental Costs and Liabilities, Environmental Claims or
Remedial Actions incurred by Seller to the extent relating to, resulting from,
or arising out of Purchaser's operations at the Facility after the date of
Closing (including activities by Purchaser which aggravate conditions existing
at the time of Closing, but only to the extent such conduct gives rise to
additional Environmental Costs and Liabilities), or which result from the
breach by Purchaser of any covenant contained in this Agreement.
2. Except as provided for in this Agreement, a party's rights, duties and
obligation regarding indemnification shall be governed by the provisions of
Section 7.4 of the Acquisition Agreement.
ARTICLE VIII - RECORDS
1. All environmental, health, and safety records ("Records") currently at
the Facility shall be provided to Purchaser in accordance with the provisions
set forth in Article I of the Acquisition Agreement.
2. Seller shall make available (and, upon request provide) to Purchaser
copies of all sampling data collected pursuant to or in response to the Order
or any future amendments to the Order as well as any reports, studies, risk
assessments, work plans, or similar documents prepared for or at the request of
or filed with the USEPA and/or the VDEQ to the extent relating to environmental
conditions on, at or under the Facility or the Business.
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Notwithstanding the foregoing, Seller shall provide Purchaser with periodic
updates and, to the extent the Order is modified or additional work is required
which will affect Purchaser's operations, Seller will provide Purchaser with
copies of such documents.
ARTICLE IX - DISPOSITION OF ENVIRONMENTAL MATERIALS
1. Until the time of Closing, Seller will conduct environmental operations
in the normal course and will not accumulate abnormal quantities of wastes
(except waste treatment sludge), resulting from routine production waste
streams generated on an ongoing basis at the Facility. Seller will make
reasonable efforts to remove all such wastes by the time of Closing. With
respect to such wastes remaining at the Facility on the date of Closing, Seller
will consult with Purchaser as to the proper disposal of such wastes and will
reimburse Purchaser for the costs associated with disposing of such wastes.
Wastes subject to this Article shall be identified by the parties at the time
of the Closing (or within a reasonable period thereafter).
ARTICLE X - DISCOVERY
1. In the event a dispute arises between Seller and Purchaser, including,
but not limited to claims under Article VI of this Agreement, or between Seller
and/or Purchaser and USEPA and/or VDEQ concerning environmental matters, the
Seller shall, after the Closing Date, be entitled to reasonable discovery in
order to ascertain relevant facts, including reasonable access to the Facility,
reasonable access to the Purchaser's non-privileged records and the Purchaser's
employees, consultants and contractors with relevant knowledge.
2. In the event a dispute arises between Purchaser and Seller, including,
but not limited to claims under Article VII of this Agreement, or between
Purchaser and USEPA and/or VDEQ concerning environmental matters, Purchaser
shall, after the Closing Date, be entitled to reasonable discovery in order to
ascertain relevant facts, including reasonable access to the Seller's non-
privilege records and Seller's employees, consultants and contractors with
relevant knowledge.
ARTICLE XI - ENVIRONMENTAL BASELINE
1. The parties agree that the May 3, 1996 Phase I Environmental Site
Assessment (Revised), Phase II Soil Sampling June 21, 1996, and Overview of
Soil Conditions, May 16, 1996, and Purchaser's Phase I Environmental Site
Assessment, prepared by Lexicon
13
<PAGE> 14
Environmental Associates, Inc. constitute nonexclusive evidence of
environmental conditions of the Facility at or near the date of Closing.
ARTICLE XII - PRE-CLOSING INVESTIGATION
1. Prior to the Closing, upon reasonable notice from Purchaser to Seller
given in accordance with the Acquisition Agreement, Seller will afford to the
officers, attorneys, accountants or other authorized representatives of
Purchaser reasonable access during normal business hours to the Facility and
the environmental books and records of Seller relating to the Facility,
excepting only those books and records which are subject to Attorney-Client
Privilege or Attorney Work-Product Privilege, so as to afford Purchaser full
opportunity to make such review, examination and investigation of environmental
matters and environmental conditions of the Facility as Purchaser may
reasonably desire to make. Purchaser will be permitted to make extracts from
or to make copies of such books and records to which access is granted under
this Article XIII as may be reasonably necessary in connection therewith,
subject to Section 2 below [and to employees' privacy rights and Seller's
policies pertaining thereto].
2. Notwithstanding and without limiting the foregoing, between the date of
the Letter of Intent and the Closing, the Purchaser, at its sole cost and
expense, may have an independent environmental consultant (the "Purchaser's
Consultant") perform an environmental inspection and audit of the Facility (the
"Purchaser's Inspection") provided that the Purchaser's Inspection shall be
conducted in a manner that does not unreasonably interfere with the operation
of the Seller's business nor does damage to the Seller's property. Prior to
conducting an inspection other than a Phase I environmental audit, Purchaser's
Consultant shall first prepare a work plan describing the proposed Purchaser's
Inspection. The Seller shall have the right and five Business Days to review
and comment on Purchaser's Consultant's work plan before it is implemented.
The Seller shall have the right to split samples. The Seller shall have the
right to be present during Purchaser's Inspection. The Purchaser and the
Seller agree that the results of Purchaser's Inspection shall be treated as
privileged and confidential as between the parties, as shall the documents
constituting and the documents utilized in or for the Purchaser's Inspection
("Purchaser's Environmental Report"), provided, however, Purchaser's
Environmental Report may be disclosed as may be required by law. If any lender
to, or advisor or representative of, the Purchaser requires a copy of any such
documents or Purchaser's Environmental Report it shall first agree to treat
14
<PAGE> 15
such documents and Purchaser's Environmental Report as confidential. The
Purchaser shall promptly restore any disturbance to the Facility which results
from Purchaser's Inspection to the same or reasonably similar predisturbed
condition.
3. Each of the parties will treat in confidence all documents, materials
and other information disclosed by the other party, whether during the course
of the negotiations leading to the execution of this Agreement, in its
investigation of the other party and in the preparation of agreement, schedules
and other documents relating to the consummation of the transactions
contemplated hereby. Prior to the Closing, and in the event that this
Agreement is terminated, neither party will use any information furnished by
any other party in its businesses. If this Agreement is terminated, each of
the parties will use its best reasonable efforts to return to the other party
all original and copies of non-public documents and materials of the type
provided for in this Article XII which have been furnished in connection with
this Agreement and will make no further use thereof or of the information
furnished hereunder.
ARTICLE XIII - DISCLOSURE
1. Purchaser acknowledges that it was afforded by Seller a full opportunity
to examine and inspect Seller's Facility and environmental, health and safety
records and to make any inquiries pertaining to same.
ARTICLE XIV - MAY 3, 1996 PHASE I RECOMMENDATIONS
1. Seller agrees that those items entitled "Recommendations" in the May 3,
1996 Phase I Environmental Site Assessment (Revised) will, if carried out by
Purchaser, be at Seller's expense. Seller is entitled to reasonable
documentation of same.
ARTICLE XV - TSCA MATTER
1. The Purchaser acknowledges that the Photo-Definable Dielectric ("PDD")
solder mask used in the manufacture of printed circuit boards at the Facility
contains two acid-modified acrylated epoxides that are subject to a Significant
New Use Rule ("SNUR") promulgated under Section 5(a)(2) of the Toxic
Substances Control Act ("TSCA"), 15 U.S.C. 2601 et seq. The SNUR is codified
at 40 C.F.R. Section 721.2650. The Purchaser also acknowledges that these
acrylates may be subject to an underlying, modified Consent Order.
15
<PAGE> 16
ARTICLE XVI - DISCLAIMER
1. Purchaser acknowledges that its acquisition of Seller's environmental,
health, and safety operations and management systems is on an "AS IS" basis and
Seller makes no representations or warranties pertaining to same (other than
the Business and the operations are in material compliance with Environmental
Laws).
ARTICLE XVII - COVENANTS
1. Seller and Purchaser will both comply in all material respects with
applicable Environmental Laws pertaining to their respective activities and
operations.
2. All undertakings made by Purchaser and Seller in this Agreement shall be
construed as covenants, the breach of which shall be a breach of this
Agreement.
3. The Seller agrees to cooperate with the Purchaser and to assist the
Purchaser in identifying all licenses, authorizations, permissions or other
permits required by or pursuant to Environmental Laws (collectively,
"Environmental Permits") and necessary to operate the Business from and after
the Closing Date and will either, where permissible, transfer existing
Environmental Permits of Seller to Purchaser, or, where not permissible, assist
Purchaser in obtaining new Environmental Permits for Purchaser.
4. In implementing the work required by the Order (or negotiating any
modification to the Order), Seller shall use its best efforts to ensure that
any action required to comply with the Order does not adversely affect
Purchaser's operations and/or the use of the Real Estate, and, where practical,
shall allow Purchaser an opportunity to comment on any proposed modifications
that could adversely impact Purchaser's operations.
5. Purchaser and Seller acknowledge that it is the intention of the parties
to have Seller, to the extent allowable by the VDEQ and not inconsistent with
the Order, obtain, as soon as possible after the Closing, a hazardous waste
identification number, thereby allowing Seller, without Purchaser becoming a
TSD facility, to dispose of any hazardous wastes generated as a result of the
operation and maintenance of the groundwater remediation system, except for
those wastes that Seller currently discharges to the wastewater pretreatment
plant and shall continue to discharge after the Closing in accordance with
Article III of this Agreement and the terms of the Order. To
16
<PAGE> 17
this end, Seller with the participation and cooperation of Purchaser shall use
its best efforts to obtain within three months of closing from the VDEQ the
necessary clarification of regulations or policy that would enable Seller to
obtain a separate generator identification number and discharge wastes in
accordance with Article III of this Agreement and the terms of the Order
without Purchaser becoming a TSD facility. Once this clarification is
obtained, Seller will obtain the identification number within one month. To
the extent the necessary clarification cannot be obtained, Seller will continue
to manage the groundwater remediation program, but all hazardous wastes
generated as a result of operating and maintaining the remediation system shall
be stored and disposed of by Purchaser. Seller shall reimburse Purchaser for
the reasonable costs of such disposal and shall indemnify Purchaser for any and
all liability attributable to such wastes, except for such liability that
arises out of or relates to Purchaser's own negligence or willful misconduct.
ARTICLE XVIII - SUCCESSORS AND ASSIGNS
1. If Purchaser sells all or a portion of the Richmond Works property to a
subsequent purchaser at some future time, Purchaser will insure that the
relevant sale agreements will provide, to the extent applicable, that Seller be
entitled to the same rights of reasonable cooperation from the subsequent
Purchaser as Seller is entitled to from Purchaser as set forth in this Article
III.
2. Seller's and Purchaser's obligations under this Agreement, including,
but not limited to, those obligations under Articles III and X, shall be
binding on its successors and assigns.
ARTICLE XIX -- APPLICABLE LAW
This Agreement and the legal relations among the parties hereto
(as compared to operations and obligations under applicable Environmental Laws)
shall be governed by and construed in accordance with the substantive Laws of
the State of New York, without giving effect to the principles of conflict of
laws thereof.
17
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LUCENT TECHNOLOGIES INC.
MICROELECTRONICS GROUP
By:/s/
---------------------------
Name:
-------------------------
Title:
------------------------
CIRCO CRAFT TECHNOLOGIES, INC.
By:/s/
---------------------------
Name:
-------------------------
Title:
------------------------
18
<PAGE> 19
SCHEDULE X
RCRA Docket III-227
RCRA Docket III-76-CA and RCRA Docket III-84-CA
Superfund Sites
Richmond Works is alleged to have been linked to four Superfund sites. These
are:
a. Bridgeport Rental & Oil Services, Logan Township, NJ
b. Greenwood Chemical, Greenwood, Virginia
c. C&R Battery Co., Chesterfield City, Virginia
d. North State Chemical, Greensboro, NC
Nassau (Staten Island)
Richmond Works has sent material to the Nassau Metals facility in Staten
Island, New York.
Third Party Off-Site Locations
Richmond Works has sent material to Dexter-Alcomet in Massachusetts, ECS in
Santa Clara, California, and Noranda in Rouyn-Noranda, Ontario, Canada
Virginia Department of Environmental Quality Inspections
1991, 1993, 1994 and 1996 VDEQ inspections.
Nuclear Regulatory Commission Inquiry
NRC inquiry as to allegedly missing isotope.
Various Written Notifications
June 1996 notification of leak from groundwater remediation system.
June 1996 notification pertaining to former temporary sludge holding area
January 3, 1993 exceedance
January 31, 1993 exceedance
December 1993 - January 1994 exceedance
19
<PAGE> 20
January 16, 1994 exceedance
May 13, 15, 20 1994 exceedance
July 20, 23, 30 1994 exceedance
October 6, 1996 exceedance
October 28, 1995 exceedance
May 24, 1996 exceedance
TSCA Matter
Coats previously worn by Lucent employees handling a PDD solder mask may not
have been provide a dermal barrier to the solder mask.
Notes On Schedule X
(a) Time frame on this schedule is January 1, 1991 to present.
(b) Disclosures not listed on this schedule but incorporated by reference
are any relevant matters referenced in Exhibits 1 and 2 to this
Agreement and any Releases that were permitted or disclosed on various
governmental forms pursuant to Environmental Laws requiring regular
disclosure of emissions, discharges, etc.
(c) Those documents identified in Article XI, "ENVIRONMENTAL BASELINE", are
incorporated in this Schedule by reference to the extent they contain
information relevant to this schedule.
(d) In all cases disclosures on this schedule are not an acknowledgment by
Seller that the Richmond Works is not in material compliance with
Environmental Laws but are simply for Purchaser's information only;
Seller believes that these disclosures are consistent with Seller's
position that Seller's Richmond Works plant is in material compliance
with Environmental Laws.
20
<PAGE> 1
EXHIBIT 12.1
VIASYSTEMS GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
---------------------- ----------------------
DEC. 1996 MAR. 1997 DEC. 1996 MAR. 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income before taxes........................... $(54,166) $ 4,245 $(52,801) $(5,785)
Fixed charges
Interest expense............................ 2,503 5,055 77,597 19,591
Amortization of deferred financing costs.... 470 937 9,422 2,356
1/3 of rent expense........................ 83 208 1,159 265
-------- ------- -------- -------
Earnings...................................... (51,110) 10,445 35,377 16,427
Fixed charges................................. 3,056 6,200 88,178 22,212
-------- ------- -------- -------
Ratio of earnings to fixed charges............ N/A 1.7 N/A N/A
======== ======= ======== =======
Deficiency of earnings to cover fixed
charges..................................... $(54,166) N/A $(52,801) $(5,785)
======== ======= ======== =======
</TABLE>
<PAGE> 1
EXHIBIT 12.2
VIASYSTEMS GROUP, INC.
COMPUTATION OF RATIO OF EBITDA TO INTEREST EXPENSE, NET
(Dollars in thousands)
<TABLE>
<CAPTION>
PRO FORMA
----------------------
DEC. 1996 MAR. 1997
--------- ---------
<S> <C> <C>
EBITDA...................................................... $172,748 $176,254(1)
Interest expense, net....................................... 77,597 78,364(1)
-------- --------
Ratio of EBITDA to interest expense, net.................... 2.2 2.2
======== ========
</TABLE>
- ---------------
(1) Represents pro forma EBITDA and interest expense, net for the twelve months
ended March 31, 1997.
<PAGE> 1
EXHIBIT 12.3
VIASYSTEMS GROUP, INC.
COMPUTATION OF RATIO OF NET DEBT TO EBITDA
(Dollars in thousands)
<TABLE>
<CAPTION>
PRO FORMA
MARCH 1997
----------
<S> <C>
Net Debt
Total debt, including current maturities.................. $832,352
Total cash and cash equivalents........................... 10,213
--------
Net Debt.......................................... 822,139
EBITDA...................................................... 176,254(1)
--------
Ratio of EBITDA to interest expense, net.................... 4.7
=========
</TABLE>
- ---------------
(1) Represents pro forma EBITDA for the twelve months ended March 31, 1997.
<PAGE> 1
EXHIBIT 21.1
<TABLE>
<CAPTION>
Name* Jurisdiction
- ----- ------------
<S> <C>
Viasystems Technologies Corp. Delaware, U.S.A.
Circo Craft Co. Inc. Quebec, Canada
Viasystems International, Inc. Delaware, U.S.A.
PCB Acquisition Limited England and Wales, U.K.
Chips Acquisition Limited England and Wales, U.K.
Interconnection Systems (Holding) Limited England and Wales, U.K.
Interconnection Systems Limited England and Wales, U.K.
PCB Investments plc England and Wales, U.K.
Forward Group PLC England and Wales, U.K.
Exacta Circuits Limited Scotland, U.K.
</TABLE>
* All entities also do business as "Viasystems."
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated June 18, 1997, on our audit of the balance sheet of Viasystems,
Inc. We also consent to the reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
St. Louis, Missouri
June 19, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated February 28, 1997, except for Note 18, for which the date is
June 6, 1997, on our audit of the financial statements and financial statement
schedule of Viasystems Group, Inc. We also consent to the reference to our firm
under the caption "Experts."
Coopers & Lybrand L.L.P.
St. Louis, Missouri
June 19, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF CHARTERED ACCOUNTANTS
We hereby consent to the use in the Registration Statement of Viasystems,
Inc. on Form S-1 of our report dated December 20, 1996, relating to the
consolidated balance sheet of Circo Craft Co. Inc. as at September 30, 1996, and
the consolidated statements of earnings, retained earnings, and changes in
financial position for the nine-month period then ended, included in the
Prospectus, which is part of the Registration Statement, and to the reference to
our firm under the heading "Experts".
Coopers & Lybrand
General Partnership
Chartered Accountants
Montreal, Quebec
June 19, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF CHARTERED ACCOUNTANTS
The Directors
Circo Craft Co. Inc.
We hereby consent to the use in the Registration Statement of Viasystems,
Inc. on Form S-1 of our report dated February 1, 1996 relating to the
consolidated balance sheet of Circo Craft Co. Inc. as at December 31, 1995 and
the consolidated statements of earnings, retained earnings and changes in
financial position for each of the years in the two-year period ended December
31, 1995 included in the Prospectus, which is part of the Registration
Statement, and to the references to us under the heading "Experts" in such
Prospectus.
Deloitte & Touche
Chartered Accountants
Montreal, Quebec
June 19, 1997
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated February 21, 1997, on our audit of the statements of net assets
sold to Viasystems Technologies Corp. of the Interconnection Business of the
Microelectronics Group, Interconnection Technologies Unit of Lucent Technologies
Inc. and the related statements of operations. We also consent to the reference
to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
St. Louis, Missouri
June 19, 1997
<PAGE> 1
EXHIBIT 23.7
CONSENT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
Forward Group PLC:
We consent to the use of our report dated 7 April 1997 on the consolidated
financial statements of Forward Group PLC as of 31 January 1997 and 1996 and for
each of the years in the three-year period ended 31 January 1997 included
therein, and to the reference to our firm under the heading "Experts" in this
registration statement on Form S-1.
KPMG Audit Plc
Chartered Accountants
Birmingham, England
19 June 1997
<PAGE> 1
EXHIBIT 23.8
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated May 27, 1997, with respect to the consolidated
financial statements of Interconnection Systems (Holdings) Limited in the
Registration Statement (Form S-1) and related Prospectus of Viasystems, Inc. for
the registration of $400,000,000 Senior Subordinated Notes due 2007.
ERNST & YOUNG
Chartered Accountants
Newcastle upon Tyne, England
June 20, 1997
<PAGE> 1
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------
Viasystems, Inc.
(Exact name of obligor as specified in its charter)
Delaware 43-1777252
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
James N. Mills
Chief Executive Officer
110 South Hanley Road, Suite 400
St. Louis, Missouri 63105
(Address of principal executive offices) (Zip code)
----------------
9 3/4% Senior Subordinated Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
- 3 -
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 13th day of June, 1997.
THE BANK OF NEW YORK
By: /S/ VIVIAN GEORGES
-------------------------------------
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street New York, NY 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1996, published in accordance
with a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........ $ 6,024,605
Interest-bearing balances................................. 808,821
Securities:
Held-to-maturity securities............................... 1,071,747
Available-for-sale securities............................. 3,105,207
Federal funds sold in domestic offices of the bank:............... 4,250,941
Loans and lease financing receivables:
Loans and leases, net of unearned income.................. 31,962,915
LESS: Allowance for loan and lease losses................ 635,084
LESS: Allocated transfer risk reserve.................... 429
Loans and leases, net of unearned income, allowance,
and reserve............................................. 31,327,402
Assets held in trading accounts................................... 1,539,612
Premises and fixed assets (including capitalized leases).......... 692,317
Other real estate owned........................................... 22,123
Investments in unconsolidated subsidiaries and associated
companies....................................................... 213,512
Customers' liability to this bank on acceptances outstanding...... 985,297
Intangible assets................................................. 590,973
Other assets...................................................... 1,487,903
-----------
Total assets...................................................... $52,120,460
===========
LIABILITIES
Deposits
In domestic offices....................................... $25,929,642
Noninterest-bearing....................................... 11,245,050
Interest-bearing.......................................... 14,684,592
In foreign offices. Edge and Agreement subsidiaries
and in IBFs............................................. 12,852,809
Noninterest-bearing....................................... 552,203
Interest-bearing.......................................... 12,300,606
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries and in IBFs:
Federal funds purchased................................... 1,360,877
Securities sold under agreements to repurchase............ 226,158
Demand notes issued to the U.S. Treasury.......................... 204,987
Trading liabilities............................................... 1,437,445
Other borrowed money
With original maturity of one year or less................ 2,312,556
With original maturity of more than one year.............. 20,766
Banks liability on acceptances executed and outstanding........... 1,014,717
Subordinated notes and debentures................................. 1,014,400
Other liabilities................................................. 1,721,291
-----------
Total liabilities................................................. $48,095,648
===========
EQUITY CAPITAL
Common stock...................................................... 942,284
Surplus........................................................... 731,319
Undivided profits and capital reserves............................ 2,354,095
Net unrealized holding gains (losses) on available-for-sale
securities...................................................... 7,030
Cumulative foreign currency translation adjustments............... ( 9,916)
-----------
Total equity capital.............................................. 4,024,812
-----------
Total liabilities and equity capital.............................. $52,120,460
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared
in conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared on conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
-------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
VIASYSTEMS GROUP, INC. AUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR
THE PERIOD ENDED DECEMBER 31, 1996 AND UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1997, BOTH
INCLUDED IN THE VIASYSTEMS, INC. S-1 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH S-1.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> AUG-28-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997
<CASH> 16,117 3,556
<SECURITIES> 0 0
<RECEIVABLES> 37,558 60,579
<ALLOWANCES> 409 448
<INVENTORY> 43,123 39,789
<CURRENT-ASSETS> 103,722 110,185
<PP&E> 212,836 223,520
<DEPRECIATION> 4,088 11,924
<TOTAL-ASSETS> 387,741 394,644
<CURRENT-LIABILITIES> 58,784 65,022
<BONDS> 0 0
0 0
30 30
<COMMON> 341 341
<OTHER-SE> 54,602 57,276
<TOTAL-LIABILITY-AND-EQUITY> 387,741 394,644
<SALES> 50,400 119,884
<TOTAL-REVENUES> 50,400 119,884
<CGS> 42,052 90,069
<TOTAL-COSTS> 42,052 90,069
<OTHER-EXPENSES> 59,279<F1> 9,630
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,973 5,992
<INCOME-PRETAX> (54,166) 4,245
<INCOME-TAX> (5,424) 1,574
<INCOME-CONTINUING> (48,742) 2,671
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (48,742) 2,671
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<FN>
<F1>INCLUDES CHARGES OF $50,800 RELATING TO THE WRITE-OFF OF ACQUIRED IN PROCESS
RESEARCH AND DEVELOPMENT COSTS ASSOCIATED WITH THE ACQUISITIONS OF CIRCO CRAFT
AND THE LUCENT DIVISION. THE WRITE-OFF RELATES TO ACQUIRED RESEARCH AND
DEVELOPMENT FOR PROJECTS THAT DO NOT HAVE A FUTURE ALTERNATIVE USE.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
VIASYSTEMS, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED BY THE COMPANY.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<C> <C>
By Registered or Certified Mail: By Hand:
The Bank of New York The Bank of New York
101 Barclays Street 101 Barclays Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
Attn: Reorganization Section New York, New York 10286
By Overnight Courier: Attn: Reorganization Section
The Bank of New York By Facsimile:
101 Barclays Street (212) 571-3080
Corporate Trust Services Window
Ground Level For Information or
New York, New York 10286 Confirmation by Telephone:
Attn: Reorganization Section (212) 815-6333
</TABLE>
(Originals of all documents sent by facsimile should be sent promptly by
registered
or certified mail, by hand, or by overnight delivery service).
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The undersigned acknowledges that it has received the Prospectus, dated
, 1997 (the "Prospectus"), of Viasystems, Inc., a Delaware
corporation (the "Company"), and this Letter of Transmittal, which together
constitute the Company's offer (the "Exchange Offer") to exchange an aggregate
principal amount of up to $400,000,000 of its 9 3/4% Senior Subordinated Notes
due 2007, which have been registered under the Securities Act of 1933, as
amended (the "Securities Act") (the "New Notes") of the Company for a like
principal amount of the issued and outstanding 9 3/4% Senior Subordinated Notes
due 2007 (the "Old Notes") of the Company.
IF YOU WISH TO EXCHANGE 9 3/4% SENIOR SUBORDINATED NOTES DUE 2007 FOR AN
EQUAL AGGREGATE PRINCIPAL AMOUNT OF 9 3/4% SENIOR SUBORDINATED NOTES DUE 2007,
PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER (AND NOT WITHDRAW) OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE COMPLETING THIS
LETTER OF TRANSMITTAL.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus.
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Old Notes (as
defined) either if Old Notes are to be forwarded herewith or if tenders of Old
Notes are to be made by book-entry transfer to an account maintained by The Bank
of New York (the "Exchange Agent") at the Depository Trust Company (the
"Book-Entry Transfer Facility" or "DTC") pursuant to the procedures set forth in
"The Exchange Offer--Procedures for Tendering" in the Prospectus.
Holders of Old Notes whose certificates (the "Certificates") for such Old
Notes are not immediately available or who cannot deliver their Certificates and
all other required documents to the Exchange Agent on or prior to the Expiration
Date (as defined in the Prospectus) or who cannot complete the procedures for
book-entry transfer on a timely basis, must tender their Old Notes according to
the guaranteed delivery procedures set forth in "The exchange Offer--Guaranteed
Delivery Procedures" in the Prospectus.
DESCRIPTION OF TENDERED OLD NOTES
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Owner(s) Aggregate
as it appears on the 9 3/4% Senior Subordinated Notes due Certificate Principal Amount
2007 ("Old Notes") Number(s) of Old Notes
(Please fill in, if blank) of Old Notes Tendered
- ---------------------------------------------------------------------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
Total Principal
Amount of Notes
Tendered
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD 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 THE FOLLOWING:
Name of Tendering Institution
---------------------------------------------
Account Number
------------------------------------------------------------
Transaction Code Number
---------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
------------------------------------------------
Window Ticket Number (if any)
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------
Name of Institution which Guaranteed Delivery
------------------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution
---------------------------------------------
Account Number
------------------------------------------------------------
Transaction Code Number
---------------------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY ACCOUNT
NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
---------------------------------------------------------------------------
Address:
-------------------------------------------------------------------
LADIES AND GENTLEMEN:
1. The undersigned hereby tenders to Viasystems, Inc., a Delaware
corporation (the "Company"), the 9 3/4% Senior Subordinated Notes due 2007 (the
"Old Notes"), described above pursuant to the Company's offer of $1,000
principal amount of 9 3/4% Senior Subordinated Notes due 2007 (the "New Notes"),
in exchange for each $1,000 principal amount of the Old Notes, upon the terms
and subject to the conditions contained in the Prospectus dated ,
1997
<PAGE> 4
(the "Prospectus"), receipt of which is hereby acknowledged, and in this Letter
of Transmittal (which together with the Prospectus constitute the "Exchange
Offer").
2. THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY,
AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION
RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
3. The undersigned understands that the tender of the Old Notes pursuant to
any one of the procedures set forth in the Prospectus and in the instructions,
attached hereto, will, upon the Company's acceptance for exchange of such
tendered Old Notes, constitute a binding agreement between the undersigned and
the Company as to the terms and conditions set forth in the Prospectus.
4. Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that:
(i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the undersigned,
whether or not the undersigned is the holder;
(ii) neither the undersigned nor any such other person is engaging in or
intends to engage in a distribution of such New Notes;
(iii) neither the undersigned nor any such other person has an arrangement
or understanding with any person to participate in the distribution
of such New Notes; and
(iv) neither the holder nor any such other person is an "affiliate," as
such term is defined under Rule 405 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), of the Company.
<PAGE> 5
5. The undersigned may, if, and only if, unable to make all of the
representations and warranties contained in Item 4 above, elect to have its Old
Notes registered in the shelf registration described in the Exchange and
Registration Rights Agreement, dated as of June 6, 1997, between the Company and
Chase Securities Inc., NatWest Capital Markets Limited and Schroder Wertheim &
Co. Incorporated in the form filed as an exhibit to the Registration Statement
(the "Registration Agreement") (all terms used in this Item 5 with their initial
letters capitalized, unless otherwise defined herein, shall have the meanings
given them in the Registration Agreement). Such election may be made by checking
the box under "Special Registration Instructions" below. By making such
election, the undersigned agrees, as a Holder participating in a Shelf
Registration, to indemnify and hold harmless the Company, its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, (collectively referred to for purposes of this
indemnification provision as the "Company"), from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof, to
which the Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holder's Information, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that no such Holder shall be liable for any indemnity claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement. Any such indemnification shall be governed by the
terms and subject to the conditions set forth in the Registration Agreement,
including, without limitation, the provisions regarding notice, retention of
counsel, contribution and payment of expenses set forth therein. The above
summary of the indemnification provision of the Registration Agreement is not
intended to be exhaustive and is qualified in its entirety by the Registration
Agreement.
6. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and delivering a prospectus, the undersigned will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. If the undersigned is a broker-dealer and Old Notes held for its
own account were not acquired as a result of market-making or other trading
activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and legal
and personal representatives of the undersigned.
8. Unless otherwise indicated herein under "Special Delivery Instructions,"
please issue the certificates for the New Notes in the name of the undersigned.
<PAGE> 6
9. Holders of Old Notes whose Old Notes are accepted for exchange will not
receive accrued interest on such Old Notes for any period from and after the
last Interest Payment Date to which interest has been paid or duly provided for
on such Old Notes prior to the original issue date of the New Notes or, if no
such interest has been paid or duly provided for, will not receive any accrued
interest on such Old Notes, and the undersigned waives the right to receive any
interest on such Old Notes accrued from and after such Interest Payment Date or,
if no such interest has been paid or duly provided for, from and after ,
1997.
10. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company or the Exchange Agent to be necessary or
desirable to complete the sale, assignment and transfer of the Old Notes
tendered hereby. All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, legal representatives, successors and assigns of the undersigned.
Except as stated in the Prospectus, this tender is irrevocable.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX.
<PAGE> 7
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the New Notes are to be issued or sent to someone
other than the undersigned or to the undersigned at an address other than that
provided above.
Mail [ ] Issue [ ] (check appropriate boxes) certificates to:
Name:
---------------------------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
(INCLUDING ZIP CODE)
SPECIAL REGISTRATION INSTRUCTIONS
(See Item 5)
To be completed ONLY IF (i) the undersigned satisfies the conditions set
forth in Item 5 above, (ii) the undersigned elects to register its Old Notes in
the shelf registration described in the Registration Agreement, and (iii) the
undersigned agrees to indemnify certain entities and individuals as set forth in
Item 5 above.
[ ] By checking this box the undersigned hereby (i) represents that it is
unable to make all of the representations and warranties set forth in Item 4
above, (ii) elects to have its Old Notes registered pursuant to the shelf
registration described in the Registration Agreement, and (iii) agrees to
indemnify certain entities and individuals identified in, and to the extent
provided in, Item 5 above.
<PAGE> 8
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by registered
holder exactly as name appears on Old Notes. If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
full title. See Instruction 3.
X
----------------------------------------------------------------------------
X
----------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATURE
Dated:
-----------------------------------------------------------------------
Name(s):
---------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
-------------------------------------------------------------------
Address:
-------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1 BELOW)
Certain Signatures Must be Guaranteed by an Eligible Institution
-----------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
-----------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
-----------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
-----------------------------------------------------------------------------
(PRINTED NAME)
-----------------------------------------------------------------------------
(TITLE)
Dated:
-----------------------------------------------------------------------
PLEASE READ THE INSTRUCTIONS ON THE REVERSE SIDE HEREOF,
WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL.
<PAGE> 9
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must
be guaranteed by an eligible guarantor institution that is a member or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or by an "eligible guarantor institution" within the meaning of Rule
17Ad-15 promulgated under the Exchange Act (an "Eligible Institution") unless
the box entitled "Special Delivery Instructions" has not been completed or the
Old Notes described above are tendered for the account of an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED DELIVERY
PROCEDURES. The Old Notes, together with a properly completed and duly executed
Letter of Transmittal (or copy thereof), should be mailed or delivered to the
Exchange Agent at the address set forth above.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent on or prior
to the Expiration Date or (iii) who cannot complete the procedures for delivery
by book-entry transfer on a timely basis, may tender their Old Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures" in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Company, must be received by the
Exchange Agent on or prior to the Expiration Date; and (iii) the Certificates
(or a Book-Entry Confirmation (as defined in the Prospectus)) representing all
tendered Old Notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in "The Exchange
Offer -- Guaranteed Delivery Procedures" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Notes to be
properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution" means a
member of or participant in the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Program, the Stock Exchange
Medallion Program or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE
AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT
IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered holder
of any Old Notes, such Old Notes must be endorsed or accompanied by appropriate
bond powers, signed by such registered holder exactly as such registered
holder's name appears on such Old Notes.
<PAGE> 10
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
4. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Capital Securities" is inadequate, the Certificate number(s)
and/or the principal amount of Old Capital Securities and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
5. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
6. MISCELLANEOUS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance, and withdrawal of tendered Old Notes
will be resolved by the Company in its sole discretion, which determination will
be final and binding. The Company reserves the absolute right to reject any or
all Old Notes not properly tendered or any Old Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities, or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding. Unless waived, any defects or
irregularities in connection with tenders of Old 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 in
such tenders or shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly 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 holder thereof as soon as practicable following the
Expiration Date.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
ANY AND ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
(LIQUIDATION AMOUNT $1,000 PER NOTE)
OF
VIASYSTEMS, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1997
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the 9 3/4% Senior Subordinated Notes due 2007 (the "Old
Notes"), of VIASYSTEMS, INC. (the "Company") are not immediately available, (ii)
Old Notes, the Letter of Transmittal and all other required documents cannot be
delivered to The Bank of New York (the "Exchange Agent") on or prior to 5:00
P.M. New York City time, on the Expiration Date (as defined in the Prospectus
referred to below) or (iii) the procedures for delivery by book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand, overnight courier or mail, or transmitted by facsimile
transmission, to the Exchange Agent. See "The Exchange Offer -- Guaranteed
Delivery Procedures" in the Prospectus. In addition, in order to utilize the
guaranteed delivery procedure to tender Old Notes pursuant to the Exchange
Offer, a completed, signed and dated Letter of Transmittal relating to The Old
Notes (or facsimile thereof) must also be received by the Exchange Agent prior
to 5:00 P.M. New York City time, on the Expiration Date. Capitalized terms not
defined herein have the meanings assigned to them in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attn: Reorganization Section
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 571-3080
Confirm By Telephone:
(212) 815-6333
By Hand Or Overnight Delivery:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
Attn: Reorganization Section
For Information Call:
(212) 815-6333
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of this Notice of Guaranteed Delivery via
facsimile to a number other than as set forth above will not constitute a valid
delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Viasystems, Inc., a Delaware Corporation
(the "Corporation"), upon the terms and subject to the conditions set forth in
the Prospectus dated , 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Old Capital Securities
set forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures."
Name(s) of Registered Holder(s):
-----------------------------------------------
Aggregate Principal Amount
Amount Tendered: $
-------------------------------------------------------------
Certificate No.(s)
(if available):
----------------------------------------------------------------
(Total Principal Amount Represented by
Old Notes Certificate(s))
- -------------------------------------------------------------------------------
$
- -------------------------------------------------------------------------------
If Old Notes will be tendered by book-entry transfer, provide the following
information:
DTC Account Number:
--------------------------------------------------------------
Date:
---------------------------------------------------------------------------
- ---------------
* Must be in denominations of a Liquidation Amount of $1,000 and any integral
multiple thereof, and not less than $100,000 aggregate Principal amount.
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs personal representatives, successors
and assigns of the undersigned.
<PAGE> 3
PLEASE SIGN HERE
X
------------------------------------------- ----------------------------
X
------------------------------------------- ----------------------------
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:
------------------------------------------------
Must be signed by the holder(s) of the Old Notes as their name(s) appear(s)
on certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement 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 set
forth his or her full title below.
Please print name(s) and address(es)
Name(s):
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Capacity:
----------------------------------------------------------------------
Address(es):
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 4
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of or participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Signature Program, the
Stock Exchange Medallion Program or a firm or other entity identified in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, as an "eligible
guarantor institution," including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities broker, municipal securities
dealer, government securities broker, government securities dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or learning agency; or (v) a savings association that is a
participant in a Securities Transfer Association recognized program (each of the
foregoing being referred to as an "Eligible Institution"), hereby guarantees to
deliver to the Exchange Agent, at one of its addresses set forth above, either
the Old Notes tendered hereby in proper form for transfer, or confirmation of
the book-entry transfer of such Old Notes to the Exchange Agent's account at The
Depositary Trust Company ("DTC"), pursuant to the procedures for book-entry
transfer set forth in the Prospectus, in either case together with one or more
properly completed and duly executed Letter(s) of Transmittal (or facsimile
thereof) and any other required documents within five business days after the
date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Old Notes tendered hereby to the Exchange Agent within the
time period set forth above and that failure to do so could result in a
financial loss to the undersigned.
<TABLE>
<S> <C>
- --------------------------------------------------- ---------------------------------------------------
Name of Firm Authorized Signature
- --------------------------------------------------- ---------------------------------------------------
Address Title
- --------------------------------------------------- ---------------------------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone No. Dated:
------------------- -------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
