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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
333-29727
(Commission File Number)
VIASYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
43-177752
(I.R.S. Employer Identification No.)
101 SOUTH HANLEY ROAD
ST. LOUIS, MISSOURI 63105
(314) 727-2087
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during
the preceding 12 months (or for such shorter period that the registrants were
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting and non voting common equity
held by non-affiliates of the registrant. (The aggregate market value shall be
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such common equity, as of a specified date within 60
days prior to the date of filing.)
NO ESTABLISHED PUBLISHED TRADING MARKET EXISTS FOR THE COMMON STOCK, PAR
VALUE $.01 PER SHARE, OF VIASYSTEMS, INC. ALL THE OUTSTANDING SHARES OF COMMON
STOCK, PAR VALUE $.01 PER SHARE, OF VIASYSTEMS, INC. ARE HELD BY VIASYSTEMS
GROUP, INC.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS MARCH 16, 1998
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<S> <C>
Common Stock 1,000
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PART I
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
Information set forth in this Annual Report on Form 10-K regarding expected
or possible future events, including statements of the plans and objectives of
management for future growth, operations, products and services and statements
relating to future economic performance, is forward-looking and subject to risks
and uncertainties. For those statements, the Company claims the protection of
the safe harbor for forward-looking statements provided for by Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"). Factors that
could affect the future results of the Company and could cause those results to
differ materially from those expressed in the forward-looking statements are
discussed at greater length herein. See Item 7, "Management's Discussion and
Analysis of Results of Operations and Financial Condition."
ITEM 1. BUSINESS
THE COMPANY
Viasystems, Inc. is a wholly owned subsidiary of Viasystems Group, Inc.
("Viasystems Group"), a holding company. Hicks, Muse, Tate & Furst Incorporated
("Hicks Muse") and Mills & Partners, Inc. ("Mills & Partners") formed Viasystems
Group in August 1996 to make strategic acquisitions of printed circuit board
("PCB") manufacturers and backplane assemblers and to integrate those
acquisitions into a global enterprise that is the preferred manufacturer and
marketer of PCBs and backplanes.
In October 1996, Viasystems Group completed the acquisition of Circo Craft
Co. Inc. ("Circo Craft"), a rigid PCB manufacturer with operations in Canada and
Puerto Rico, and in December 1996, Viasystems Technologies Corp. ("Viasystems
Technologies"), a wholly owned subsidiary of Viasystems Group, acquired
substantially all assets of the Interconnection Technologies Unit of the
Microelectronics Group (the "Lucent Division") of Lucent Technologies. The
combination of Circo Craft and the former Lucent Division created one of the
largest independent manufacturers of PCBs and backplanes in North America.
In April 1997, an affiliate of Hicks Muse acquired Forward Group PLC
("Forward Group"), a rigid PCB manufacturer located in the United Kingdom.
Subsequently, Viasystems Group acquired Forward Group from the Hicks Muse
affiliate. On April 2, 1997, Viasystems, Inc. was formed as a subsidiary of
Viasystems Group. On April 10, 1997, Viasystems Group contributed (the
"Contribution") to Viasystems, Inc. all of the capital of its then existing
subsidiaries -- Circo Craft, Viasystems Technologies, and PCB Acquisition
Limited (the acquisition parent of Forward Group). Prior to the Contribution,
Viasystems, Inc. had no operations of its own. Also in April 1997 and subsequent
to the formation of Viasystems, Inc. and the Contribution, another affiliate of
Hicks Muse, Chips Holdings, Inc. ("Chips Holdings"), acquired Interconnection
Systems (Holdings) Limited ("Chips"). Viasystems Group subsequently acquired
Chips Holdings, which merged into Viasystems Group (the "Chips Merger"), and
Chips and its operating subsidiaries became indirect wholly-owned subsidiaries
of Viasystems, Inc.
The discussion included herein of Viasystems or the Company represents the
results of operations of Viasystems, Inc. and its subsidiaries subsequent to the
Contribution by Viasystems Group and of Viasystems Group and its subsidiaries
prior to the Contribution of such subsidiaries to Viasystems, Inc.
The Company believes it is the one of the largest manufacturers and
marketers of PCBs and backplanes 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.
Backplanes 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. As of
December 31, 1997, the Company had 16 manufacturing facilities, strategically
located in North America and Europe, including one of the world's largest PCB
and backplane manufacturing plants.
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MARKETS AND CUSTOMERS
The Company designs, develops and manufactures products which it supplies
to more than 800 customers worldwide. The Company provides double-sided PCBs,
multilayer PCBs and backplanes to its diverse customer base. The Company's
position as a strategic supplier of quick-turnaround prototype and medium to
high volume PCBs and backplane assembly fosters close relationships with
customers. These relationships result in additional growth opportunities as the
Company has the capabilities and capacity to meet its customers' wide range of
needs.
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. In connection with the
Lucent Division acquisition in December 1996, Lucent Technologies and the
Company have into a five-year supply agreement, through Viasystems Technologies,
pursuant to which substantial revenues may be derived. Sales to Lucent
Technologies by the Company for the period from inception (August 28, 1996) to
December 31, 1996, and for the year ended December 31, 1997 were $13.6 million
and $310.1 million, respectively. Lucent Technologies accounted for
approximately 27.0% and 39.0% of the Company's net sales for the period from
inception (August 28, 1996) to December 31, 1996, and for the year ended
December 31, 1997, respectively. The supply 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 backplanes from the Company, and is 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. 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.
The following table shows the Company's net sales and percentage of its net
sales to the principal end-user markets it serves:
<TABLE>
<CAPTION>
DECEMBER 31,
MARKETS 1997
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(DOLLARS IN MILLIONS)
<S> <C> <C>
Telecommunications.......................................... $532.4 66.9%
Automotive.................................................. 80.4 10.1
Computer.................................................... 67.2 8.5
Industrial.................................................. 61.9 7.8
Military.................................................... 12.8 1.6
Other....................................................... 40.6 5.1
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Total............................................. $795.3 100.0%
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</TABLE>
PRODUCTS AND SERVICES
The Company's offering of products and services includes the following:
Design and Development. The Company provides design and engineering
assistance to customers 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.
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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 backplanes 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.
Backplanes. Backplanes 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 backplanes to provide customers with a high level of PCB
technology on a quick-turnaround and volume basis.
Specialty Production. The Company 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 Industry 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 PROCESSES
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
certified. This certification facilitates worldwide acceptance of the Company's
products. ISO-9002 certification 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
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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.
SALES AND MARKETING
The Company places a high priority on identifying and responding to its
customers' requirements on a timely basis. In order to ensure that the Company
is best positioned to respond to these requirements, it has developed a sales
and marketing strategy that utilizes global account managers, a highly trained
Company-employed direct sales force and independent manufacturers'
representatives. This global sales organization is structured to ensure
geographic coverage and account coordination.
As of December 31, 1997, the Company employed 99 sales and marketing
employees, of which 22 were 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, the Company's sales force is
organized by country and, for specialty products, by customer. In both North
America and Europe, a staff of sales engineers, technical service personnel and
customer service organizations supports the sales organization to ensure
high-quality, customer-focused service. The global marketing organization
further supports the sales organization through market research, market
development and communications.
INTERNATIONAL OPERATIONS
Approximately 37% of the Company's 1997 sales originated outside of North
America, primarily in Europe. As of December 31, 1997, the Company had
manufacturing facilities in the U.K., a backplane assembly facility in Spain,
and sales offices in Sweden, France, Germany and South Africa. The Company
believes that its global presence is important as it allows the Company to
provide consistent, quality products on a timely basis to its multinational
customers worldwide. See Note 13 of the Company's Consolidated Financial
Statements for geographic region information and Note 19 of the Company's
Financial Statements for subsequent acquisitions in Holland, Sweden and Italy.
The Company is subject to risks generally associated with international
operations, including price and exchange controls and other restrictive actions.
In addition, fluctuations in currency exchange rates may affect the Company's
results of operations. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition" in Item 7 hereof.
RAW MATERIALS AND 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. 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. The Company
has undertaken a cost containment project whereby it is reducing the number of
raw material vendors and obtaining cost reductions by agreeing to increase
volumes of raw material purchases from specified vendors. This project's
effectiveness has been enhanced by the Company's size and worldwide presence.
Although the Company uses a select group of
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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 reduce inventory carrying costs. The Company also
maintains a Supplier Certification Program to evaluate 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 backplane
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 managed by Mills & Partners (see Note 15 to the
Notes to Consolidated Financial Statements in Item 8 hereof).
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. During the period from the Company's inception (August 28, 1996)
to December 31, 1996 and the year ended December 31, 1997, the Company's
research and development expenditures were $0.5 million and $10.8 million,
respectively. In addition, in the Company's acquisitions of Circo Craft and the
Lucent Division in 1996 and of Forward Group and Chips in 1997, portions of the
purchase prices -- totals of $50.8 million and $294.5 million in 1996 and 1997,
respectively -- were assigned to acquired in process research and development
and expensed in the Company's statements of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included in Items 7 and 8, respectively,
hereof.
The Company's research and development staff of over 650 experienced
engineers, chemists and laboratory technicians works together with the Company's
sales staff to identify specific customer and industry 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.
COMPETITION
The PCB and backplane 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
backplane 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.
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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 backplane assembly.
BACKLOG
The Company estimates that its backlog of unfilled orders on December 31,
1996 and December 31, 1997, was approximately $50.8 million and $108.5 million,
respectively. The increase in backlog in 1997 was due to the 1997 acquisitions
of Forward Group and Chips. Unfilled orders may be cancelled prior to delivery;
however, such cancellations have historically not been material. Substantially
all the backlog as of December 31, 1997, is expected to be filled by March 30,
1998. The backlog outstanding at any point in time is not necessarily indicative
of the level of business to be expected in the ensuing period.
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. The Company believes that their prior owners are fully capable of
performing and will perform under such agreements. 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 December 31, 1997, the Company had approximately 7,200 employees.
Approximately 2,380 employees, or about 33%, were 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.
RECENT DEVELOPMENTS
On January 30, 1998, the Company acquired certain assets and assumed
certain liabilities of the PCB production facility of Ericsson Telecom AB
("Ericsson") located in Sweden (the "Ericsson Facility"), for a cash purchase
price of approximately $7.0 million. In addition, the company and Ericsson
signed a three-year supply agreement whereby Ericsson committed to purchase 40%
of its PCB requirements from the Company. On February 17, 1998, the Company
acquired Print Service Holding N.V., the holding company parent of Mommers Print
Service, B.V. ("Mommers"), a PCB manufacturer located in the Netherlands and
specializing in the production of high-volume, medium- to high-complexity PCBs
and backplanes, for a purchase price of approximately $59.4 million, including
assumed debt. On March 12, 1998, the Company acquired Zincocelere S.p.A.
("Zincocelere"), a PCB manufacturer located in northern Italy and specializing
in high volume, medium to high complexity PCB's, for a purchase price of
approximately $100.0 million, including assumed debt. The acquisition of the PCB
production facility from Ericsson, and the acquisitions of Mommers and
Zincocelere are herein referred to as the 1998 Acquisitions. The Company
anticipates that it will continue to make strategic acquisitions of PCB
companies throughout the world in accordance with its expansion strategy.
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ITEM 2. PROPERTIES
In addition to its executive offices in St. Louis, Missouri, as of December
31, 1997, the Company operated 16 principal manufacturing and research
facilities located in seven different countries with a total area of
approximately 2.1 million square feet. The Company owns approximately 1.8
million square feet and leases approximately 300,000 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 are 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
a credit facility with a financial institution. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Item 7 hereof.
The Company's facilities at December 31, 1997 were 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
backplanes
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,
prototype and pre-production
Granby, Quebec................ 103,000 Owned High volume, high density PCBs
MEXICO
Juarez, Mexico................ 5,000 Leased(2) Backplanes
EUROPE
Tres Cantos, Spain............ 5,000 Leased(3) Backplanes
Galashiels, Scotland.......... 121,000 Owned High volume PCBs
Selkirk, Scotland............. 142,000 Owned/Leased(4) High volume complex PCBs and
quick-turnaround
Rugby, England................ 36,000 Leased(5) Pre-production PCBs
Tamworth, England............. 62,000 Owned Prototype, quick-turnaround
complex PCBs
Telford, England.............. 44,000 Leased(6) Medium volume PCBs
Manchester, England........... 30,000 Owned Advanced prototype and pre-
production PCBs
Portsmouth, England........... 27,000 Leased(7) High reliability thick-film
hybrids
South Shields, England........ 320,000 Owned High volume PCBs and quick-
turnaround
Newcastle, England............ 500,000 Under construction High volume PCBs
</TABLE>
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(1) Lease expires December 31, 2002.
(2) Lease is month to month.
(3) Lease is month to month
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(4) Lease portion of facility (approximately 30,000 sq. ft.) expires May 15,
2004 (includes options to renew through May 15, 2024 and to purchase).
(5) Lease expires June 24, 2009.
(6) Lease expires June 24, 2987 (999 year lease).
(7) Lease expires October 1, 2004.
In addition to the facilities listed above, at December 31, 1997 the
Company maintained 18 sales and marketing facilities, all of which are leased,
including 14 located in North America and one each in Sweden, France, Germany
and South Africa.
ITEM 3. LEGAL PROCEEDINGS
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders in the fourth
quarter of 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
All of the Company's outstanding common stock is held by Viasystems Group,
and, accordingly, there is no established public trading market for the
Company's Common Stock. The Company has paid no dividends since inception, and
its ability to pay dividends is limited by the terms of certain agreements
related to its indebtedness.
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ITEM 6. SELECTED FINANCIAL DATA
THE COMPANY
The selected information below for the period from inception (August 28,
1996) to December 31, 1996 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 selected information below for the year ended December 31, 1997,
presents the financial information of Viasystems, Inc. and its subsidiaries
subsequent to the capital contribution by Viasystems Group and the financial
information of Viasystems Group and its subsidiaries prior to the capital
contribution to Viasystems, Inc. The data for the year ended December 31, 1997,
has been derived from the audited consolidated financial statements of
Viasystems, Inc. The following information should be read in conjunction with
the audited Consolidated Financial Statements of Viasystems, Inc. and the notes
thereto and "Management's Discussion and Analysis of Results of Operations and
Financial Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
FROM INCEPTION
(AUGUST 28, YEAR
1996) TO ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
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(DOLLARS IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................... $ 50,400 $ 795,289
Cost of goods sold.......................................... 42,052 554,097
Selling, general and administrative expenses................ 3,844 75,650
Depreciation................................................ 4,102 51,884
Amortization of intangible assets........................... 533 58,153
Write-off of acquired in-process research and
development(1)............................................ 50,800 294,500
-------- ----------
Operating loss............................................ (50,931) (238,995)
Interest expense............................................ 2,503 64,612
Amortization of deferred financing costs.................... 470 6,629
Other expense............................................... 262 1,024
-------- ----------
Loss before income taxes and extraordinary item........... (54,166) (311,260)
Provision (benefit) for income taxes........................ (5,424) 8,432
-------- ----------
Loss before extraordinary item............................ (48,742) (319,692)
Extraordinary loss, net of tax(2)........................... -- 7,796
-------- ----------
Net loss.......................................... $(48,742) $ (327,488)
======== ==========
OTHER DATA:
Adjusted EBITDA(3).......................................... $ 4,504 $ 165,812
Operating cash flows........................................ 1,662 104,906
Investing cash flows........................................ (286,286) (273,067)
Financing cash flows........................................ 300,713 184,077
Capital expenditures........................................ 3,563 117,163
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents................................... $ 16,117 $ 27,538
Working capital............................................. 44,938 16,659
Total assets................................................ 387,741 1,068,912
Total debt, including current maturities.................... 265,620 847,375
Stockholders' equity (deficit).............................. 54,973 (92,193)
</TABLE>
9
<PAGE> 11
- ---------------
(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 in 1996 and Forward Group and Chips in 1997. 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, Inc.
(2) The Company recorded, as an extraordinary item, a non-cash write-off of
deferred financing fees of approximately $7,796, net of income tax benefit
of $4,332, related to deferred financing fees incurred on debt retired
before maturity.
(3) Adjusted EBITDA is defined as operating income (loss) plus depreciation,
amortization and the non-cash charge relating to the write-off of acquired
in-process research and development. The Company believes that Adjusted
EBITDA provides additional information for determining its ability to meet
debt service requirements as revenues increase more than cash expenditures
for operating expenses. Adjusted EBITDA does not represent and should not be
considered as an alternative to net income or cash flow from operations as
determined by Generally Accepted Accounting Principles ("GAAP"). Adjusted
EBITDA does not necessarily indicate whether cash flow will be sufficient
for cash requirements. The calculation of Adjusted EBITDA does not include
the commitments of the Company for capital expenditures and payment of debt
and should not be deemed to represent funds available to the Company.
Adjusted EBITDA, as presented, may not be comparable to similarly-titled
measures of other companies.
10
<PAGE> 12
CIRCO CRAFT CO. INC.
The selected information below represents the financial information of
Circo Craft for the periods indicated. The data for the three fiscal years ended
December 31, 1995, and the nine months ended September 30, 1996 (the period
prior to the acquisition of Circo Craft by Viasystems Group), set forth in
Canadian GAAP in Canadian dollars ("C$"), has been derived from the audited
consolidated financial statements of Circo Craft. 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 set forth in U.S.
GAAP for the two years ended December 31, 1995, the nine months ended September
30, 1996, has been derived from the audited 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
consolidated statements of earnings, retained earnings and changes in financial
position of Circo Craft and the notes thereto and "Management's Discussion and
Analysis of Results of Operations and Financial Condition," all included
elsewhere herein.
CANADIAN GAAP
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEARS ENDED DECEMBER 31, ENDED
----------------------------------- SEPTEMBER 30,
1993 1994(1) 1995(1) 1996
--------- --------- --------- -------------
(CANADIAN DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. C$106,244 C$151,825 C$185,156 C$129,633
Cost of goods sold........................ 88,788 124,929 148,788 101,532
Selling, general and administrative
expenses................................ 7,908 10,079 11,087 7,969
Depreciation and amortization............. 7,296 7,160 7,931 8,456
--------- --------- --------- ---------
Operating income........................ 2,252 9,657 17,350 11,676
Interest expense.......................... 337 515 852 646
Other income.............................. -- (195) (915) (880)
Expenses related to sale(2)............... -- -- -- 5,907
--------- --------- --------- ---------
Income before income taxes.............. 1,915 9,337 17,413 6,003
Provision for income taxes................ 1,854 2,719 5,564 3,847
--------- --------- --------- ---------
Net income before
non-controlling interest...... C$ 61 C$ 6,618 C$ 11,849 C$ 2,156
========= ========= ========= =========
OTHER DATA:
EBITDA(3)................................. C$ 9,548 C$ 16,817 C$ 25,281 C$ 20,132
Capital expenditures...................... 11,072 6,679 23,764 13,058
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
</TABLE>
11
<PAGE> 13
APPROXIMATE AMOUNTS IN U.S. GAAP
<TABLE>
<CAPTION>
FIVE YEARS ENDED NINE MONTHS
DECEMBER 31, ENDED
---------------------- SEPTEMBER 30,
1994(1) 1995(1) 1996
--------- --------- -------------
(CANADIAN DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................. C$142,840 C$194,140 C$129,633
Cost of goods sold.................................... 122,513 148,788 101,532
Selling, general and administrative expenses.......... 10,217 10,846 8,072
Depreciation and amortization......................... 7,160 7,931 8,456
--------- --------- ---------
Operating income.................................... 2,950 26,575 11,573
Interest expense...................................... 515 852 646
Other income.......................................... (195) (915) (880)
Expenses related to sale(2)........................... -- -- 5,907
--------- --------- ---------
Income before income taxes.......................... 2,630 26,638 5,900
Provision for income taxes............................ 2,822 6,079 3,680
--------- --------- ---------
Net income (loss) before non-controlling interest... C$ (192) C$ 20,559 C$ 2,220
========= ========= =========
OTHER DATA:
EBITDA(3)............................................. C$ 10,110 C$ 34,506 C$ 20,029
Operating cash flows.................................. 5,653 24,388 18,034
Investing cash flows.................................. (7,392) (21,790) (14,444)
Financing cash flows.................................. 5,737 9,300 1,222
Capital expenditures.................................. 6,679 23,764 13,058
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents............................. C$ 4,703 C$ 16,600 C$ 21,411
Working capital....................................... 25,276 40,057 41,909
Total assets.......................................... 91,139 128,964 134,725
Total debt, including current maturities.............. 14,101 15,998 17,563
</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 as revenues
increase more than cash expenditures for operating expenses. 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. The calculation of EBITDA does not
include the commitments of the Company for capital expenditures and payment
of debt and should not be deemed to represent funds available to the
Company. EBITDA, as presented, may not be comparable to similarly-titled
measures of other companies.
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 year ended December 31, 1993, 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 Decem-
12
<PAGE> 14
ber 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 statements of operations of Viasystems Technologies and the notes
thereto and "Management's Discussion and Analysis of Results of Operations and
Financial Condition," all included elsewhere herein.
<TABLE>
<CAPTION>
ELEVEN MONTHS
FISCAL YEARS ENDED DECEMBER 31, ENDED
--------------------------------- NOVEMBER 30,
1993 1994 1995 1996
--------- --------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales....................................... $262,364 $310,559 $325,047 $325,102
Cost of goods sold.............................. 217,277 238,623 274,824 244,313
Selling, general and administrative expenses.... 24,259 42,930 42,445 34,792
Depreciation and amortization................... 17,606 16,111 16,378 18,317
-------- -------- -------- --------
Operating income (loss)....................... 3,222 12,895 (8,600) 27,680
Interest expense(1)............................. -- 5 204 917
Other income.................................... (249) (75) (94) (228)
-------- -------- -------- --------
Income (loss) before income taxes............. 3,471 12,965 (8,710) 26,991
Provision (benefit) for income taxes............ 1,319 4,927 (3,310) 10,257
-------- -------- -------- --------
Net income (loss)..................... $ 2,152 $ 8,038 $ (5,400) $ 16,734
======== ======== ======== ========
OTHER DATA:
EBITDA(2)....................................... $ 20,828 $ 29,006 $ 7,778 $ 45,997
Operating cash flows(3).........................
Investing cash flows(3).........................
Financing cash flows(3).........................
Capital expenditures............................ 9,823 16,884 22,173 16,485
</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 as
revenues increase more than cash expenditures for operating expenses. 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. The calculation of EBITDA
does not include the commitments of the Company for capital expenditures and
payment of debt and should not be deemed to represent funds available to the
Company. EBITDA, as presented, may not be comparable to similarly-titled
measures of other companies. Charges of $8,896, $14,565, $18,987, and
$7,900, net of estimated additional administrative costs to be incurred, for
fiscal years ended 1993, 1994, 1995 and the eleven months ended November 30,
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.
(3) Financial statements had not been previously prepared for the Lucent
Division. The data in the table above has been derived from financial
statements that present only assets purchased in the Lucent Division
acquisition and results of operations related to the Lucent Division. Any
computation of historical cash flow data for the Lucent Division would be
based on arbitrary assumptions of the financial information necessary to
prepare such data. As a result, the historical cash flow data of the Lucent
Division has not been prepared or presented.
13
<PAGE> 15
FORWARD GROUP PLC
The selected information below presents financial information of Forward
Group for the periods indicated. The data for the four fiscal years ended
January 31, 1997, set forth in U.K. GAAP in U.K. pounds sterling ("U.K.L"), has
been derived from the audited consolidated financial statements of Forward
Group. 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 set forth in U.S. GAAP as of and for the
three fiscal years ended January 31, 1997, has been derived from the audited
consolidated 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 consolidated financial statements of Forward Group
and the notes thereto and "Management's Discussion and Analysis of Results of
Operations and Financial Condition," all included elsewhere herein.
U.K. GAAP
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JANUARY 31,
1994 1995 1996 1997
------- ------- ------- --------
(POUNDS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................. L20,663 L23,819 L66,839 L105,029
Costs of goods sold................................... 11,505 17,032 49,850 79,030
Selling, general and administrative expenses.......... 5,856 3,179 6,425 11,189
Depreciation and amortization......................... 1,143 1,215 2,701 4,694
Restructuring charges(1).............................. -- -- -- 1,244
------- ------- ------- --------
Operating income.................................... 2,159 2,393 7,863 8,872
Interest expense...................................... 208 228 412 996
Other income.......................................... (75) (52) (113) (229)
Gain on disposal of discontinued operation(2)......... -- (1,503) -- --
------- ------- ------- --------
Income before income taxes.......................... 2,026 3,720 7,564 8,105
Provision for income taxes............................ 699 744 2,641 2,707
------- ------- ------- --------
Net income.................................. L 1,327 L 2,976 L 4,923 L 5,398
======= ======= ======= ========
OTHER DATA:
Adjusted EBITDA(3).................................... L 3,302 L 3,608 L10,564 L 14,810
Capital expenditures.................................. 3,050 2,724 4,678 11,841
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents............................. L 4 L 3 L 789 L --
Working capital....................................... (94) 1,245 1,898 (3,074)
Total assets.......................................... 13,968 15,589 51,124 60,282
</TABLE>
14
<PAGE> 16
APPROXIMATE AMOUNTS IN U.S. GAAP
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------
1995 1996 1997
------- -------- --------
(POUNDS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales................................................... L23,819 L 66,839 L105,029
Costs of goods sold......................................... 17,032 49,850 79,030
Selling, general and administrative expenses................ 3,179 6,390 11,029
Depreciation and amortization............................... 1,219 2,787 4,870
Restructuring charges(1).................................... -- -- 1,244
------- -------- --------
Operating income.......................................... 2,389 7,812 8,856
Interest expense............................................ 228 412 996
Other income................................................ (52) (113) (229)
Gain on disposal of discontinued operation(2)............... (1,523) -- --
------- -------- --------
Income before income taxes................................ 3,736 7,513 8,089
Provision for income taxes.................................. 1,488 2,652 2,760
------- -------- --------
Net income........................................ L 2,248 L 4,861 L 5,329
======= ======== ========
OTHER DATA:
Adjusted EBITDA(3).......................................... L 3,608 L 10,599 L 14,970
Operating cash flows........................................ 1,901 8,594 13,995
Investing cash flows........................................ 301 (12,045) (16,373)
Financing cash flows........................................ (2,203) 4,237 1,589
Capital expenditures........................................ 2,724 4,678 11,841
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents................................... L 3 L 789 L --
Working capital............................................. 1,534 2,553 (3,074)
Total assets................................................ 15,134 56,539 67,406
Total debt, including current maturities.................... 1,746 7,879 15,535
</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) Adjusted 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 and $2,006,
in U.K.L and U.S.$, respectively. The Company believes that Adjusted EBITDA
provides additional information for determining its ability to meet debt
service requirements as revenues increase more than cash expenditures for
operating expenses. Adjusted 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 does not
necessarily indicate whether cash flow will be sufficient for cash
requirements. The calculation of Adjusted EBITDA does not include the
commitments of the Company for capital expenditures and payment of debt and
should not be deemed to represent funds available to the Company. Adjusted
EBITDA, as presented, may not be comparable to similarly-titled measures of
other companies.
15
<PAGE> 17
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 1, 1994, March 31, 1995, March 29, 1996, and April 4, 1997 set forth in
U.K. GAAP in U.K.L, has been derived from the audited consolidated financial
statements of Chips. 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 set forth in U.S. GAAP as of and for
the fiscal years ended March 31, 1995, March 29, 1996 and April 4, 1997, has
been derived from the audited 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 consolidated
financial statements of Chips and the notes thereto and "Management's Discussion
and Analysis of Results of Operations and Financial Condition," all included
elsewhere herein.
U.K. GAAP
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-------------------------------------------
APRIL 1, MARCH 31, MARCH 29, APRIL 4,
1994 1995 1996 1997
-------- --------- --------- --------
(POUNDS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales........................................... L51,852 L70,805 L104,611 L141,643
Costs of goods sold................................. 36,024 49,149 73,407 94,466
Selling, general and administrative expenses........ 6,264 6,242 7,522 10,514
Depreciation and amortization....................... 6,561 10,822 17,302 19,123
------- ------- -------- --------
Operating income.................................. 3,003 4,592 6,380 17,540
Interest expense.................................... 449 921 807 818
Other income........................................ (200) (109) -- (44)
------- ------- -------- --------
Income before income taxes........................ 2,754 3,780 5,573 16,766
Provision for income taxes.......................... 1,488 2,539 4,422 6,874
------- ------- -------- --------
Net income........................................ L 1,266 L 1,241 L 1,151 L 9,892
======= ======= ======== ========
OTHER DATA:
EBITDA(1)........................................... L 9,564 L15,414 L 23,682 L 36,663
Capital expenditures................................ 11,434 14,477 25,544 27,591
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents........................... L 27 L 2,087 L 2,636 L 26,244
Working capital..................................... (2,948) (1,094) (5,851) 11,516
Total assets........................................ 36,067 52,616 67,349 129,921
</TABLE>
16
<PAGE> 18
APPROXIMATE AMOUNTS IN U.S. GAAP
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------
MARCH 31, MARCH 29, APRIL 4,
1995 1996 1997
--------- --------- --------
(POUNDS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................................. L 70,805 L104,611 L141,643
Costs of goods sold........................................ 49,149 73,407 94,466
Selling, general and administrative expenses............... 6,112 7,464 10,437
Depreciation and amortization.............................. 9,124 15,752 17,522
-------- -------- --------
Operating income......................................... 6,420 7,988 19,218
Interest expense........................................... 921 807 818
Other income............................................... (109) -- (44)
-------- -------- --------
Income before income taxes............................... 5,608 7,181 18,444
Provision for income taxes................................. 2,080 2,584 6,112
-------- -------- --------
Net income....................................... L 3,528 L 4,597 L 12,332
======== ======== ========
OTHER DATA:
EBITDA(1).................................................. L 15,544 L 23,740 L 36,740
Operating cash flows....................................... 10,763 18,670 27,826
Investing cash flows....................................... (12,670) (16,816) (24,119)
Financing cash flows....................................... 3,967 (1,305) 19,901
Capital expenditures....................................... 14,477 25,544 27,591
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents.................................. L 2,087 L 2,636 L 26,244
Working capital............................................ (677) (3,929) 14,276
Total assets............................................... 45,397 62,893 105,452
Total debt, including current maturities................... 11,295 15,699 35,754
</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 as revenues
increase more than cash expenditures for operating expenses. 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. The calculation of EBITDA does not
include the commitments of the Company for capital expenditures and payment
of debt and should not be deemed to represent funds available to the
Company. EBITDA, as presented, may not be comparable to similarly-titled
measures of other companies.
17
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion should be read in conjunction with the audited
Consolidated Financial Statements and the notes thereto included in Item 8 of
this report.
Certain information presented herein includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act. One can identify these
forward-looking statements by their use of words such as "expects," "plans,"
"will," "estimates," "forecasts," "projects" and other words of similar meaning.
One can also identify them by the fact that they do not relate strictly to
historical or current facts. These statements are likely to address expected or
possible future events, including statements of the plans and objectives of
management for future growth, operations, products and services and statements
relating to future economic performance. There can be no assurance that the
Company's actual results will not differ materially from its expectations. One
must carefully consider any such statement and should understand that many
factors could cause actual results to differ from the Company's forward-looking
statements. These factors include inaccurate assumptions and a broad variety of
other risks and uncertainties, including some that are known and some that are
not. No forward-looking statement can be guaranteed and actual future results
may vary materially. Although it is not possible to predict or identify all such
factors, they may include the following:
- - General competition in the markets and industries in which the Company
operates:
- - Consequences of the Company's substantial leverage including: (i) significant
cash requirements to service indebtedness, reducing funds available for
operations and future business opportunities and increasing its vulnerability
to adverse general economic and industry conditions and competition; (ii)
possible limitations on its ability to obtain additional financing for
operations and acquisitions; and (iii) restrictions placed on it by the
agreements setting forth the terms and conditions of such indebtedness;
- - Uncertainties arising from the Company's limited history of integrating the
operations of separate and distinct businesses acquired since August 1996;
- - Uncertainties arising from the Company's ability to implement its operating
and acquisition strategy, including its ability to identify, negotiate and
consummate future acquisitions on terms management consider favorable;
- - Fluctuations in operating results arising from the variability in timing and
volume of customer orders compared to the Company's capacity at time of such
orders, timing of expenditures in anticipation of future sales, pricing
pressures, variations in product mix, start-up expenses relating to new
facilities, economic conditions in the electronics industry and adverse
developments with respect to significant customers, including Lucent
Technologies;
- - Uncertainties arising from the rapidly changing technology and continually
changing process developments characteristic of the market for the Company's
products and services;
- - Uncertainties relating to the Company's significant operations in
international markets, including currency fluctuations and restrictions,
inflation, changes in political and economic conditions, governmental
regulation, changes in import duties, trade restrictions, work stoppages and
taxes;
- - Changes in accounting standards promulgated by the American Institute of
Certified Public Accountants, the Financial Accounting Standards Board or the
Securities and Exchange Commission that are adverse to the Company; and
- - Economic factors over which the Company has no control, including inflation
and interest rates.
This list should not be considered an exhaustive statement of all potential
risks and uncertainties.
GENERAL
Viasystems, Inc. is a wholly owned subsidiary of Viasystems Group. Hicks
Muse and Mills & Partners formed Viasystems Group in August 1996 to make
strategic acquisitions of PCB manufacturers and backplane assemblers and to
integrate those acquisitions into a global enterprise that is the preferred
manufacturer and marketer of PCBs and backplanes. 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 Decem-
18
<PAGE> 20
ber 1996, Viasystems Technologies, a wholly owned subsidiary of Viasystems
Group, acquired substantially all the assets of the Lucent Division, in a
transaction valued at approximately $200.0 million. The combination of Circo
Craft and the former Lucent Division created one of the largest independent
manufacturers of PCBs and backplanes 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 $208.5 million. Subsequently, Viasystems Group acquired Forward
Group from the Hicks Muse affiliate. Viasystems, Inc. was formed on April 2,
1997, as a subsidiary of Viasystems Group. On April 10, 1997, Viasystems Group
contributed to Viasystems, Inc. all of the capital of its then existing
subsidiaries -- Circo Craft, Viasystems Technologies, and PCB Acquisition
Limited (the acquisition parent of Forward Group). Prior to the contribution of
this capital by Viasystems Group, Viasystems, Inc. had no operations of its own.
Also in April 1997, Chips Holdings acquired Chips. Viasystems Group subsequently
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 and
the assumption of debt, and the Chips operating subsidiaries became indirect
wholly-owned subsidiaries of Viasystems, Inc.
The discussion included herein of the Company represents the results of
operations of Viasystems, Inc. and its subsidiaries subsequent to the capital
contribution by Viasystems Group and of Viasystems Group and its subsidiaries
prior to the capital contribution of such subsidiaries to Viasystems, Inc.
The Company manufactures PCBs and assembles backplanes in various regions
of the world and exports and imports these products to and from a large number
of countries. The Company's operations may therefore be subject to volatility
because of currency fluctuations, inflation and changes in political and
economic conditions in these countries. Sales and expenses are frequently
denominated in local currencies and may be affected as currency fluctuations
affect the Company's product prices and operating costs or those of its
competitors. The Company, from time to time, engages in hedging operations, such
as forward exchange contracts, to reduce its exposure to foreign currency
fluctuations. Such hedging operations historically have not been material, and
gains and losses from such operations have not been significant. There can be no
assurance that such hedging operations will eliminate or substantially reduce
such risk. 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 Standard ("SFAS") No. 52.
The Company's volume of products being produced by the Company's facilities
has increased since the acquisition of each entity, and certain of the Company's
production equipment is operating at or near capacity. A significant portion of
the Company's planned capital expenditures in 1998 is directed toward expansion
of production capacity to meet increased demand.
Management has implemented a Company-wide initiative to ensure that its
information systems and systems applications are capable of processing data and
transactions pertaining to the year 2000. The initiative utilizes both Company
resources and external resources to identify systems and applications affected,
to correct existing systems or to acquire replacement systems, and to test the
systems and applications for compliance with the requirements for processing
year 2000 information. The majority of the Company's major information systems
are currently being upgraded and replaced as part of a strategy to implement
consistent systems worldwide. The new systems being installed are capable of
processing year 2000 information. All remaining systems will either be corrected
in order to enable them to process year 2000 information or will be replaced
with year 2000 compliant systems. The Company will capitalize and depreciate the
cost of replacement systems consistent with its existing capital expenditures
policies. Costs incurred to modify and maintain existing systems will be
expensed as incurred. Management believes that a substantial portion of the
costs for the new systems and the modifications will not represent incremental
costs to the Company, but rather will represent the reallocation of existing and
planned information technology resources. The amounts expensed in 1997 were
immaterial, and management expects that amounts required to be expensed in
future periods will not have a material effect on its financial position or
results of operations. The Company believes that it will achieve compliance with
year 2000 processing requirements in advance of the year 2000, and does
19
<PAGE> 21
not anticipate any material disruption in its operations as the result of any
failure by the Company to be in compliance. The Company does not have sufficient
information concerning the year 2000 compliance of its suppliers and customers
and, therefore, is unable to predict what effect, if any, such compliance will
have on the Company. However, the Company plans to formally communicate with all
of its significant suppliers and large customers to determine the effect on the
Company if those third parties do not remediate their year 2000 issue. The
Company's present estimate of costs to address the year 2000 compliance include
any costs associated with the anticipated effect of third parties, based on
available information. However, there can be no guarantee that the systems of
third parties on which the Company's systems rely will be converted timely or
that a failure of a third party to convert would not have a material adverse
effect on the Company.
Each of Viasystems Group, Circo Craft, Viasystems Technologies, Forward
Group and Chips are predecessors to Viasystems, Inc. A discussion of the results
of operations for each of the separate entities follows the discussion below
relating to the Company. The separate results of each entity are impacted by a
number of factors including target markets, customers, and local economics.
Differing demand for printed circuit boards in general and demand for different
technologies of printed circuit boards may not be consistent for each of the
predecessor entities acquired. The Company believes that the combination of the
predecessor entities will provide it with a significant advantage in managing
its operations to meet demand. The discussion of the results of operations of
the separate entities has been prepared based upon the results of each of
separate entity in accordance with the local GAAP of the entity and should be
read in conjunction with the "Selected Financial Data" of each of entity and the
financial statements and notes thereto of Viasystems Group, Circo Craft,
Viasystems Technologies, Forward Group, and Chips, all of which are included
elsewhere herein.
RESULTS OF OPERATIONS -- THE COMPANY
Viasystems, Inc. is a wholly owned subsidiary of Viasystems Group.
Viasystems, Inc. was formed on April 2, 1997, as a subsidiary of Viasystems
Group. On April 10, 1997, Viasystems Group contributed to Viasystems, Inc. all
of the capital of its then existing subsidiaries -- Circo Craft, Viasystems
Technologies, and PCB Acquisition Limited (the acquisition parent of Forward
Group). Prior to the contribution of this capital by Viasystems Group,
Viasystems, Inc. had no operations of its own. The discussion included herein of
the Company represents the results of operations of Viasystems, Inc. and its
subsidiaries subsequent to the capital contribution by Viasystems Group and of
Viasystems Group and its subsidiaries prior to the capital contribution of such
subsidiaries to Viasystems, Inc.
Year Ended December 31, 1997
The Company's net sales for the year ended December 31, 1997 were $795.3
million and cost of goods sold were $554.1 million, or 69.7% of net sales.
Selling, general and administrative expenses for the same period were $75.6
million, or 9.5% of net sales. During the year ended December 31, 1997, net cash
from operations was $104.9 million. For the same period, the Company used
approximately $117.2 million for capital expenditures and used approximately
$155.9 million in other investing activities, primarily for the acquisitions of
Forward Group. The acquisitions were funded through the issuance of $187.1
million of long-term obligations and the proceeds of $59.8 million of equity
offerings offset by $34.5 million of financing costs.
The Period From Inception (August 28, 1996) to December 31, 1996
The Company'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 7.5% 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, the Company 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.
The Company believes that its operating results are not comparable between
the period from inception (August 28, 1996) to December 31, 1996 and the year
ended December 31, 1997 nor to the operating results expected to be achieved in
the future due to, among other things, the startup of the Company in 1996, the
20
<PAGE> 22
acquisitions made in 1996 and 1997 and to date in 1998, the anticipated future
acquisitions, and the financing incurred to fund past and future acquisitions.
The Company believes that, due to the acquisitions made, sales in subsequent
periods will increase from that reported for the period from inception (August
28, 1996) to December 31, 1996 and for the year ended December 31, 1997.
RESULTS OF OPERATIONS -- CIRCO CRAFT
Nine Months Ended September 30, 1996 Compared to Fiscal 1995
Net sales and cost of goods sold for the nine months ended September 30,
1996, were C$129.6 million and C$101.5 million, respectively, compared to sales
and cost of goods sold for fiscal 1995 of C$185.2 million and C$148.8 million,
respectively. Net sales for the nine months ended September 30, 1996, were
approximately 70.0% of sales for fiscal 1995. In general, Circo Craft's sales
were lower during 1996 due to a shift in the product mix to lower layer count
products driven primarily by the demand of one of Circo Craft's customers in the
automotive industry. As a percentage of sales, cost of goods sold for the nine
months ended September 30, 1996, decreased to 78.3% from 80.4% for fiscal 1995
primarily as a result of cost savings achieved through improved production
processes. Selling, general and administrative expenses for the nine months
ended September 30, 1996, were C$8.0 million compared to selling, general and
administrative expenses for fiscal 1995 of C$11.1 million. Selling, general and
administrative expenses as a percentage of sales for the nine months ended
September 30, 1996, increased to 6.1% from 6.0% for fiscal 1995 primarily as a
result of the lower sales caused by the product mix shift discussed above.
RESULTS OF OPERATIONS -- VIASYSTEMS TECHNOLOGIES
Eleven Months Ended November 30, 1996 Compared to Fiscal 1995
Net sales and cost of goods sold for the eleven months ended November 30,
1996, were $325.1 million and $244.3 million, respectively, compared to sales
and cost of goods sold for fiscal 1995 of $325.0 million and $274.8 million,
respectively. Net sales for the eleven months ended November 30, 1996, were
approximately 100.0% of sales for fiscal 1995 as sales for Viasystems
Technologies increased during 1996 due to increased demand by Lucent
Technologies caused by the rapidly expanding telecommunications market. As a
percentage of sales, cost of goods sold for the eleven months ended November 30,
1996, decreased to 75.1% from 84.5% for fiscal 1995 primarily as a result of the
favorable impact of productivity improvements. Selling, general and
administrative expenses for the eleven months ended November 30, 1996, were
$34.8 million compared to selling, general and administrative expenses for
fiscal 1995 of $42.4 million. Selling, general and administrative expenses as a
percentage of sales for the eleven months ended November 30, 1996, decreased to
10.7% from 13.1% for fiscal 1995 as a result of decreased allocations from
Lucent Technologies.
RESULTS OF OPERATIONS -- FORWARD GROUP
Fiscal Year Ended January 31, 1997 Compared to Fiscal Year Ended January 31,
1996
Net sales and cost of goods sold for the fiscal year ended 1997 were L105.0
million and L79.0 million, respectively, compared to sales and cost of goods
sold for the fiscal year ended 1996 of L66.8 million and L49.9 million,
respectively. Sales during the fiscal year ended 1997 increased over the fiscal
year ended 1996 due primarily to the full year impact of the 1995 acquisition of
Exacta Circuits and three smaller companies in 1996. As a percentage of sales,
cost of goods sold for the fiscal year ended 1997 increased to 75.2% from 74.6%
for the fiscal year ended 1996 primarily as a result of the three smaller
acquisitions in 1996 which have products with lower margins. Selling, general
and administrative expenses for the fiscal year ended 1997 were L11.2 million
compared to selling, general and administrative expenses for the fiscal year
ended 1996 of L6.4 million. Selling, general and administrative expenses
increased in the fiscal year ended 1997 primarily due to the impact of the
acquisitions discussed above.
RESULTS OF OPERATIONS -- CHIPS
Fiscal Year Ended April 4, 1997 Compared to Fiscal Year Ended March 29, 1996
Net sales and cost of goods sold for the fiscal year ended 1997 were L141.6
million and L94.5 million, respectively, compared to sales and cost of goods
sold for the fiscal year ended 1996 of L104.6 million and L73.4 million,
respectively. Sales during the fiscal year ended 1997 increased over the fiscal
year ended 1996
21
<PAGE> 23
due to increased demand for higher layer count PCBs for the telecommunications
and computer industries. As a percentage of sales, cost of goods sold for the
fiscal year ended 1997 decreased to 66.7% from 70.2% for the fiscal year ended
1996 primarily as a result of improved absorption of costs due to higher sales
and productivity improvements achieved as a result of a number of cost savings
projects underway including projects to decrease the cost of process materials
and improve process automation. Selling, general and administrative expenses for
the fiscal year ended 1997 were L10.5 million compared to selling, general and
administrative expenses for the fiscal year ended 1996 of L7.5 million. Selling,
general and administrative expenses as a percentage of sales for the fiscal year
ended 1997 remained relatively consistent at 7.4% compared to 7.2% for the
fiscal year ended 1996.
LIQUIDITY AND CAPITAL RESOURCES -- THE COMPANY
Net cash provided by operating activities was $104.9 million for the year
ended December 31, 1997, which compared to $1.7 million provided by operations
for the period from inception (August 28, 1996) to December 31, 1996. Net cash
used in investing of $273.1 million for the year ended December 31, 1997,
consisted of capital expenditures of $117.2 million and acquisition activities
of a net of $155.9 million. Net cash used in investing of $286.3 million for the
period from inception (August 28, 1996) to December 31, 1996 consisted of
capital expenditures of $3.6 million and acquisition activities of a net of
$282.7 million. Net cash provided by financing activities was $184.1 million for
the year ended December 31, 1997, compared to net cash provided by financing
activities of $300.7 million for the period from inception (August 28, 1996) to
December 31, 1996. The net cash provided by financing activities for the year
ended December 31, 1997 was used primarily for the acquisition of Forward Group.
The acquisition of Chips was completed in a non-cash transaction in which the
selling stockholders received notes payable (the "Chips Loan Notes"). The net
cash provided by financing activities in the period from inception (August 28,
1996) to December 31, 1996 was used primarily to finance the acquisitions of
Circo Craft and the Lucent Division.
On April 11, 1997, the Company entered into a $216.0 million Senior
Subordinated Credit Agreement (the "Subordinated Credit Facility"). The proceeds
of the Subordinated Credit Facility were used to repay a tender facility which
was used to acquire Forward Group and $20.0 million of term loans outstanding
under the Second Amended and Restated Credit Agreement (the "Senior Credit
Facilities"). In connection with the Chips Merger, Viasystems Group assumed the
$437.5 million of Chips Loan Notes. The Chips Loan Notes are collateralized by
letters of credit issued by banks. These letters of credit are in turn
collateralized in part by a fully cash collateralized $118.3 million
reimbursement obligation of Bisto Funding, Inc., a special purpose entity and
sister company of Viasystems established as a subsidiary of Viasystems Group in
connection with the acquisition of Chips, with the remainder, including interest
on the Chips Loan Notes for one year, collateralized by a reimbursement
obligation of the Company (the "Chips Reimbursement Obligation"). As such, the
Company's liability for principal under the Chips Loan Notes represents $319.3
million, or the net amount of the Chips Loan Notes and the cash collateral of
Bisto Funding, Inc. To the extent the interest income earned by Bisto Funding,
Inc. on the $118.3 million of cash it holds is insufficient to fund interest on
$118.3 million of the 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, the first
$118.3 million of principal payments will be paid by Bisto Funding, Inc. 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
obligation in respect of the $319.3 million principal amount of the Chips Loan
Notes (see Note 10 to the Notes to Consolidated Financial Statements in Item 8
hereof). On June 2, 1997, the Company completed the offering of $400.0 million
of 9 3/4% Senior Subordinated Notes due 2007 (the "1997 Notes"). The net
proceeds of the 1997 Notes were used to repay the Subordinated Credit Facility,
approximately $130.3 million of term loans outstanding under the Senior Credit
Facilities, and approximately $41.6 million of revolving credit amounts
outstanding under the Senior Credit Facilities which was borrowed subsequent to
December 31, 1996, to repay debt assumed in the acquisition of Chips. As of
December 31, 1997, the Company's indebtedness consisted of amounts outstanding
under the Senior Credit Facilities, the 1997 Notes, the Company's liability
under the Chips Reimbursement Obligation, capital leases and other debt.
22
<PAGE> 24
On February 9, 1998, the Company completed the offering of an additional
$100.0 million of 9 3/4% Senior Subordinated Notes due 2007 at a price of
104.5%, yielding net proceeds of $101.0 million (the "1998 Notes" and together
with the 1997 Notes, the "2007 Notes"). As a condition of the offering of the
1998 Notes, Hicks Muse agreed to contribute an additional $50.0 million of
equity to the Company and the Senior Credit Facilities were amended to, among
other things, establish an additional $70.0 million term loan (the "Amended
Senior Credit Facilities"). A portion of the proceeds of the 1998 Notes, the
additional term loan under the Senior Credit Facilities, and the equity
contribution have been used to fund the acquisitions of the Ericsson Facility,
Mommers, and Zincocelere. In addition, the Company used a portion of these
proceeds to repay revolving credit line amounts outstanding under the Senior
Credit Facilities which were borrowed subsequent to December 31, 1997.
The Company's Adjusted EBITDA (as defined) for fiscal 1996 and 1997 was
$4.5 million and $165.8 million, respectively. As a percentage of sales,
Adjusted EBITDA was 8.9% and 20.9%, respectively, for the same periods. Adjusted
EBITDA is one of the financial measures in the covenants to the Senior Credit
Facilities. Although Adjusted EBITDA does not necessarily indicate whether cash
flows will be sufficient for cash requirements, the Company believes that
Adjusted EBITDA provides additional information for determining its ability to
meet debt service requirements as revenues increase more than cash expenditures
for operating expenses.
The Company anticipates that in addition to the acquisitions discussed
above, its primary uses of cash in 1998 will be (i) for capital expenditures for
maintenance, replacement and acquisitions of equipment, expansion of capacity,
productivity improvements and product and process technology development and
(ii) to pay interest on, and to repay principal of, indebtedness under the
Amended Senior Credit Facilities, the 2007 Notes, the Chips Reimbursement
Obligation and other outstanding indebtedness of the Company as discussed in
Note 10 to the Notes to Consolidated Financial Statements in Item 8 hereof. The
Company anticipates making capital expenditures in 1998 for facilities,
equipment and information systems, including capital expenditures on the 1998
Acquisitions completed to date. The Amended Senior Credit Facilities contains
annual limits on the Company's capital expenditures. The Company believes that
such limits are sufficient to allow the Company to undertake all anticipated
capital projects. In 1998, the Company will be obligated to make principal and
interest payments of approximately $78.0 million under the Amended Senior Credit
Facilities, 2007 Notes, and Chips Reimbursement Obligation, which the Company
anticipates will be made from cash flow from operations.
Borrowings under the Senior Credit Facilities bear 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. The 2007 Notes bear interest at the rate of
9 3/4% per annum, which is payable semiannually in arrears. The Chips Loan Notes
have a maturity of six years and pay cash interest quarterly at a fixed rate
initially 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 have the right after the first anniversary of
their issuance to redeem the Chips Loan Notes by putting them to Viasystems
Group on any interest payment date at 100% of their principal amount. In the
event the Chips Loan Notes are redeemed, the Company's liability under the Chips
Reimbursement Obligation of $319.3 million will be funded by a term loan
available under the Senior Credit Facilities.
The Company estimates that the acquired developed technologies it has
capitalized will retain economic utility for 15 years, but that revenues
contributed by the acquired developed technologies may decrease 40%-45% through
five years and 70-80% through ten years. The Company also anticipates that these
technologies will be supplanted over time by new products and processes
developed through the successful completion of acquired research and development
efforts and new research and development efforts. The Company believes that
efforts to complete the acquired in-process research and development projects
will consist primarily of internal engineering costs over the next two to four
years. These costs are estimated to be approximately $40-$60 million. Such
estimate is subject to revision should there be changes in the operating
environment or the technical knowledge available within the industry or the
Company. The Company anticipates that cash
23
<PAGE> 25
generated from existing operations will be sufficient to fund such expenditures.
The Company, through its continued investment in research and development,
intends to achieve and sustain technical superiority in the design and delivery
of advanced PCB products, and believes, given its leadership position in the
industry, that it is well positioned to do so. The Company believes that the new
product and process technologies which result from ongoing research and
development will build on the existing core printed circuit board technology and
contribute to an anticipated growth in the Company's sales and anticipated
improvements in the Company's cost of production in the future.
While the core PCB technology remains relatively consistent, the Company's
research and development projects aim to advance the technical know-how, further
develop complete technological solutions, enhance the conceptual formulation and
design of possible technological alternatives, and design and improve testing
capabilities. As such, these research and development projects bear a certain
amount of risk. If these efforts are successful, they will enable the Company to
further penetrate existing markets, pursue sizable new markets, and dramatically
expand the business. If acceptable advancements are not achieved, failed
research and development projects could have a material adverse effect on the
Company's financial position or results of operations. The Company is unable to
accurately quantify the potential impact in the future of the failure of any
single project or multiple projects which were acquired as in-process research
and development in the acquisitions of Circo Craft, Viasystems Technologies,
Forward Group, and Chips. Although there can be no guarantee that the acquired
in-process research and development projects will achieve technological
feasibility, the Company believes that the likelihood of development is
reasonable for these projects. The Company does not believe that it is subject
to any greater risk of failure than its competitors, and, in fact, believes that
its size, access to financial resources and relationships with customers
contribute to a reduction of that risk which gives the Company a competitive
technical advantage.
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 December 31, 1997, there were no amounts outstanding under the
revolving credit facilities available under the Senior Credit Facilities, and
approximately $249.6 million ($100.0 million of which was only available for
future acquisitions) of available borrowing capacity thereunder, subject to
certain limitations. Pursuant to the Amended Senior Credit Facilities, the
revolving credit facilities available were increased by $25.0 million and an
additional $70.0 million term loan was added. The Company anticipates that the
cash flow from operations and additional funds available under the revolving
facilities of the Amended Senior Credit Facilities will be sufficient to meet
its foreseeable requirements for working capital, capital expenditures and debt
service and other operating cash requirements. The acquisition of other
businesses by the Company in the future likely would require external sources of
debt and/or equity financing. There can be no assurance that such funds would be
available on terms satisfactory to the Company, if at all. In addition, the
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.
The Amended Senior Credit Facilities and the 2007 Notes restrict the
Company from, among other things: (i) incurring additional indebtedness (other
than permitted indebtedness); (ii) creating liens; (iii) disposing of assets;
(iv) guaranteeing indebtedness; (v) merging or selling substantially all of its
assets; (vi) declaring and paying certain dividends; (vii) making certain
investments and loans; and (viii) entering into certain transactions with
affiliates, in each case with certain exceptions customary for credit facilities
such as the Amended Senior Credit Facilities.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1998, the Company will adopt SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," and SFAS No. 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits." The Company does not expect adoption of
these standards to have a material impact on its Consolidated Financial
Statements.
24
<PAGE> 26
ITEM 8. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
VIASYSTEMS, INC. & SUBSIDIARIES
Report of Independent Auditors.............................. 26
Consolidated Balance Sheets as of December 31, 1996 and
1997...................................................... 27
Consolidated Statements of Operations from inception (August
28, 1996) to December 31, 1996 and for the year ended
December 31, 1997......................................... 28
Consolidated Statements of Stockholder's Equity from
inception (August 28, 1996) to December 31, 1996 and for
the year ended December 31, 1997.......................... 29
Consolidated Statements of Cash Flows from inception (August
28, 1996) to December 31, 1996 and for the year ended
December 31, 1997......................................... 30
Notes to Consolidated Financial Statements.................. 31
Schedule II -- Valuation and Qualifying Accounts............ 49
CIRCO CRAFT CO. INC.
Auditors' Report............................................ 50
Auditors' Report............................................ 51
Consolidated Statements of Retained Earnings for the year
ended December 31, 1995 and the nine month period ended
September 30, 1996........................................ 52
Consolidated Statements of Earnings for the year ended
December 31, 1995 and the nine month period ended
September 30, 1996........................................ 53
Consolidated Statements of Changes in Financial Position for
the year ended December 31, 1995 and the nine month period
ended September 30, 1996.................................. 54
Notes to Consolidated Statements............................ 55
VIASYSTEMS TECHNOLOGIES CORP. (FORMERLY MICROELECTRONICS
GROUP, INTERCONNECTION TECHNOLOGIES UNIT OF LUCENT
TECHNOLOGIES, INC.)
Report of Independent Auditors.............................. 62
Statements of Operations for the year ended December 31,
1995 and the eleven month period ended November 30,
1996...................................................... 63
Notes to Financial Statements............................... 64
FORWARD GROUP PLC
Report of Independent Auditors.............................. 67
Consolidated Profit and Loss Accounts for the years ended
January 31, 1996 and 1997................................. 68
Consolidated Statements of Total Recognized Gains and Losses
for the years ended January 31, 1996, and 1997............ 69
Consolidated Balance Sheet at January 31, 1997.............. 70
Consolidated Statements of Cash Flows for the years ended
January 31, 1996 and 1997................................. 71
Notes to the Consolidated Financial Statements.............. 72
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
Report of Independent Auditors.............................. 93
Consolidated Profit and Loss Accounts for the years ended
March 29, 1996 and April 4, 1997.......................... 94
Consolidated Statements of Total Recognized Gains and Losses
for the years ended March 29, 1996 and April 4, 1997...... 95
Consolidated Balance Sheet at April 4, 1997................. 96
Consolidated Statements of Cash Flows for the years ended
March 29, 1996 and April 4, 1997.......................... 97
Notes to the Consolidated Financial Statements.............. 98
</TABLE>
25
<PAGE> 27
REPORT OF INDEPENDENT AUDITORS
The Board of Directors of Viasystems, Inc.:
We have audited the consolidated financial statements and the financial
statement schedule of Viasystems, Inc. and subsidiaries (as defined in Note 1 to
the financial statements) listed in the index on page 25 of this Form 10-K.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Viasystems,
Inc. and subsidiaries as of December 31, 1996, and 1997 and the consolidated
results of their operations and their cash flows for the period from inception
(August 28, 1996) to December 31, 1996 and for the year ended December 31, 1997,
in conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
St. Louis, Missouri
January 30, 1998,
except for Note 19
for which the date is
March 26, 1998
26
<PAGE> 28
VIASYSTEMS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 16,117 $ 27,538
Accounts receivable, less allowance for doubtful accounts
of $409 and $2,573, respectively....................... 37,149 113,269
Inventories, net.......................................... 43,123 84,631
Prepaid expenses and other................................ 7,333 26,240
-------- ----------
Total current assets.............................. 103,722 251,678
Property, plant and equipment, net.......................... 208,748 448,128
Deferred financing costs, net............................... 27,351 58,696
Intangible assets, net...................................... 47,920 309,470
Other assets................................................ -- 940
-------- ----------
Total assets...................................... $387,741 $1,068,912
======== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term obligations............... $ 10,804 $ 31,363
Accounts payable.......................................... 5,185 86,941
Accrued and other liabilities............................. 42,112 85,860
Income taxes payable...................................... 683 30,855
-------- ----------
Total current liabilities......................... 58,784 235,019
Deferred taxes.............................................. 3,785 67,797
Long-term obligations, less current maturities.............. 254,816 816,012
Other noncurrent liabilities................................ 15,383 42,277
-------- ----------
Total liabilities................................. 332,768 1,161,105
-------- ----------
Stockholder's equity (deficit)
Common stock, par value $.01 per share, 1,000 shares
authorized, issued and outstanding..................... -- --
Contributed capital....................................... 103,794 282,763
Accumulated deficit....................................... (48,742) (376,230)
Cumulative translation adjustment......................... (79) 1,274
-------- ----------
Total stockholder's equity (deficit).............. 54,973 (92,193)
-------- ----------
Total liabilities and stockholder's equity
(deficit).................................... $387,741 $1,068,912
======== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated balance sheets
27
<PAGE> 29
VIASYSTEMS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INCEPTION
(AUGUST 28,
1996) TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Net sales................................................... $ 50,400 $ 795,289
Operating expenses:
Cost of goods sold........................................ 42,052 554,097
Selling, general and administrative....................... 3,844 75,650
Depreciation.............................................. 4,102 51,884
Amortization of intangibles............................... 533 58,153
Write-off of acquired in-process research and
development............................................ 50,800 294,500
-------- ---------
Operating loss.............................................. (50,931) (238,995)
Other expenses:
Interest expense.......................................... 2,503 64,612
Amortization of deferred financing costs.................. 470 6,629
Other expense............................................. 262 1,024
-------- ---------
Loss before income taxes and extraordinary item............. (54,166) (311,260)
Provision (benefit) for income taxes........................ (5,424) 8,432
-------- ---------
Loss before extraordinary item.............................. (48,742) (319,692)
Extraordinary item -- loss on early extinguishment of debt,
net of income tax benefit of $4,332....................... -- 7,796
-------- ---------
Net loss.................................................... $(48,742) $(327,488)
======== =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
28
<PAGE> 30
VIASYSTEMS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE
COMMON CONTRIBUTED ACCUMULATED TRANSLATION
STOCK CAPITAL DEFICIT ADJUSTMENT TOTAL
------ ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance at Inception (August 28,
1996)................................. $ -- $ -- $ -- $ -- $ --
Capital contributed to Viasystems
Group prior to formation of the
Company............................ -- 103,794 -- -- 103,794
Net loss.............................. -- -- (48,742) -- (48,742)
Foreign currency translation
adjustment......................... -- -- -- (79) (79)
------ -------- --------- ------ --------
Balance at December 31, 1996............ -- 103,794 (48,742) (79) 54,973
Capital contribution by Viasystems
Group to the Company............... -- 178,969 -- -- 178,969
Net loss.............................. -- -- (327,488) -- (327,488)
Foreign currency translation
adjustment......................... -- -- -- 1,353 1,353
------ -------- --------- ------ --------
Balance at December 31, 1997.......... $ -- $282,763 $(376,230) $1,274 $(92,193)
====== ======== ========= ====== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
29
<PAGE> 31
VIASYSTEMS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INCEPTION
(AUGUST 28,
1996) TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss.................................................. $ (48,742) $(327,488)
Adjustments to reconcile net loss to net cash provided by
Operating activities:
Write-off of acquired in-process research and
Development........................................... 50,800 294,500
Extraordinary item -- loss on early extinguishment of
debt.................................................. -- 12,128
Depreciation........................................... 4,102 51,884
Amortization of intangibles............................ 533 58,153
Amortization of deferred financing costs............... 470 6,629
Deferred taxes......................................... (5,874) (15,109)
Change in assets and liabilities, net of acquisitions:
Accounts receivable.................................. (15,469) (8,050)
Inventories.......................................... 2,655 (15,979)
Prepaid expenses and other........................... (927) (6,640)
Accounts payable and accrued and other liabilities... 14,875 38,539
Income taxes payable................................. (761) 16,339
--------- ---------
Net cash from operating activities........................ 1,662 104,906
--------- ---------
Cash flows provided by (used in) investing activities:
Acquisitions, net of cash acquired of $20,890 and
$42,778, respectively................................. (282,723) (155,904)
Capital expenditures................................. (3,563) (117,163)
--------- ---------
Net cash used in investing activities.................. (286,286) (273,067)
--------- ---------
Cash flows provided by (used in) financing activities:
Proceeds from issuance of long-term obligations...... 238,283 --
Proceeds from the issuance of Senior Subordinated
Notes due 2007...................................... -- 400,000
Proceeds from the Subordinated Credit Facility....... -- 216,000
Repayment of amounts due under the Credit Agreements
and the Second Amended and Restated Credit
Agreement........................................... -- (151,964)
Repayment of the Subordinated Credit Facility........ -- (216,000)
Repayment of other long-term obligations............. -- (90,187)
Equity proceeds...................................... 73,794 60,719
Financing fees and other............................. (11,364) (34,491)
--------- ---------
Net cash from financing activities..................... 300,713 184,077
--------- ---------
Effect of exchange rate changes on cash................ 28 (4,495)
--------- ---------
Net change in cash and cash equivalents................ 16,117 11,421
Cash and cash equivalents at beginning of period....... -- 16,117
--------- ---------
Cash and cash equivalents at end of period............. $ 16,117 $ 27,538
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest............................... $ 323 $ 59,956
========= =========
Cash paid for income taxes........................... $ 1,184 $ 4,742
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
30
<PAGE> 32
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
1. BASIS OF PRESENTATION
Viasystems, Inc. ("Viasystems") is a wholly owned subsidiary of Viasystems
Group, Inc. 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. Prior to the
contribution of this capital by Viasystems Group, Inc., Viasystems had no
operations of its own. The consolidated financial statements included herein
present the results of operations of Viasystems and its subsidiaries subsequent
to the capital contribution by Viasystems Group, Inc., and the results of
operations of Viasystems Group, Inc. and its subsidiaries prior to the capital
contribution of such subsidiaries to Viasystems. As used herein, the Company
refers to Viasystems and its subsidiaries subsequent to the capital contribution
by Viasystems Group, Inc. and Viasystems Group, Inc. and its subsidiaries prior
to such capital contribution. These financial statements have been adjusted to
reflect the equity structure of Viasystems on a retroactive basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company is primarily involved in manufacturing and distributing
advanced printed circuit boards ("PCBs") and assembling backplanes at various
facilities located in the United States, Canada, United Kingdom and Puerto Rico.
The Company's customers include a diversified base of manufacturers in the
telecommunications, computer and automotive industries throughout North America
and Europe.
Principles of Consolidation
The consolidated financial statements include the accounts of Viasystems
and its wholly-owned subsidiaries. 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.
Derivative Financial Instruments
In 1997, the Company entered into an interest rate hedging arrangement for
the purpose of hedging against interest rate fluctuations. The Company paid a
fee of approximately $180 for the arrangement. This fee is included in deferred
financing fees and amortized on a straight-line basis over the life of the
arrangement, through March 1999. The interest rate hedging arrangement provides
a ceiling on the base interest rate of 7.0% on borrowings up to $120,000 under
the Second Amended and Restated Credit Agreement (see Note 10) through March
1998 and a ceiling on the base interest rate of 8.0% on borrowings up to
$120,000 under the Second Amended and Restated Credit Agreement thereafter
through March 1999. The Company estimates that fair value approximates the
carrying value of the interest rate hedging arrangement.
In 1997, the Company entered into forward foreign currency collars which
effectively lock in a range of exchange rates to protect the Company against
foreign currency fluctuations in connection with the Chips Term Loan (as defined
in Note 10), which the Company will convert to a foreign currency if the Chips
Term Loan is drawn. As discussed in Notes 3 and 10, the Company has entered into
the Chips Loan Notes that may be called, commencing April 1, 1997. If called,
the Chips Loan Notes will be repaid from proceeds from the Chips Term Loan. The
Company is required to convert the Chips Term Loan to a foreign currency after
it is
31
<PAGE> 33
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
drawn. The collars were acquired at no cost and expire in April 1998. Gains and
losses on the collars are recorded in current period earnings. The amount of
gain for the year ended December 31, 1997 was immaterial.
From time to time, the Company engages in short-term hedging activities to
reduce its exposure to foreign currency fluctuations. Such hedging activities
are not material and gains and losses from such activities are not significant.
There can be no assurance that these hedging activities will eliminate or reduce
foreign currency risk.
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
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
straight-line method, which approximates the effective interest method.
Intangible Assets
Intangible assets consist primarily of identifiable intangibles acquired
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. In addition, the
Company's policy for the recognition and measurement of any impairment of
goodwill is to assess the current and anticipated future discounted cash flows
associated with the goodwill. An impairment of goodwill occurs when the
discounted cash flows (excluding interest) do not exceed the carrying amount of
goodwill. The amount of the impairment loss is the difference between the amount
of the goodwill and the discounted cash flows associated with the goodwill. At
December 31, 1997 the Company does not believe there has been any impairment of
its identified intangible assets or goodwill. Amortization of intangible assets
is computed using systematic methods over the estimated useful lives of the
related assets as follows:
<TABLE>
<CAPTION>
LIFE METHOD
---- ------
<S> <C> <C>
Developed technologies........................... 15 years Double-declining balance
Assembled workforce.............................. 1 year Straight-line
Customer list.................................... 3 years Straight-line
Goodwill......................................... 20 years Straight-line
</TABLE>
32
<PAGE> 34
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Research and Development
Expenditures for research and development activities relating to new
products and processes are charged to expense as incurred. The Company's
research and development expenditures were $545 and $10,797 for the period from
inception (August 28, 1996) to December 31, 1996 and for the year ended December
31, 1997, respectively.
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 value of the Senior Subordinated Notes due 2007 (see Note
10) is $413,500 at December 31, 1997. The Company has estimated this fair value
data by using current market data. The fair market values of the other 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 received $2,802 and $1,778 of property, plant, and
equipment paid for by Lucent Technologies Inc. for the period from inception
(August 28, 1996) to December 31, 1996 and for the year ended December 31, 1997,
respectively.
The purchase of the shares of Forward Group was partially funded through
the issuance of approximately $24,420 of notes payable to Forward Group's former
shareholders. The purchase of shares of ISL was entirely funded through the
issuance of approximately $437,500 of loan notes.
In 1997, the Company received a non-cash contribution of $118,250 from
Viasystems Group, Inc, when Viasystems Group, Inc. transferred $118,250 in cash
to Bisto Funding, Inc. The cash transfer was recorded as a capital contribution
and a reduction of the carrying amount of the notes payable to the former
shareholders of Interconnection Systems (Holdings) Limited (see Note 3). The
notes payable recorded by the Company are net of the $118,250 as Bisto Funding,
Inc. is contractually obligated to pay such amount to the note holders in the
event the notes payable are redeemed (see Note 10).
3. ACQUISITIONS
On October 1, 1996, the Company acquired all of the outstanding stock of
Circo Craft Co. Inc. ("Circo Craft"), 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 since the date of the Circo Craft
Acquisition.
33
<PAGE> 35
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Circo Craft Acquisition has been accounted for using the purchase
method of accounting whereby the total purchase price has been allocated to the
assets and liabilities based on their estimated respective fair values. The
Company allocated a significant portion of the purchase price, as described
below, to intangible assets, 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
in-process R&D projects relate primarily to developing significant enhancements
to the current product offering, as well as introducing advanced new products.
The incomplete projects include new connector functionality, chip packaging
solutions, component miniaturization, specialty drilling and surface finishes.
Given the uniqueness of the tasks and the technologies involved, alternative
future uses for these projects, apart from the objectives and economics of the
projects for which they are intended, do not exist. The Company believes that
the efforts to complete the acquired in-process R&D projects will consist of
internally-staffed engineering costs over the next two to four years. The costs
to complete the in-process R&D projects and to procure, develop and test the
required capital assets are anticipated to be significant. The other acquired
intangibles include developed technology, assembled workforce, and customer
list. These intangibles are being amortized over their estimated useful lives of
1-15 years. The remaining unidentified intangible asset has been allocated to
goodwill and is being amortized over its estimated useful life of 20 years (see
Note 2).
The total purchase price including fees and expenses has been allocated to
the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 52,846
Property, plant and equipment............................... 50,710
Developed technologies...................................... 13,400
Assembled workforce......................................... 5,200
Customer list............................................... 3,400
In-process R&D.............................................. 39,200
Goodwill.................................................... 9,829
Non-current assets.......................................... 2,500
Current liabilities......................................... (24,103)
Non-current liabilities..................................... (22,247)
--------
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. (the "Lucent Division"), a rigid printed circuit board
manufacturer and backplane assembler, (the "Lucent Division Acquisition") for an
aggregate cash consideration of $170,000 and 1,200,000 shares of preferred stock
valued at $30,000 plus acquisition fees and expenses of $1,969. The operating
results of Viasystems Technologies Corp. are included in the consolidated
financial statements of the Company since the date of the Lucent Division
Acquisition.
The Lucent Division Acquisition was accounted for using the purchase method
of accounting whereby the total purchase price has been allocated to the assets
and liabilities based on their estimated respective fair values. The Company
allocated a significant portion of the purchase price, as described below, to
intangible assets, including approximately $11,600 of 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 in-process R&D projects relate primarily to developing
significant enhancements to the current product offering as well as introducing
advanced new products. The incomplete projects include new connector
functionality, chip packaging solutions, component miniaturization, specialty
drilling and surface finishes. Given the uniqueness of the tasks and the
technologies involved, alternative future uses
34
<PAGE> 36
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
for these projects, apart from the objectives and economics of the projects for
which they are intended, do not exist. The Company believes that the efforts to
complete the acquired inprocess R&D projects will consist of internally-staffed
engineering costs over the next two to four years. The costs to complete the
in-process R&D projects and to procure, develop and test the required capital
assets are anticipated to be significant. The other acquired intangibles include
developed technology, assembled workforce, and customer list. These intangibles
are being amortized over their estimated useful lives of 1-15 years. The
remaining unidentified intangible asset has been allocated to goodwill and is
being amortized over its estimated useful life of 20 years (see Note 2).
The total purchase price including fees and expenses has been allocated to
the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 39,204
Property, plant and equipment............................... 155,674
Developed technologies...................................... 7,866
Assembled workforce......................................... 5,810
Customer list............................................... 5,099
In-process R&D.............................................. 11,600
Goodwill.................................................... 1,013
Non-current assets.......................................... 13,080
Current liabilities......................................... (9,862)
Non-current liabilities..................................... (27,515)
--------
Total............................................. $201,969
========
</TABLE>
On April 11, 1997, the Company acquired all of the outstanding stock of
Forward Group, PLC ("Forward"), a manufacturer of rigid printed circuit boards
located in the U.K. The purchase price of approximately $208,483 consisted of
cash and notes payable to certain Forward stockholders plus $5,585 of
acquisition fees and expenses (the "Forward Acquisition"). The Forward
Acquisition and 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 Note 10).
The Forward 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.
Accordingly, the results of operations of Forward since its acquisition are
included in the results of operations of the Company. The Company has allocated
a significant portion of the purchase price, as described below, to intangible
assets, including approximately $97,800 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 $97,800 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 1-15 years.
The remaining unidentified intangible asset has been allocated to goodwill and
is being amortized over its estimated useful life of 20 years (see Note 2).
35
<PAGE> 37
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The total purchase price including fees and expenses has been allocated to
the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.............................................. 42,656
Property, plant and equipment............................... 58,534
Developed technologies...................................... 34,800
Assembled workforce......................................... 6,600
Customer list............................................... 13,200
In-process R&D.............................................. 97,800
Goodwill.................................................... 53,083
Non-current assets.......................................... 5,660
Current liabilities......................................... (41,938)
Non-current liabilities..................................... (56,327)
--------
Total............................................. $214,068
========
</TABLE>
In April 1997, Viasystems Group, Inc.'s stockholders and certain of its
affiliates formed Chips Holding, Inc., to acquire Interconnection Systems
(Holdings) Limited ("ISL"), a manufacturer of rigid printed circuit boards
located in the U.K. On April 21, 1997, Chips Holdings, Inc. acquired ISL for
$437,500 plus $8,953 of acquisition fees and expenses (the "ISL Acquisition").
The purchase price consisted entirely of notes payable to the former
stockholders of ISL. In connection with the transaction, the stockholders of
Viasystems Group, Inc. 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 (the "Chips Merger") in
consideration for the issuance to Viasystems Group, Inc.'s stockholders and
certain of its affiliates of 140,000,000 shares of Viasystems Group, Inc. common
stock valued at $140,000. Viasystems Group, Inc. assumed the $437,500 of notes
payable which were incurred by Chips Holdings, Inc. (the "Chips Loan Notes") to
finance the ISL acquisition (see Note 10).
The ISL 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. The
Company has allocated a significant portion of the purchase price, as described
below, to intangible assets, including approximately $196,700 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 $196,700 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 1-15 years. The remaining unidentified intangible asset has been
allocated to goodwill and is being amortized over its estimated useful life of
20 years (see Note 2).
The Chips Merger was accounted for as a transfer of assets among companies
under common control and was recorded at Chips Holdings, Inc.'s historical cost.
In the Chips Merger, ISL and its subsidiaries became wholly owned subsidiaries
of Viasystems, and as such, Viasystems will account for the acquisition of ISL
as of the acquisition by Chips Holdings, Inc. and the results of operations of
ISL since the acquisition by Chips Holdings, Inc. are included in the results of
operations of the Company.
36
<PAGE> 38
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The total purchase price including fees and expenses has been allocated to
the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 96,287
Property, plant and equipment............................... 114,983
Developed technologies...................................... 66,500
Assembled workforce......................................... 8,000
Customer list............................................... 17,900
In-process R&D.............................................. 196,700
Goodwill.................................................... 115,092
Non-current assets.......................................... 12,971
Current liabilities......................................... (71,140)
Non-current liabilities..................................... (110,840)
---------
Total..................................................... $ 446,453
=========
</TABLE>
The Company will evaluate the capacities and production capabilities of all
acquired entities to assess potential cost savings from consolidating those
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 results
of operations of the Company for the year ended December 31, 1996, as though the
Circo Craft Acquisition, the Lucent Division Acquisition, the Forward
Acquisition and the ISL Acquisition and the related financing had occurred at
January 1, 1996 and for the year ended December 31, 1997, as though the Forward
Acquisition and the ISL Acquisition and the related financing had occurred at
January 1, 1997. In preparing this data, the financial data of Circo Craft for
the period from January 1, 1996 to the date of the Circo Craft Acquisition has
been translated at an exchange rate of Canadian $1.36 = U.S. $1.00, the exchange
rate at September 30, 1996, which is not materially different from the average
exchange rate for the period. Due to the differing year ends of Forward and ISL
compared to the Company, the results of Forward for the month of January and ISL
for the three months ended April 4, 1997 are included in the unaudited pro forma
data for both the year ended December 31, 1996, and 1997. The financial data of
Forward for the year ended January 31, 1997 and for the three months ended March
31, 1997 has been translated at an exchange rate of U.K.L.62 = U.S.$1.00 and
U.K.L.61 = U.S.$1.00, respectively, which is not materially different from the
average exchange rate for the respective period. The financial data for ISL for
the year and three months ended April 4, 1997, has been translated at an
exchange rate of U.K. L0.61 = U.S. $1.00, which is not materially different from
the average exchange rate for the period.
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Net sales................................................... $872,424 $899,474
Loss before extraordinary item.............................. (51,411) (35,245)
Net loss.................................................... (51,411) (35,425)
</TABLE>
4. INVENTORIES
The composition of inventories at December 31 is as follows:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Raw materials............................................... $12,829 $24,709
Work in process............................................. 16,796 28,472
Finished goods.............................................. 13,498 31,450
------- -------
Total............................................. $43,123 $84,631
======= =======
</TABLE>
37
<PAGE> 39
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. INTANGIBLE ASSETS
Intangible assets are amortized using systematic methods over various
estimated useful lives (see Note 2). The composition of intangible assets at
December 31 is as follows:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Developed technologies...................................... $ 21,185 $122,808
Assembled workforce......................................... 10,980 25,468
Customer list............................................... 8,479 39,679
Goodwill.................................................... 7,809 180,039
-------- --------
48,453 367,994
Less: Accumulated amortization.............................. (533) (58,524)
-------- --------
Total............................................. $ 47,920 $309,470
======== ========
</TABLE>
6. PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment at December 31 is as
follows:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Land and buildings.......................................... $ 52,480 $ 77,346
Machinery, equipment and other.............................. 144,455 343,028
Construction in progress.................................... 12,533 78,101
Leasehold improvements...................................... 3,368 1,505
-------- --------
212,836 499,980
Less: Accumulated depreciation.............................. (4,088) (51,852)
-------- --------
Total............................................. $208,748 $448,128
======== ========
</TABLE>
7. ACCRUED AND OTHER LIABILITIES
The composition of accrued and other liabilities at December 31 is as
follows:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Accrued payroll and related costs........................... $12,069 $22,761
Accrued capital expenditures................................ 1,752 24,565
Accrued and other liabilities............................... 28,291 38,534
------- -------
Total............................................. $42,112 $85,860
======= =======
</TABLE>
38
<PAGE> 40
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 and 1997, was $17,083 and $49,042, respectively, of cost
basis and $380 and $16,895, respectively, 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, 1998) to December 31, 1996
and $3,005 for the year ended December 31, 1997. 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>
1998...................................................... $12,638 $2,622
1999...................................................... 10,909 2,124
2000...................................................... 5,597 192
2001...................................................... 821 49
2002...................................................... 4 34
------- ------
Total............................................. 29,969 $5,021
======
Less: Amounts representing interest....................... (2,759)
-------
Capital lease obligation (see Note 10)............ $27,210
=======
</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 minimum annual dollar volumes
of PCBs and backplanes from the Company at defined prices. 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 and the provision for income taxes for the year
ended December 31, 1997 consisted of the following:
<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Current:
Federal................................................... $ -- $ 3,990
State..................................................... -- 920
Foreign................................................... 170 18,631
------- --------
170 23,541
------- --------
Deferred:
Federal................................................... (5,698) (2,195)
State..................................................... -- (507)
Foreign................................................... 104 (12,407)
------- --------
(5,594) (15,109)
------- --------
$(5,424) $ 8,432
======= ========
</TABLE>
39
<PAGE> 41
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reconciliation between the statutory income tax rate and effective tax rate
is summarized below:
<TABLE>
<CAPTION>
1996 1997
-------- ---------
<S> <C> <C>
U.S. Federal statutory rate................................. $(18,416) $(108,941)
Permanent items............................................. 15,680 113,159
State taxes................................................. (3,250) 269
Foreign taxes in excess of U.S. statutory rate.............. 213 3,945
Other....................................................... 349 --
-------- ---------
$ (5,424) $ 8,432
======== =========
</TABLE>
The tax effects of significant temporary differences representing deferred
tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Deferred tax assets:
Accrued liabilities not yet deductible................... $10,112 $ 17,306
Net operating loss carryforwards......................... 1,037 406
Other.................................................... 186 1,590
------- --------
11,335 19,302
Valuation Allowance................................... (260) (260)
------- --------
11,075 19,042
------- --------
Deferred tax liabilities:
Intangibles.............................................. (5,418) (40,251)
Fixed Assets............................................. (3,505) (27,747)
Other.................................................... (239) (1,535)
------- --------
(9,162) (69,533)
------- --------
Net deferred tax asset (liability)......................... $ 1,913 $(50,491)
======= ========
</TABLE>
Approximate domestic and foreign income before income tax provision are as
follows:
<TABLE>
<CAPTION>
INCEPTION YEAR ENDED
(AUGUST 28, 1996) TO DECEMBER 31,
DECEMBER 31, 1996 1997
-------------------- ------------
<S> <C> <C>
Domestic.............................................. $(14,426) $ 5,307
Foreign............................................... (39,740) (316,567)
</TABLE>
As of December 31, 1997, the Company has $5,794 of Puerto Rican net
operating loss carryforwards, which will expire in 2001-2003, if not previously
utilized. At December 31, 1997, the Company has included a net current deferred
tax asset of $17,306 in prepaid expenses and other assets. Due to the recent
acquisitions of foreign subsidiaries, the Company is in the process of
determining the amount of undistributed earnings of its foreign subsidiaries.
The Company has not recognized and does not anticipate recognizing a deferred
tax liability for the undistributed earnings of its foreign subsidiaries because
the Company does not expect those earnings to reverse and become taxable to the
Company in the foreseeable future. Determination of the amount of deferred taxes
on undistributed earnings of the Company's foreign subsidiaries is not
practicable.
40
<PAGE> 42
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. LONG-TERM OBLIGATIONS
The composition of long-term obligations at December 31 is as follows:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Credit Agreements:
Term Facilities........................................... $238,345 $ 87,500
Revolvers................................................. 1,235 --
Senior Subordinated Notes Due 2007.......................... -- 400,000
Chips Loan Notes Liability.................................. -- 319,250
Capital lease obligations (see Note 8)...................... 17,265 27,210
Other....................................................... 8,775 13,415
-------- --------
265,620 847,375
Less current maturities........................... (10,804) (31,363)
-------- --------
$254,816 $816,012
======== ========
</TABLE>
The schedule of principal payments for long-term obligations at December
31, 1997 is as follows:
<TABLE>
<S> <C>
1998.............................................. $ 31,363
1999.............................................. 45,752
2000.............................................. 70,388
2001.............................................. 65,570
2002.............................................. 65,309
Thereafter........................................ 568,993
--------
$847,375
========
</TABLE>
EXISTING FINANCING
In April 1997, the Company entered into a $216,000 Senior Subordinated
Credit Agreement (the "Subordinated Credit Facility"). The proceeds of the
Subordinated Credit Facility were used to repay $20,000 of term loans
outstanding under the Credit Agreement (see Prior Financing below) and to repay
a tender facility used to acquire Forward Group. In connection with the Forward
Acquisition and the subsequent organization of the Company as a subsidiary of
Viasystems Group, Inc., the Company entered into an Amended and Restated Credit
Agreement with terms substantially similar to the Credit Agreement of Viasystems
Group, Inc. In addition to existing facilities available under the Credit
Agreement, the Amended and Restated Credit Agreement provided for a U.K. L32,000
(approximately US $52,800) revolving facility to Forward Group.
In June 1997, Viasystems completed an offering (the "1997 Offering") of
$400,000 of 9 3/4% Senior Subordinated Notes due 2007 (the "2007 Notes").
Interest on the 2007 Notes is due semiannually. The 2007 Notes may not be
redeemed prior to June 1, 2002, except in the event of a Change of Control (as
defined) or and Initial Public Offering (as defined) and at premium (as defined
in the Indenture). The 2007 Notes are redeemable, at the Company's option, at
the redemption prices of 104.875% at June 1, 2002, and at decreasing prices to
100% at June 1, 2005, and thereafter, plus accrued interest. In addition, prior
to June 1, 2001, the Company may redeem, within specified guidelines, up to
$35,000 of the 2007 Notes with proceeds of one or more Equity Offerings (as
defined) by the Company or Viasystems Group, Inc. at a redemption price of
109.75% plus accrued interest. Viasystems used the net proceeds of the 1997
Offering to repay the Subordinated Credit Facility, approximately $130,000 of
term loans outstanding under the Amended and Restated Credit Agreement, and
approximately $41,600 of revolving credit amounts outstanding under the
41
<PAGE> 43
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amended and Restated Credit Agreement which was borrowed subsequent to December
31, 1996, to repay debt assumed in the acquisition of Chips, plus interest on
all debt repaid.
Also in June 1997 and pursuant to the Chips Merger, Viasystems Group, Inc.
assumed the $437,500 of Chips Loan Notes, and the Company entered into a
reimbursement obligation which requires it to pay a portion of the Chips Loan
Notes in the event such notes are called. 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 rate 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 which are in turn collateralized in part by
a fully cash collateralized $118,250 reimbursement obligation of Bisto Funding,
Inc., a special purpose entity and sister company of Viasystems established as a
subsidiary of 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 (the "Chips
Reimbursement Obligation"). As such, the Company's liability for principal under
the Chips Loan Notes represents $319,250 (the "Chips Loan Notes Liability"), or
the amount achieved by netting the $118,250 of cash collateral held by Bisto
Funding, Inc. against the $437,500 of Chips Loan Notes. To the extent the
interest income earned by Bisto Funding, Inc. on the $118,250 of cash it holds
is insufficient to fund interest on $118,250 of the 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. Upon redemption of
the Chips Loan Notes, the first $118,250 of principal payments will be paid by
Bisto Funding, Inc. and the remainder will be funded by the Company in
accordance with the Chips Reimbursement Obligation.
In connection with the 1997 Offering and the Chips Merger, 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 Amended and Restated Credit Agreement. The
Second Amended and Restated Credit Agreement provides for (i) an $88,000 term
loan facility (the "U.S. Term Loan") and a $150,000 revolving credit facility
(the "U.S. Revolving Loan" and together with the U.S. Term Loan, the "U.S.
Loans"); (ii) a U.S. $25,000 revolving credit facility (the "Canadian Revolving
Loan"), (iii) a L32,000 revolving credit facility (the "Forward Group Revolving
Loan") and a L27,600 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$346,463 Letter of Credit Facility in respect of
the Chips Loan Notes comprised of (a) a U.S.$319,250 term loan facility ("the
Chips Term Loan" and together with the U.S. Term Loan, the "Term Loans") in
respect of the principal portion of the Chips Loan Notes and (b) a U.S. $27,213
facility in respect of interest on the Chips Loan Notes. The Chips Term Loan is
an unfunded term loan facility that may be drawn upon by the Company so that it
may satisfy the Chips Loan Notes Liability. Although 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 have not been classified as current at December 31,
1997, since the Company has in place a facility to replace the Chips Loan Notes
in the event they are called. Borrowings under the Second Amended and Restated
Credit Agreement are collateralized by first priority mortgages and liens on
substantially all of the material assets of the Company and its subsidiaries.
The U.S. Term Loan consists of two tranches: (i) $55,000 of tranche B term
loans (the "Tranche B Loan") and (ii) $33,000 of tranche C term loans (the
"Tranche C Loan"). The Tranche B Loan amortizes semiannually over eight years
and the Tranche C Loan is payable $1,500 on December 31, 2004 and $31,500 on
June 30, 2005. The Chips Term Loan, if drawn, amortizes semi-annually over six
years.
The Company may use the Revolving Loans for letters of credit in an amount
not to exceed $15,000, 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 L5,000 in the case of the Forward Group Revolving
Loan and
42
<PAGE> 44
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
L10,000 in the case of the Chips Revolving Loan. Of the Forward Group Revolving
Loan, L2,232 is available solely to finance obligations in respect of the notes
payable to the selling stockholders of Forward. Of the U.S. Revolving Loan,
$100,000 is available solely to finance future acquisitions.
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 U.S.
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%. At December 31, 1997 the
weighted average interest rate on outstanding borrowings under the Amended an
Restated Credit Agreement was 8.69%.
The Company pays a per annum fee equal to the applicable margin on
Revolving Loans which bear interest at the Eurocurrency Base Rate, of the
average daily face amount of outstanding letters of credit, 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.
The Company pays a Commitment Fee equal to 0.5% on the undrawn portion of the
commitments in respect of Revolving Loans and a Facility Fee equal to 0.5% on
the Canadian revolving credit commitment. In addition, the Company pays a fee of
0.25% per annum of Bisto Funding, Inc.'s $118,250 portion of the Chips Letter of
Credit to the extent not paid by Bisto Funding, Inc.
The Amended Senior Credit Facilities and the 2007 Notes restrict the
Company from, among other things: (i) incurring additional indebtedness (other
than permitted indebtedness); (ii) creating liens; (iii) disposing of assets;
(iv) guaranteeing indebtedness; (v) merging or selling substantially all of its
assets; (vi) declaring and paying certain dividends; (vii) making certain
investments and loans; and (viii) entering into certain transactions with
affiliates, in each case with certain exceptions customary for credit facilities
such as the Amended Senior Credit Facilities. In addition, the Second Amended
and Restated Credit Agreement contains financial covenants which require the
Company to maintain certain financial ratios and limit the Company's amount of
capital expenditures.
PRIOR FINANCING
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 "Technologies Credit Agreement", respectively, and together,
the "Credit Agreement"). Borrowings under the Credit Agreement 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 Cnd$86,750 (approximately
U.S.$65,000) Canadian term loan (the "Canadian Term Loan") and a U.S.$25,000 (or
the Canadian dollar equivalent) revolving credit facility (the "Circo
Revolver"). The Viasystems Technologies Credit Agreement consist 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.
43
<PAGE> 45
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 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 the 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 was 7.68%
11. OTHER NONCURRENT LIABILITIES
Included in other noncurrent liabilities are liabilities for monitoring and
oversight fees to Hicks, Muse & Co. Partners L.P. ("Hicks, Muse"), a shareholder
and affiliate of the Company, (see Note 15) and deferred income related to
reimbursement agreements with two governmental agencies in the U.K. (the "U.K.
Agreements"). Pursuant to the U.K. Agreements, the agencies have provided funds
of approximately $18,000 as of December 31, 1997. Funds received by the Company
under the U.K. Agreements are not subject to repayment, provided that the
Company meets certain employment requirements at its manufacturing facilities.
As the Company has met and management believes that it will continue to meet
these requirements, the Company is recognizing the amounts to be received under
the U.K. Agreements as a reduction of cost of sales over the life of the U.K.
Reimbursement Agreements and, as such, recognized a reduction of cost of sales
of approximately $3,134 during the year ended December 31, 1997.
12. 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.
44
<PAGE> 46
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. BUSINESS SEGMENT INFORMATION
The Company operates in one business segment -- the manufacture and sale of
PCBs, which are sold throughout many diverse markets.
The Company's operations are located worldwide and can be grouped into two
geographical segments.
Pertinent financial data by major geographic segments is as follows:
<TABLE>
<CAPTION>
OPERATING TOTAL
NET SALES INCOME/(LOSS) ASSETS
--------- ------------- ----------
<S> <C> <C> <C>
NORTH AMERICA:
Inception (August 28, 1996) to December 31,
1996...................................... $ 50,400 $ (50,931) $ 447,775
Year ended December 31, 1997................. 499,266 50,495 803,526
EUROPE:
Inception (August 28, 1996) to December 31,
1996...................................... $ -- $ -- $ --
Year ended December 31,1997.................. 296,023 (289,490) 632,428
ELIMINATIONS
Inception (August 28, 1996 to December 31,
1996...................................... $ -- $ -- $ (60,034)
Year ended December 31, 1997................. -- -- (367,042)
TOTAL:
Inception (August 28, 1996) to December 31,
1996...................................... $ 50,400 $ (50,931) $ 387,741
Year ended December 31, 1997................. 795,289 (238,995) 1,068,912
</TABLE>
14. CONCENTRATION OF BUSINESS
Sales to one customer were 27% and 39% of net revenues for the period from
inception (August 28, 1996) to December 31, 1996 and for the year ended December
31, 1997, respectively.
15. 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
(a shareholder and affiliate of the Company) pursuant to which the Company paid
Hicks, Muse a cash fee of $5,013 for the period from inception (August 28, 1996)
to December 31, 1996 and $10,400 for the year ended December 31, 1997 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 Acquisitions as deferred financing costs. The Agreement further provides
that the Company shall pay Hicks, Muse an annual fee of $1,750 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 $1,750 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.
Pursuant to the Chips Merger, Viasystems Group, Inc. assumed the $437,500
of Chips Loan Notes, and the Company entered into a Reimbursement Obligation
which requires it to pay a portion of the principal and interest on the Chips
Loan Notes in the event such notes are called. The Company's portion of the
Chips Loan Notes is $319,250, which is the net amount of the Chips Loan Notes of
$437,500 and cash collateral held by Bisto Funding, Inc. in the amount of
$118,250. The cash collateral held by Bisto Funding, Inc. is required to be paid
to the loan note holders prior to the Company's Reimbursement Obligation
commitment (see Note 10).
45
<PAGE> 47
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company purchased approximately $1,307 and $41,000 of connectors from
Berg Electronics Corp. (an affiliate of the Company) for the period from
inception (August 28, 1996) to December 31, 1996 and for the year ended December
31, 1997, respectively. The Company had a payable to Berg Electronics Corp. of
$1,307 and $4,600 as of December 31, 1996, and 1997, respectively
16. STOCK OPTION PLANS
On February 4, 1997, Viasystems Group, Inc. adopted the Viasystems Group,
Inc. 1997 Stock Option Plan (the "Option 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. A
total of 8,409,782 shares of Viasystems Group, Inc. Common Stock will be
reserved for issuance under the Stock Option Plan. As of December 31, 1997,
options to purchase an aggregate of 5,235,000 shares of Viasystems Group, Inc.
Common Stock subject to the terms and conditions of the Stock Option Plan are
outstanding. The terms and vesting periods of the options granted are to be
determined by the board of directors. All options granted under the Option Plan
to date have ten year terms and vest over five year periods.
Viasystems Group, Inc. 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 applies APB Opinion No.
25, "Accounting for Stock Issued to Employees," and related Interpretations in
accounting for the Option Plan. Had compensation cost for the Option Plan and
the Performance Options been determined based upon the fair value at the grant
date for awards under these plans consistent with the methodology prescribed
under Financial Accounting Standards No. 123, pro forma net loss for the year
ended December 31, 1997, would have been $(327,588).
The fair value of each option grant is estimated on the date of grant using
the minimum value method with the following assumptions: (i) no dividend yield;
(ii) risk free interest rate of 5.5%; and (iii) expected life of 5 years.
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts of compensation costs. Additional awards in future
years are anticipated.
Changes in the status of the Option Plan are summarized below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE PRICE OPTIONS OPTIONS
PER SHARE GRANTED VESTED
-------------- --------- -------
<S> <C> <C> <C>
December 31, 1996................................ $ -- -- --
Granted........................................ 1.00 5,260,000 --
Vested......................................... 1.00 -- 200,000
Forfeited...................................... 1.00 (25,000) --
--------- -------
December 31, 1997................................ $1.00 5,235,000 200,000
========= =======
</TABLE>
46
<PAGE> 48
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Changes in the status of the Performance Options are summarized below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE PRICE OPTIONS OPTIONS
PER SHARE GRANTED VESTED
-------------- --------- -------
<S> <C> <C> <C>
August 28, 1996 (inception)...................... $ -- -- --
Granted........................................ 1.00 1,085,187 --
--------- -------
December 31, 1996................................ 1.00 1,085,187 --
Granted........................................ 1.00 8,138,904 --
Vested......................................... -- -- --
Forfeited...................................... -- -- --
--------- -------
December 31, 1997................................ $1.01 9,224,091 --
========= =======
</TABLE>
The weighted average grant-date fair value of options granted during 1997
was $1.00 per share. All options outstanding under the Option Plan at December
31, 1997, have exercise prices of $1.00 per share and have weighted average
remaining contractual lives of between 9 and 10 years.
Of the Performance Options outstanding at December 31, 1997, 1,085,187 and
8,138,904 have exercise prices of $1.08 and $1.00, respectively, and have
weighted average remaining contractual lives of between 9 and 10 years.
17. RETIREMENT PLANS
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 and $807 for the
year ended December 31, 1997.
The Company and its subsidiaries have two defined benefit pension plans
covering certain groups of employees in foreign countries. The benefits are
based on years of services and final average salary. The Company's funding
policy is to make annual contributions to the extent such contributions are
actuarially determined.
Components of net pension expense are as follows:
<TABLE>
<CAPTION>
1997
------
<S> <C>
Service cost (present value of benefits earned in the
year)..................................................... $1,821
Interest cost on the projected benefit obligation........... 2,699
Actual return on assets..................................... (6,970)
Net amortization and deferral............................... 4,016
------
Net periodic pension costs.................................. $1,566
======
</TABLE>
47
<PAGE> 49
VIASYSTEMS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the plans' funded status and the amounts
recognized in the Company's consolidated balance sheet:
<TABLE>
<CAPTION>
1997
--------
<S> <C>
Projected benefit obligation................................ $ 44,978
Plan assets at fair value, primarily equity and fixed-income
securities................................................ (43,675)
--------
Net pension liability....................................... $ 1,303
========
</TABLE>
The principal assumptions used are as follows:
<TABLE>
<CAPTION>
PERCENT
-------
<S> <C>
Weighted average discount rates............................. 6.75%
Long term rate of return on plan assets..................... 8.75%
Salary Growth............................................... 4.75%
Pension Increases........................................... 3.00%
</TABLE>
18. EXTRAORDINARY ITEM
During the year ended December 31, 1997, the Company recorded, as an
extraordinary item, a one-time, non-cash write-off of deferred financing fees of
approximately $7,796, net of income tax benefit of $4,332, related to deferred
financing fees incurred on debt retired before maturity.
19. SUBSEQUENT EVENTS
On February 9, 1998, the Company completed the offering of an additional
$100,000 of 9 3/4% Series B Senior Subordinated Notes due 2007 (the "1998
Offering"). As a condition of the 1998 Offering and the Credit Agreement, Hicks
Muse agreed to contribute an additional $50,000 of equity to the Company and the
Second Amended and Restated Credit Agreement was amended to, among other things,
establish an additional $70,000 term loan and increase the U.S. Revolving Loan
by $25,000.
On January 30, 1998, the Company acquired certain assets and assumed
certain liabilities of the PCB production facility of Ericsson Telecom AB
("Ericsson") located in Sweden (the "Ericsson Facility"), for a cash purchase
price of approximately $7,000. In addition, the company and Ericsson signed a
three-year supply agreement whereby Ericsson committed to purchase 40% of its
PCB requirements from the Company. On February 17, 1998, the Company acquired
Print Service Holding N.V., the holding company parent of Mommers Print Service,
B.V. ("Mommers"), a PCB manufacturer located in The Netherlands and specializing
in the production of high-volume, medium- to high-complexity PCBs and
backplanes, for a purchase price of approximately $59,400, including assumed
debt. On March 12, 1998, the Company acquired Zincocelere S.p.A.
("Zincocelere"), a PCB manufacturer located in northern Italy and specializing
in the production of high volume, medium to high complexity PCB's, for a
purchase price of approximately $100,000, including assumed debt. The
acquisition of the PCB production facility from Ericsson, and the acquisitions
of Mommers and Zincocelere are herein referred to as the 1998 Acquisitions. The
Company anticipates that it will continue to make strategic acquisitions of PCB
companies throughout the world in accordance with its expansion strategy.
A portion of the proceeds of the 1998 Offering, the additional term loan
under the Senior Credit Facilities, and the $50,000 equity contribution by Hicks
Muse have been used to fund the acquisitions of the Ericsson Facility, Mommers,
and Zincocelere. In addition, the Company used a portion of these proceeds to
repay revolving credit line amounts borrowed subsequent to December 31, 1997,
and outstanding under the Second Amended and Restated Credit Agreement.
48
<PAGE> 50
VIASYSTEMS, INC. & SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE
ALLOWANCE FOR DOUBTFUL AT CHARGES TO BALANCE AT
ACCOUNTS -- DEDUCTED FROM BEGINNING COST AND ACCOUNTS TRANSLATION END OF
RECEIVABLES IN THE BALANCE SHEET OF PERIOD ACQUISITIONS EXPENSES WRITTEN OFF ADJUSTMENTS PERIOD
- ---------------------------------- --------- ------------ ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996.................... $ -- $ 407 $ -- $ -- $ 2 $ 409
===== ====== ====== ======= ==== ======
1997.................... $ 409 $1,632 $7,176 $(7,636) $992 $2,573
===== ====== ====== ======= ==== ======
</TABLE>
49
<PAGE> 51
AUDITORS' REPORT
To The Directors of Circo Craft Co. Inc.
We have audited the consolidated statements of earnings, retained earnings
and changes in financial position of Circo Craft Co. Inc. for the nine-month
period ended September 30, 1996. These statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
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 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 statement presentation.
In our opinion, these consolidated statements of earnings, retained
earnings and changes in financial position present fairly, in all material
respects, the results of operations of the Company 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
50
<PAGE> 52
AUDITORS' REPORT
To the Directors of Circo Craft Co. Inc.:
We have audited the consolidated statements of earnings, retained earnings
and changes in financial position of Circo Craft Co. Inc. for the year ended
December 31, 1995. These statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these 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 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 statement presentation.
In our opinion, these consolidated statements of earnings, retained
earnings and changes in financial position present fairly, in all material
respects, the results of operations of the Company and the changes in its
financial position for the year ended December 31, 1995, in accordance with
generally accepted accounting principles in Canada.
Deloitte & Touche
Chartered Accountants
Montreal, Quebec
February 1, 1996
51
<PAGE> 53
CIRCO CRAFT CO. INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Balance -- Beginning of period.............................. $32,216 $43,909
Net earnings for the period....................... 11,693 1,974
------- -------
Balance -- End of period.................................... $43,909 $45,883
======= =======
</TABLE>
52
<PAGE> 54
CIRCO CRAFT CO. INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Sales....................................................... $185,156 $129,633
Cost of sales............................................... 148,788 101,532
-------- --------
Operating margin............................................ 36,368 28,101
-------- --------
Selling, general and administrative expenses................ 11,087 7,969
-------- --------
Other expenses (income)
Depreciation of fixed assets.............................. 7,931 8,456
Interest on long-term debt................................ 852 646
Interest income........................................... (915) (880)
Expenses related to sale (note 9)......................... -- 5,907
-------- --------
7,868 14,129
-------- --------
Earnings before income taxes and non-controlling interest... 17,413 6,003
Provision for income taxes (note 5)......................... 5,564 3,847
-------- --------
Earnings before non-controlling interest.................... 11,849 2,156
Non-controlling interest.................................... 156 182
-------- --------
Net earnings for the period................................. $ 11,693 $ 1,974
======== ========
</TABLE>
53
<PAGE> 55
CIRCO CRAFT CO. INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Operating activities
Net earnings for the period............................... $ 11,693 $ 1,974
Non-cash items --
Depreciation of fixed assets......................... 7,931 8,456
Deferred income taxes................................ 800 1,050
Gain on sale of fixed assets......................... (397) (716)
Non-controlling interest............................. 156 182
-------- --------
20,183 10,946
Cash provided by (used for) non-cash operating working
capital items.......................................... 3,964 7,191
-------- --------
24,147 18,137
-------- --------
Financing activities
Increase in long-term debt................................ 3,537 4,186
Repayment of long-term debt............................... (2,624) (3,187)
Decrease in non-controlling interest...................... -- (2,608)
Issue of common shares.................................... 8,827 4,047
-------- --------
9,740 2,438
-------- --------
Investing activities
Acquisition of fixed assets............................... (23,764) (13,058)
Proceeds from sale of fixed assets........................ 922 1,018
-------- --------
(22,842) (12,040)
-------- --------
Increase in cash............................................ 11,045 8,535
Cash -- beginning of period................................. 6,685 17,730
-------- --------
Cash -- end of period....................................... $ 17,730 $ 26,265
======== ========
Represented by --
Cash and short-term deposits........................... 19,231 28,438
Bank indebtedness...................................... (1,501) (2,173)
-------- --------
$ 17,730 $ 26,265
======== ========
</TABLE>
54
<PAGE> 56
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
1. ACCOUNTING POLICIES
The consolidated statements of earnings, retained earning and changes in
financial position have been prepared in accordance with accounting principles
generally accepted in Canada and include the following significant accounting
policies:
Principles of Consolidation
The consolidated statements of earnings, retained earnings and changes in
financial position include the accounts of the company and its wholly owned
subsidiary, Circo Caribe Corporation ("Circo Caribe"). All significant
intercompany 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 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>
Revenue Recognition
Sales and related cost of sales are included in income when goods are
delivered to the customer in accordance with the delivery terms.
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.
55
<PAGE> 57
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
2. 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.
3. CAPITAL STOCK
(a) As at September 30, 1996, 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.
(b) The issued and paid capital stock consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
----------------------
(THOUSANDS OF DOLLARS)
<S> <C>
16,069,300 common shares.................................... 41,823
1,200,000 Second Preferred shares, Series A (note 3(c))..... --
156,000 Second Preferred shares, Series B (note 3(c))....... --
2,556,000 Second Preferred shares, Series C (note 3(c))..... --
------
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.
56
<PAGE> 58
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
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 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 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.
4. 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.
5. INCOME TAXES
(a) The company's provision for income taxes includes the following:
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Current.................................................... $4,764 $2,797
Deferred................................................... 800 1,050
------ ------
$5,564 $3,847
====== ======
</TABLE>
(b) The company's effective income tax rate is as follows:
<TABLE>
<CAPTION>
1995 1996
% %
----- -----
<S> <C> <C>
Combined basic federal and provincial income tax rate....... 45.09 45.09
Increase (decrease) in income tax rate resulting from:
Active business income deduction.......................... (7.35) (7.35)
Manufacturing and processing deduction.................... (7.00) (7.00)
Non-deductible expenses................................... -- 12.82
Surtax.................................................... 1.07 1.12
Other..................................................... 1.19 2.07
----- -----
Combined Canadian rates..................................... 33.00 46.75
Unrecognized (recognized) income tax benefits of Circo
Caribe.................................................... (1.05) 17.33
----- -----
31.95 64.08
===== =====
</TABLE>
57
<PAGE> 59
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
(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.
6. MAJOR CUSTOMERS
Approximately 26%, 19%, and 10%, respectively (1995 -- 19%, 15%, 14%, and
11%) of the company's sales were to three unrelated multinational corporations
(four in 1995) which have multiple divisions responsible for their own
purchasing decisions.
7. 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
---------------------------- ---------------------------- ----------------------------
NINE MONTH NINE MONTH NINE MONTH
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1995 1996 1995 1996 1995 1996
------------ ------------- ------------ ------------- ------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Sales to external
Customers............ 155,326 109,756 29,830 19,877 185,156 129,633
======= ======= ====== ====== ======= =======
Inter-segment Sales.... -- 678 7,211 775 -- --
======= ======= ====== ====== ======= =======
Earnings (loss)
Before income taxes
And non-controlling
Interest............. 16,859 8,228 554 (2,225) 17,413 6,003
======= ======= ====== ====== ======= =======
</TABLE>
Export sales amounted to approximately 66% (1995 -- 73%) of the company's
total sales to external customers.
8. UNITED STATES ACCOUNTING PRINCIPLES
The consolidated statements of earnings, retained earnings and changes in
financial position 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").
58
<PAGE> 60
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
Net Earnings
(a) The following summary sets out the material adjustments to the
company's reported net earnings, which would be made in order to conform to U.S.
GAAP:
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Net earnings for the period under Canadian GAAP............ 11,693 1,974
U.S. GAAP adjustments:
Contingent gain (note 8(b)).............................. 8,984 --
Translation gains and losses (note 8(c))................. 241 (103)
Income taxes (note 8(d))................................. (515) 167
------ -----
Net earnings (loss) for the period under U.S. GAAP......... 20,403 2,038
====== =====
</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 4 would have been recorded in earnings in 1995
under U.S. GAAP net of related expenses of $1,544,000.
(c) 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.
(d) 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.
(e) 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 statements of earnings, retained earnings and changes in financial
position.
59
<PAGE> 61
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows
(f) Under U.S. GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Net cash provided by operating activities.................. 24,388 18,034
Net cash provided by financing activities.................. 9,300 1,222
Net cash used in investing activities...................... (21,790) (14,444)
------- -------
Net increase in cash....................................... 11,898 4,812
------- -------
Cash at the end of the period.............................. 16,600 21,412
======= =======
</TABLE>
(g) 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.
(h) 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). 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.
(i) 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 and
$2,052,000 for the nine-month period ended September 30, 1996 and for the year
ended December 31, 1995.
Other disclosure
(j) The disclosure of the following amounts is required under U.S. GAAP:
<TABLE>
<CAPTION>
NINE MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Research and development expenses........................... 4,159 3,495
Payments under operating leases............................. 795 799
Payments under capital leases............................... 975 1,713
Interest paid............................................... 1,025 631
Income taxes paid........................................... 4,115 3,931
</TABLE>
(k) 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 (year ended December 31, 1995 -- $88,000).
60
<PAGE> 62
CIRCO CRAFT CO. INC.
NOTES TO CONSOLIDATED STATEMENTS -- (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
(l) 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.
9. COMMITMENTS
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>
10. 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.
61
<PAGE> 63
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 operations of the
Interconnection Business (the "Business") of the Microelectronics Group,
Interconnection Technologies Unit of Lucent Technologies Inc. ("Lucent") for the
year 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 financial 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 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'
results of operations or cash flows.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the statements of operations of the Business for the
year ended December 31, 1995 and for the period January 1, 1996 through November
30, 1996, 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
62
<PAGE> 64
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1996,
YEAR ENDED THROUGH
DECEMBER 31, NOVEMBER 30,
1995 1996
------------ ----------------
<S> <C> <C>
Net sales................................................... $325,047 $325,102
Operating expenses:
Cost of goods sold........................................ 274,824 244,313
Selling, general and administrative....................... 35,246 27,567
Research and development.................................. 7,199 7,225
Depreciation and amortization............................. 16,378 18,317
-------- --------
Operating income (loss)........................... (8,600) 27,680
Other income (expenses):
Other income.............................................. 94 228
Interest expense.......................................... (204) (917)
-------- --------
Income (loss) before income taxes................. (8,710) 26,991
Provision (benefit) for income taxes........................ (3,310) 10,257
-------- --------
Net income (loss)................................. $ (5,400) $ 16,734
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
63
<PAGE> 65
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, backplanes 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. No statement of cash
flows has been presented since any computation of historical cash flow data for
the Business would be based on arbitrary assumptions of the financial
information necessary to prepare such data and, in the opinion of management,
would not be meaningful.
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.
64
<PAGE> 66
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS) -- (CONTINUED)
The allocations and other components of cost of sales and selling, general
and administrative expenses are as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1996
YEAR ENDED THROUGH
DECEMBER 31, NOVEMBER 30,
1995 1996
------------ ---------------
<S> <C> <C>
Allocated cost of sales................................... $ 8,878 $ 6,004
Other cost of sales....................................... 265,946 238,309
-------- --------
$274,824 $244,313
======== ========
Allocated selling expense................................. $ 6,226 $ 3,494
Other selling expense..................................... 3,823 2,472
Allocated general and administrative...................... 14,187 8,706
Other general and administrative.......................... 11,010 12,895
-------- --------
$ 35,246 $ 27,567
======== ========
Allocated research and development........................ $ -- $ --
Other research and development............................ 7,199 7,225
-------- --------
$ 7,199 $ 7,225
======== ========
</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. 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.
D. Research and Development Costs: Research and development costs are
charged to expense when incurred.
3. 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.
65
<PAGE> 67
MICROELECTRONICS GROUP, INTERCONNECTION TECHNOLOGIES UNIT
OF LUCENT TECHNOLOGIES INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS) -- (CONTINUED)
The Business' sales to Lucent and its affiliates were $282,971 and $295,189
for the year ended December 31, 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
$239,624 and $232,276 for the year ended December 31, 1995 and for the period
January 1, 1996 through November 30, 1996, respectively.
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.
4. 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-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 1995 and 1996,
respectively.
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.
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 $7,300 and $6,200 for the year
ended December 31, 1995 and for the period January 1, 1996 through November 30,
1996, respectively.
5. 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.
66
<PAGE> 68
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of Forward Group PLC
We have audited the accompanying consolidated balance sheet of Forward
Group PLC and its subsidiaries at 31 January 1997 and the related consolidated
profit and loss accounts and cash flow statements for each of the years in the
two-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 1997 and the results of their
operations and their cash flows for each of the years in the two-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 two-year period ended 31 January
1997 and equity shareholders' funds at 31 January 1997 to the extent summarized
in Note 25 to the consolidated financial statements.
KPMG Audit Plc
Chartered Accountants
Birmingham, England
7 April 1997
67
<PAGE> 69
FORWARD GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
YEARS ENDED
31 JANUARY
----------------
1996 1997
NOTE (L000) (L000)
---- ------ -------
<S> <C> <C> <C>
Turnover
Continuing operations..................................... 2 66,839 97,001
Acquisitions.............................................. 2 -- 8,028
------ -------
66,839 105,029
------ -------
Operating profit
Continuing operations..................................... 3 7,976 8,079
Acquisitions.............................................. 3 -- 1,022
------ -------
7,976 9,101
Net interest payable...................................... 5 (412) (996)
------ -------
Profit on ordinary activities before taxation............... 6 7,564 8,105
Tax on profit on ordinary activities........................ 8 (2,641) (2,707)
------ -------
Profit for the financial year............................... 4,923 5,398
Dividends................................................... 9 (1,089) (552)
------ -------
Retained profit for the financial year...................... 18 3,834 4,846
====== =======
</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.
68
<PAGE> 70
FORWARD GROUP PLC
CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
YEARS ENDED
31 JANUARY
------------------
1996 1997
(L000) (L000)
------- -------
<S> <C> <C>
Profit for the financial year............................... 4,923 5,398
Currency translation adjustment............................. -- (22)
----- -----
4,923 5,376
===== =====
</TABLE>
69
<PAGE> 71
FORWARD GROUP PLC
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
31 JANUARY
1997
NOTE (L000)
---- ----------
<S> <C> <C>
Fixed assets
Tangible assets........................................... 10 36,407
Current assets
Stocks.................................................... 12 6,586
Debtors................................................... 13 17,289
-------
23,875
Creditors: amounts falling due within one year.............. 14 (26,949)
-------
Net current liabilities..................................... (3,074)
-------
Total assets less current liabilities....................... 33,333
Creditors: amounts falling due after more than one year..... 15 (6,574)
Provisions for liabilities and charges...................... 16 (2,616)
-------
Net assets.................................................. 24,143
=======
Capital and reserves
Called up share capital................................... 17 2,754
Share premium account..................................... 18 6,837
Revaluation reserve....................................... 18 566
Profit and loss account................................... 18 13,986
-------
Equity shareholders' funds.................................. 24,143
=======
</TABLE>
70
<PAGE> 72
FORWARD GROUP PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
YEARS ENDED 31,
JANUARY
------------------
1996 1997
NOTE (L000) (L000)
---- ------- -------
<S> <C> <C> <C>
Net cash inflow from operating activities................... 20a 10,667 18,561
Returns on investments and servicing of finance
Interest received......................................... 61 85
Interest paid............................................. (464) (1,018)
Dividends paid............................................ (722) (1,207)
------- -------
Net cash outflow from returns on investments and servicing
of finance................................................ (1,125) (2,140)
UK tax paid................................................. (1,670) (3,633)
Investing activities
Purchase of tangible fixed assets......................... 20e (4,153) (7,624)
Acquisition of businesses (net of cash and cash
equivalents acquired).................................. 20d (8,191) (9,184)
Sale of tangible fixed assets............................. 299 435
------- -------
Net cash outflow from investing activities.................. (12,045) (16,373)
------- -------
Net cash outflow before financing........................... (4,173) (3,585)
Financing
Issue of Ordinary share capital........................... 7,550 92
Capitalisation issue expenses............................. -- (24)
Repayment of bank loan.................................... (790) (720)
Capital element of hire purchase and finance lease
payments............................................... (1,170) (2,393)
------- -------
Net cash inflow/(outflow) from financing.................... 20b 5,590 (3,045)
------- -------
Net increase/(decrease) in cash and cash equivalents........ 20c 1,417 (6,630)
======= =======
</TABLE>
71
<PAGE> 73
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 under the acquisition method of accounting. The results of
companies or businesses acquired during the year are included from the date of
acquisition. Internal sales and profits are eliminated on consolidation.
Goodwill arising on acquisitions is written off directly against reserves on
acquisition.
Turnover
Turnover represents the amounts (excluding value added tax) derived from
the provision of goods to third party customers and is recognized when goods are
shipped and title has passed.
Government revenue grants
Government revenue grants are recognized 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 realizable value. Cost comprises materials, labor and
an appropriate proportion of production overheads.
72
<PAGE> 74
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
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.
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 realized in the foreseeable future.
Hire purchase and leased assets
Assets held under hire purchase or finance lease contracts are capitalized
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.
73
<PAGE> 75
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
2. SEGMENTAL ANALYSIS
Turnover is analyzed by geographical destination as follows:
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ -------
<S> <C> <C>
United Kingdom.............................................. 40,263 55,848
Rest of Europe.............................................. 25,200 42,364
Rest of the world........................................... 1,376 6,817
------ -------
66,839 105,029
====== =======
</TABLE>
The Group's turnover, profit before taxation and assets relate to only one
business segment, the electronics 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
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>
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>
74
<PAGE> 76
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Acquisitions in 1997 comprise the former GEC-Marconi hybrid business,
Manchester Circuits Limited and TI Technologies (Pty) Limited.
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>
1996 1997
----- -----
<S> <C> <C>
Sales....................................................... 32 51
Administration.............................................. 49 80
Production.................................................. 933 1,642
----- -----
1,014 1,773
===== =====
Employees at end of year.................................... 1,454 1,874
----- -----
</TABLE>
The aggregate payroll costs of these persons were as follows:
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Wages and salaries.......................................... 18,215 30,503
Social security costs....................................... 1,755 2,916
Other pension costs......................................... 745 1,239
------ ------
20,715 34,658
====== ======
</TABLE>
5. NET INTEREST PAYABLE
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Bank loan and overdrafts.................................... 216 609
Hire purchase and finance lease contracts................... 257 472
--- -----
Interest payable and similar charges........................ 473 1,081
Interest receivable and similar income...................... (61) (85)
--- -----
412 996
=== =====
</TABLE>
75
<PAGE> 77
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>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Directors' emoluments (see note 7):
As Directors.............................................. 33 86
Remuneration as executives................................ 333 333
--- ---
366 419
Compensation for loss of office........................... 81 --
Grants receivable........................................... (21) (19)
Property rental income...................................... (88) (87)
Auditors' remuneration...................................... 75 84
Research and development expenditure........................ 507 764
Payments under operating leases:
Plant and equipment....................................... 113 245
Other assets.............................................. 187 324
=== ===
</TABLE>
In addition, KPMG Audit Plc and its associates received L97,000 (1996:
L91,000) 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). The emoluments of the highest paid Director, excluding
pension contributions, were 136,000. In 1996 the Chairman was also the highest
paid director.
The emoluments of the Directors, excluding pension contributions, were
within the following ranges:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
L5,001 -- L10,000............................... 1 --
L10,001 -- L15,000............................... 2 --
L15,001 -- L20,000............................... -- 1
L20,001 -- L25,000............................... -- 1
L25,001 -- L30,000............................... 2 --
L40,001 -- L45,000............................... -- 1
L70,001 -- L75,000............................... 1 --
L75,001 -- L80,000............................... 1 --
L95,001 -- L100,000.............................. 1 1
L100,001 -- L105,000............................. -- 1
L135,001 -- L140,000............................. -- 1
== ==
</TABLE>
76
<PAGE> 78
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>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
The charge for taxation all arises in the UK and comprises:
Corporation tax on profit for the year at 33% (1996:
33%)................................................... 2,486 2,556
Deferred taxation......................................... 202 439
Prior year adjustments in respect of:
Corporation tax........................................... (111) (281)
Deferred taxation......................................... 64 (7)
----- -----
2,641 2,707
===== =====
</TABLE>
The 1997 current year charge includes the effect of tax losses which have
not been relieved.
9. DIVIDENDS
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Interim dividend paid....................................... 434 552
Proposed final dividend..................................... 655 --
----- ---
1,089 552
===== ===
</TABLE>
77
<PAGE> 79
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. Accumulated historical cost depreciation was L258,000.
The net book value of Group tangible fixed assets includes L10,412,000 in
respect of assets held under hire purchase or finance lease contracts, after
charging depreciation for the year of L1,286,000 and L1,439,000 of freehold
land, which is not depreciated.
Plant and machinery includes L1,143,000 of assets which are under the
course of construction.
11. INVESTMENTS
(a) 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.
78
<PAGE> 80
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
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>
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 7,904
acquisition...............................................
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.
79
<PAGE> 81
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
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.
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.
80
<PAGE> 82
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
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>
The following table, which is presented for the purposes of disclosure
under US GAAP in accordance with the requirements of Accounting Principles Board
Opinion No. 16 "Business Combinations" ("APB 16"), reflects the unaudited pro
forma combined results of operations of the Group, together with the companies
and businesses acquired during the years ended 31 January 1996 and 1997 on the
basis that the acquisitions had taken place on 1 February 1995:
<TABLE>
<CAPTION>
1996 1997
------- -------
(L000) (L000)
(UNAUDITED)
<S> <C> <C>
Turnover.................................................... 103,007 107,617
Profit on ordinary activities after taxation................ 7,553 5,161
</TABLE>
The following table, which is presented for the purposes of disclosure
under US GAAP in accordance with the requirements of APB 16, reflects the
unaudited pro forma combined results of continuing operations of the Group,
together with the companies and businesses acquired during the years ended 31
January 1996 and 1995 on the basis that the acquisitions had taken place on 1
February 1994:
<TABLE>
<CAPTION>
1995 1996
------- -------
(L000) (L000)
(UNAUDITED)
<S> <C> <C>
Turnover.................................................... 68,211 90,845
Profit on ordinary activities after taxation................ 3,927 7,425
</TABLE>
These unaudited pro forma combined results have been prepared for
comparative purposes only. In management's opinion the unaudited pro forma
results of operations are not indicative of the actual results that would have
occurred had the acquisitions been consummated at the beginning of the years
presented or of future operations of the combined companies under the ownership
and management of the Company.
81
<PAGE> 83
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
12. STOCKS
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Raw materials and consumables............................... 3,233
Work in progress............................................ 2,465
Finished goods and goods for resale......................... 888
-----
6,586
=====
</TABLE>
13. DEBTORS
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Trade debtors............................................... 16,368
Other debtors............................................... 454
Prepayments and accrued income.............................. 467
------
17,289
======
</TABLE>
14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Bank overdrafts............................................. 5,841
Bank loan................................................... 720
Obligations under hire purchase and finance lease
contracts................................................. 2,400
Trade creditors............................................. 10,884
Corporation tax and Advance Corporation Tax payable......... 2,540
Other taxes and social security............................. 1,448
Other creditors............................................. 278
Accruals and deferred income................................ 2,838
------
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>
1997
(L000)
------
<S> <C>
Bank loan................................................... 1,800
Obligations under hire purchase and finance lease
contracts................................................. 4,774
-----
6,574
=====
Bank loan and overdrafts are repayable as follows:
Within one year............................................. 6,561
Between one and two years................................... 720
Between two and five years.................................. 1,080
-----
8,361
=====
</TABLE>
82
<PAGE> 84
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>
1997
(L000)
------
<S> <C>
Within one year............................................. 2,400
Between one and two years................................... 4,498
Between two and five years.................................. 276
-----
7,174
=====
</TABLE>
16. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Deferred taxation........................................... 2,616
Pension provision........................................... --
-----
2,616
=====
</TABLE>
(a) Deferred taxation
Deferred taxation is provided using the liability method at a rate of 33%
as follows:
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Accelerated capital allowances.............................. 2,413
Short term timing differences............................... 203
-----
2,616
=====
</TABLE>
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
At beginning of year........................................ 2,068
Charged to profit and loss account.......................... 432
Arising on purchase of businesses........................... (48)
Movement in Advance Corporation Tax......................... 164
-----
At end of year.............................................. 2,616
=====
</TABLE>
Unprovided deferred taxation in respect of deferred capital gains amounted
to L744,000.
(a) Pension provision
The pension provision which arose during the year ended 31 January 1996 as
a result of the acquisition of Exacta Circuits Limited 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.
83
<PAGE> 85
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
17. SHARE CAPITAL
<TABLE>
<CAPTION>
1997
---------------
(L000) (L000)
------ ------
<S> <C> <C>
Authorised:
Ordinary shares of 5p each................................ 72,900 3,645
====== =====
Allotted, called up and fully paid:
Ordinary shares of 5p each................................ 55,088 2,754
====== =====
</TABLE>
On 13 March 1996 the Company issued 63,593 Ordinary shares for a non-cash
consideration of 157,000 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.
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
- ---------------- -------------- ---------------
<S> <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>
84
<PAGE> 86
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
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 1996..................... 8,840 65 578 10,340 19,823
Retained profit for the financial
year................................. -- -- -- 4,846 4,846
Capitalization 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.
19. RECONCILIATION OF MOVEMENT IN CONSOLIDATED EQUITY SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Profit for the financial year............................... 4,923 5,398
Dividends................................................... (1,089) (552)
------ ------
3,834 4,846
Issue of shares............................................. 13,432 284
Shares to be issued......................................... 157 --
Expenses of capitalisation issue............................ -- (24)
Goodwill written off........................................ (5,852) (1,446)
Currency translation adjustment............................. -- (22)
------ ------
Net increase in equity shareholders' funds.................. 11,571 3,638
At beginning of year........................................ 8,934 20,505
------ ------
At end of year.............................................. 20,505 24,143
====== ======
</TABLE>
85
<PAGE> 87
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
20. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Operating profit............................................ 7,976 9,101
Depreciation................................................ 2,701 4,694
Profit on sale of tangible fixed assets..................... (15) (169)
------ ------
10,662 13,626
Movements in working capital:
(Increase)/decrease in stocks............................... (1,552) 1,454
(Increase)/decrease in debtors.............................. (778) 2,837
Increase in creditors....................................... 2,335 644
------ ------
5 4,935
------ ------
Net cash inflow from operating activities................... 10,667 18,561
====== ======
</TABLE>
(b) Analysis of changes in financing during the year
<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>
86
<PAGE> 88
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
(c) Analysis of cash and cash equivalents
<TABLE>
<CAPTION>
CHANGE CHANGE
1995 IN YEAR 1996 IN YEAR 1997
(L000) (L000) (L000) (L000) (L000)
------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C>
Cash at bank and in hand................. 3 786 789 (789) --
Bank overdrafts.......................... (631) 631 -- (5,841) (5,841)
---- ----- --- ------ ------
(628) 1,417 789 (6,630) (5,841)
==== ===== === ====== ======
</TABLE>
(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) Major non-cash transactions
Fixed asset additions of L4,548,000 (1996: L658,000) were financed by hire
purchase borrowings.
87
<PAGE> 89
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>
1997
(L000)
------
<S> <C>
Contracted but not provided for............................. 830
===
</TABLE>
Annual commitments under operating leases are as follows:
<TABLE>
<CAPTION>
LAND AND
BUILDINGS OTHER
--------- ------
1997 1997
(L000) (L000)
--------- ------
<S> <C> <C>
Expiring within one year.................................... 8 61
Expiring between two and five years......................... 30 180
Expiring in more than five years............................ 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.
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 during the year to
several defined contribution schemes.
88
<PAGE> 90
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
SFAS NO 87 DISCLOSURES (UNAUDITED)
For the purpose of the disclosure in accordance with US GAAP, the pension
cost of the Exacta Circuits Limited pension scheme has been restated in the
following tables, in accordance with the requirements of SFAS No 87. The funded
status of the scheme, under SFAS No 87 is as follows:
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Projected benefit obligations............................... 19,380
Plan assets at fair value................................... 19,864
------
Projected benefit obligations less than plan assets......... (484)
Unrecognised net gain....................................... 1,099
------
Accrued pension at end of year.............................. 615
======
</TABLE>
Plan assets consist primarily of investments in UK and overseas equity and
fixed interest securities. The principal assumptions used for SFAS No 87
purposes were as follows:
<TABLE>
<CAPTION>
PERCENT
-------
<S> <C>
Discount rate............................................... 8.5
Long term rate of increase in remuneration.................. 6.5
Long term rate of increase in pensions...................... 3.5
</TABLE>
The net periodic pension cost for the pension scheme under SFAS No 87
comprised:
<TABLE>
<CAPTION>
1997
(L000)
-------
<S> <C>
Service cost -- present value of benefits earned in the
year...................................................... 1,476
Interest cost on projected benefit obligations.............. 1,397
Actual return on assets..................................... (1,893)
Net amortization and deferral............................... 328
Contributions by employees.................................. (513)
------
Net periodic pension cost................................... 795
======
</TABLE>
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.
89
<PAGE> 91
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
Ordinary circuit boards
Exacta Circuits Limited Scotland L1 100% Manufacture of printed
Ordinary circuit boards
Technograph Microcircuits England L1 100% Manufacture of ceramic
Limited Ordinary based microcircuits
Forward Circuits England L1 100% International trading in
International Limited Ordinary printed circuit boards
Manchester Circuits Limited England L1 100% Manufacture of printed
Ordinary circuit boards
L1 100%
Preferred
Ordinary
L1 100%
Cumulative
redeemable
preference
TI Technologies (Pty) South Africa R1 100% Manufacture of printed
Limited Ordinary circuit boards
Swift International (Pty) South Africa R1 100% Manufacture of printed
Limited Ordinary circuit boards
Exacta Circuits (France) France FF 100 100% Sale of printed circuit
SARL Ordinary boards 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 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.
90
<PAGE> 92
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
(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.
Under US GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
YEAR ENDED 31 JANUARY
----------------------
1996 1997
(L000) (L000)
--------- ---------
<S> <C> <C>
Net cash provided by operating activities................... 8,594 13,995
Net cash used in investing activities....................... (12,045) (16,373)
Net cash provided by financing activities................... 4,237 1,589
------- -------
Net increase/(decrease) in cash and cash equivalents........ 786 (789)
======= =======
Cash and cash equivalents under US GAAP..................... 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.
91
<PAGE> 93
FORWARD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Approximate effects on net profit of differences between UK and US GAAP:
<TABLE>
<CAPTION>
YEAR ENDED 31
JANUARY
----------------
1996 1997
(L000) (L000)
------ ------
<S> <C> <C>
Net profit in conformity with UK GAAP....................... 4,923 5,398
Adjustments:
Goodwill.................................................. (99) (188)
Revaluation of properties................................. 13 12
Pension cost.............................................. 35 160
Tax effect of US GAAP adjustments......................... (11) (53)
----- -----
Net profit in conformity with US GAAP....................... 4,861 5,329
===== =====
</TABLE>
Approximate effects on equity shareholders' funds of differences between UK
and US GAAP at 31 January:
<TABLE>
<CAPTION>
1997
(L000)
------
<S> <C>
Equity shareholders' funds in conformity with UK GAAP....... 24,143
Adjustments:
Goodwill.................................................. 7,690
Deferred taxation......................................... (744)
Revaluation of properties................................. (566)
Pension cost.............................................. (615)
Tax effect of US GAAP adjustments......................... 203
------
Equity shareholders' funds in conformity with US GAAP....... 30,111
======
</TABLE>
26. 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 and 1996, on which the auditors' reports were unqualified.
The statutory accounts for the year ended 31 January 1996 have been delivered to
the Registrar of Companies for England and Wales. Those for the year ended 31
January 1997 have not yet been delivered.
92
<PAGE> 94
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 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 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 April 4, 1997, and the
consolidated results of its operations and its consolidated cash flows for the
years ended 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
93
<PAGE> 95
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
NOTES (L000) (L000)
----- --------- --------
<S> <C> <C> <C>
Turnover.................................................... 2 104,611 141,643
Cost of sales............................................. 90,170 112,980
------- -------
Gross profit.............................................. 14,441 28,663
Distribution costs........................................ 1,148 1,632
Administrative expenses................................... 6,913 9,491
------- -------
6,380 17,540
Other operating income.................................... -- 44
------- -------
Operating profit............................................ 3 6,380 17,584
Interest receivable....................................... 6 -- 414
Interest payable.......................................... 7 (807) (1,232)
------- -------
Profit on ordinary activities before taxation............... 5,573 16,766
Tax on profit on ordinary activities...................... 8 4,422 6,874
------- -------
Profit for the year after taxation*......................... 1,151 9,892
Dividends................................................. 9 500 450
------- -------
Retained profit for the period.............................. 20 651 9,442
======= =======
</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>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Note of historical cost profits
Reported profit on ordinary activities before taxation.... 5,573 16,766
Depreciation charged during the period in respect of the
excess of valuation over historical cost of revalued
assets................................................. 1,449 1,500
------- -------
Historical cost profit on ordinary activities before
taxation............................................... 7,022 18,266
======= =======
Historical cost profit on ordinary activities after
taxation and dividends................................. 2,100 10,942
======= =======
</TABLE>
The Notes to the Consolidated Financial Statements are an integral part of these
Financial Statements.
94
<PAGE> 96
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
NOTES (L000) (L000)
----- --------- --------
<S> <C> <C> <C>
Profit on ordinary activities after taxation................ 1,151 9,892
Unrealized surplus on revaluation of freehold land and
buildings................................................. 10 -- (1,564)
Unrealized surplus on revaluation of plant and machinery.... 10 -- 23,743
------- -------
Total recognized gains and losses relating to the period.... 1,151 32,071
======= =======
</TABLE>
The Notes to the Consolidated Financial Statements are an integral part of these
Financial Statements.
95
<PAGE> 97
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED BALANCE SHEET
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
APRIL 4,
1997
NOTES (L000)
----- --------
<S> <C> <C>
Fixed assets
Tangible assets........................................... 10 70,542
-------
Current assets
Stocks.................................................... 11 9,132
Debtors................................................... 12 24,003
Cash at bank and in hand.................................. 13 26,244
-------
59,379
Creditors: amounts falling due within one year.............. 14 (47,863)
-------
Net current (liabilities)/assets............................ 11,516
-------
Total assets less current liabilities....................... 82,058
Creditors: amounts falling due after more than one year
Loans..................................................... 16 27,336
Obligations under finance leases.......................... 15 3,203
Accruals and deferred income
Deferred Government grants................................ 18 --
-------
51,519
=======
Capital and reserves*
Called up share capital................................... 19 --
Share premium account..................................... 20 4,650
Revaluation reserve....................................... 20 26,364
Other reserves............................................ 20 216
Profit and loss account................................... 20 20,289
-------
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.
96
<PAGE> 98
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
NOTES (L000) (L000)
----- --------- --------
<S> <C> <C> <C>
Net cash inflow from operating activities................... 3(b) 22,757 33,842
------- -------
Returns on investments and servicing of finance
Interest paid............................................. (776) (1,077)
Interest received......................................... -- 414
Dividends paid to parent company shareholders............. (500) (450)
------- -------
Net cash outflow from returns on investments and servicing
of finance................................................ (1,276) (1,113)
------- -------
Taxation
Corporation tax paid...................................... (2,811) (4,903)
------- -------
Tax paid.................................................... (2,811) (4,903)
------- -------
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................. (16,816) (24,119)
Net cash outflow from investing activities.................. (16,816) (24,119)
Net cash inflow/(outflow) before financing.................. 1,854 (12,293)
======= =======
Financing
New loans................................................. 16 -- (22,089)
Repayment of loans........................................ 16 682 1,183
Repayment of finance leases............................... 15 623 1,005
------- -------
Net cash outflow/(inflow) from financing.................... 1,305 (19,901)
Increase in cash and cash equivalents....................... 13 549 7,608
------- -------
1,854 (12,293)
======= =======
</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.
97
<PAGE> 99
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.
Revenue Recognition
Revenue is recognized in the period in which goods are dispatched to
customers.
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>
98
<PAGE> 100
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Net realizable value is based on estimated selling price less further costs
expected to be incurred to completion and disposal.
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.
2. TURNOVER
Turnover represents the net invoiced sales, excluding value added tax, of
goods sold during the period.
The Company's operations are all located in the United Kingdom and its
turnover and pre-tax profit is attributable to one continuing activity, the
manufacture of printed circuit boards.
99
<PAGE> 101
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 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
United Kingdom.............................................. 55,236 61,209
Belgium..................................................... 11,539 16,915
Germany..................................................... 10,931 19,524
Sweden...................................................... 8,065 21,630
Other Continental Europe.................................... 18,840 22,365
------- -------
104,611 141,643
======= =======
</TABLE>
Of the total turnover, 16.3% related to one customer (1996: 17.3%) and
15.8% to another (1996: 11.5%).
3. OPERATING PROFIT
(a) This is stated after charging/(crediting):
<TABLE>
<CAPTION>
YEAR ENDED
--------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Directors' remuneration (see note 4)........................ 42 192
Auditors' remuneration for audit services................... 31 35
Auditors' remuneration for non audit services............... 63 75
Depreciation of tangible fixed assets....................... 17,302 19,123
Exceptional depreciation charge............................. -- --
Research and development expenditure........................ 549 475
Exchange gains.............................................. 41 (431)
Hire of plant and machinery................................. 42 18
Regional Selective Assistance............................... (600) (600)
====== ======
</TABLE>
(b) Reconciliation of operating profit to net cash inflow from operating
activities
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Operating profit............................................ 6,380 17,584
Depreciation................................................ 17,302 19,123
Loss on disposal of tangible fixed assets................... -- --
Government grants released.................................. (600) (600)
Increase in debtors......................................... (2,691) (6,632)
Increase in stocks.......................................... (3,301) (1,685)
Increase in creditors....................................... 5,667 6,052
------- ------
Net cash inflow from operating activities................... 22,757 33,842
======= ======
</TABLE>
100
<PAGE> 102
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
4. DIRECTORS' REMUNERATION
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Fees........................................................ -- --
Other emoluments (including pension contributions).......... 42 192
------- --------
42 192
======= ========
Emoluments of the chairman (excluding pension contributions)
were:..................................................... L23,547 L 9,078
======= ========
Emoluments of the highest paid director (excluding pension
contributions) were:...................................... L23,547 L181,413
======= ========
</TABLE>
Directors emoluments (excluding pension contributions) fell within the
following ranges:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
--------- --------
<S> <C> <C>
LNil -- L5,000 1 --
L5,001 -- L10,000 -- 1
L15,001 -- L20,000 1 --
L20,001 -- L25,000 1 --
L180,001 -- L185,000 -- 1
</TABLE>
5. STAFF COSTS
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Wages and salaries.......................................... 19,320 26,429
Social security costs....................................... 1,706 2,185
Other pension costs......................................... 232 212
-------- ------
21,258 28,826
======== ======
</TABLE>
The average weekly number of employees during the period was made up as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
--------- --------
<S> <C> <C>
Sales and administration.................................... 78 67
Manufacturing............................................... 1,050 1,332
----- -----
1,128 1,399
===== =====
</TABLE>
101
<PAGE> 103
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
6. INTEREST RECEIVABLE
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Bank deposit interest....................................... -- 414
=== ===
</TABLE>
7. INTEREST PAYABLE
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Bank overdraft.............................................. 141 10
Other loans wholly repayable within five years (net of
rebate)................................................... 389 478
Other loans not wholly repayable within five years.......... 77 544
Loan stock.................................................. 200 200
----- -----
Other interest.............................................. -- --
----- -----
807 1,232
===== =====
</TABLE>
8. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
The taxation charge is made up as follows:
Based on the profit for the period
Corporation tax at 33%...................................... 4,422 6,463
Deferred taxation........................................... -- --
----- -----
4,422 6,463
Corporation tax under/(over) provided in previous Periods... -- 411
----- -----
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).
9. DIVIDENDS
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C> <C>
Ordinary -- interim paid.......................................... 500 450
-- final proposed........................................ -- --
--- ---
500 450
=== ===
</TABLE>
102
<PAGE> 104
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 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 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 29, 1996................................. 7,420 32,475 39,895
====== ======= =======
At April 4, 1997.................................. 14,109 56,433 70,542
====== ======= =======
</TABLE>
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 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 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>
103
<PAGE> 105
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
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>
APRIL 4,
1997
(L000)
--------
<S> <C>
Plant and machinery......................................... 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 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>
APRIL 4,
1997
(L000)
--------
<S> <C>
Raw materials and consumables............................... 5,401
Work in progress............................................ 2,492
Finished goods for resale................................... 1,239
-----
9,132
=====
</TABLE>
12. DEBTORS
<TABLE>
<CAPTION>
APRIL 4,
1997
(L000)
--------
<S> <C>
Trade debtors............................................... 20,910
Other debtors............................................... 2,499
Prepayments and accrued income.............................. 594
------
24,003
======
</TABLE>
104
<PAGE> 106
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
13. CASH AND CASH EQUIVALENTS
Analysis of balances as shown in the consolidated balance sheet and changes
during the periods:
<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.
14. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
APRIL 4,
1997
(L000)
--------
<S> <C>
Current installment due on loan (note 16)................... 4,183
Trade creditors............................................. 21,021
Amounts under finance leases (note 15)...................... 1,032
Current corporation tax..................................... 7,233
Other taxes and social security costs....................... 702
Other creditors............................................. 361
Accruals.................................................... 13,331
------
47,863
======
</TABLE>
15. OBLIGATIONS UNDER FINANCE LEASES AND HIRE PURCHASE CONTRACTS
<TABLE>
<CAPTION>
APRIL 4,
1997
(L000)
--------
<S> <C>
Amounts payable:
Within one year........................................... 1,371
In two to five years...................................... 3,654
-----
5,025
Less: finance charges allocated to future periods........... 790
-----
4,235
=====
Finance leases and hire purchase contracts are analyzed as
follows:
Current obligations (note 14)............................. 1,032
Noncurrent obligations.................................... 3,203
-----
4,235
=====
</TABLE>
105
<PAGE> 107
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
Analysis of changes in finance leases and hire purchase contracts:
<TABLE>
<CAPTION>
APRIL 4,
1997
(L000)
--------
<S> <C>
Opening balance............................................. 5,086
Inception of finance lease contracts........................ 154
Capital element on finance lease rental payments............ (1,005)
------
Closing balance............................................. 4,235
======
</TABLE>
16. LOANS
<TABLE>
<CAPTION>
APRIL 4,
1997
GROUP (L000)
----- --------
<S> <C>
Wholly repayable within five years:
Bank loan Bank of Scotland(1)............................. 3,500
Loan stock................................................ 2,000
European Coal and Steel Community (ECSC) loan(1).......... 125
European Coal and Steel Community (ECSC) loan(2).......... 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................................................... 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
------
31,519
Less: included in current liabilities (see note 14)......... (4,183)
------
27,336
======
For loans not wholly repayable within five years the amounts
repayable by installments are:
Within five years......................................... 8,090
After five years.......................................... 8,804
------
16,894
======
</TABLE>
106
<PAGE> 108
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
<TABLE>
<CAPTION>
1997
(L000)
--------
<S> <C>
Loans are repayable as follows:
Amounts falling due: --
Within one year........................................... 4,183
Between one and two years................................. 3,058
Between two and five years................................ 15,474
In five years or more..................................... 8,804
------
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.
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 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Opening balance............................................. 11,295 10,613
New loans raised............................................ -- 22,089
Repayment of loans.......................................... (682) (1,183)
------ ------
Closing balance............................................. 10,613 31,519
====== ======
</TABLE>
107
<PAGE> 109
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
17. DEFERRED TAXATION
Deferred taxation provided in the financial statements and the amounts not
provided are as follows:
<TABLE>
<CAPTION>
NOT
PROVIDED PROVIDED
-------- --------
APRIL 4, APRIL 4,
1997 1997
(L000) (L000)
-------- --------
<S> <C> <C>
Capital allowances in advance of depreciation............... -- 725
Other timing differences.................................... -- (2,978)
Taxation on valuation surplus............................... -- 8,720
-- ------
-- 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 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Opening balance............................................. 1,200 600
Received in the period...................................... -- --
Released during the period.................................. (600) (600)
----- ----
Closing balance............................................. 600 --
===== ====
</TABLE>
19. SHARE CAPITAL
The authorised and allotted, called up and fully paid share capital at
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 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>
108
<PAGE> 110
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
21. CAPITAL COMMITMENTS
<TABLE>
<CAPTION>
APRIL 4,
1997
(L000)
--------
<S> <C>
Contracted for but not provided............................. --
======
Authorized but not contracted for........................... 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.
Included within accruals under "Creditors -- amounts falling due within one
year" is a pension scheme accrual of L515,877.
The net periodic pension cost for each fiscal year is as follows:
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
L L
--------- --------
<S> <C> <C>
Service cost................................................ 176 263
Interest cost............................................... 385 443
Actual return on plan assets................................ (830) (509)
Net amortization and deferral............................... 375 (57)
---- ----
Net periodic pension cost................................... 106 140
==== ====
</TABLE>
23. DIRECTORS' INTERESTS
I H Bradbury has an interest in payments of L389,933 (1996 -- L383,640)
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.
109
<PAGE> 111
INTERCONNECTION SYSTEMS (HOLDINGS) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(EXPRESSED IN BRITISH POUNDS STERLING)
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 year ended March 29, 1996, 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, 1995. 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, 1995 has been allocated to shareholders' funds based on a ratio of
6/15, being the number of years elapsed between the effective date of FAS 87 and
April 1, 1995 over the 15 year period being used to amortize the transition
liability.
Summary of principal assumptions made by the actuary:
<TABLE>
<CAPTION>
MARCH 29, APRIL 4,
1996 1997
% %
--------- --------
<S> <C> <C>
Discount rate............................................... 9.0% 8.5%
Salary growth............................................... 7.0 6.5
Long-term return on assets.................................. 9.0 9.0
Pension increases........................................... 3.0 3.0
</TABLE>
The following table details the funded status of the plan under US GAAP:
<TABLE>
<CAPTION>
APRIL 4,
1997
(L000)
--------
<S> <C>
Vested benefit obligation................................... 5,800
Accrued benefit obligation.................................. 5,800
Projected benefit obligation................................ 6,520
Assets at market value...................................... 6,368
Funded status............................................... (152)
Unrecognized transition asset............................... (395)
Other unrecognised net loss................................. 787
Prepaid pension cost........................................ 240
</TABLE>
Amounts funded to the pension are primarily invested in equity and fixed
income securities.
110
<PAGE> 112
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 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>
YEAR ENDED
----------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- ---------
<S> <C> <C>
Profit for the year as reported in the consolidated profit
and loss account.......................................... 1,151 9,892
Pension costs............................................... 58 77
Amortization of Goodwill.................................... (84) (84)
Depreciation of tangible fixed assets....................... 1,634 1,685
Deferred taxation -- methodology............................ 1,858 787
-- on adjustments........................ (20) (25)
----- -----
Net income for the year as adjusted to accord with US
GAAP...................................................... 4,597 12,332
===== =====
</TABLE>
111
<PAGE> 113
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 29, APRIL 4,
1996 1997
(L000) (L000)
--------- ---------
<S> <C> <C>
Shareholders' funds as reported in the consolidated balance
sheet..................................................... 19,898 51,519
Intangible fixed assets -- goodwill:
Cost...................................................... 840 840
Amortization.............................................. (472) (556)
Tangible fixed assets:
Cost...................................................... (4,076) (2,304)
Amortization.............................................. (2,491) (24,942)
Current assets/liabilities:
Pension costs............................................. 679 756
Deferred taxation -- methodology.......................... 1,466 2,253
-- on adjustments...................... (224) (249)
Provisions for liabilities and charges:
Deferred taxation -- methodology.......................... -- --
-- on adjustments...................... -- --
------ -------
Shareholders' equity as adjusted to accord with US GAAP..... 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.
The categories of cash flow activity under US GAAP can be summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------
MARCH 29, APRIL 4,
1996 1997
(L000) (L000)
--------- --------
<S> <C> <C>
Cash inflow from operating activities....................... 18,670 27,826
Cash outflow on investing activities........................ (16,816) (24,119)
Cash (outflow)/inflow from financing activities............. (1,305) 19,901
------- -------
Increase in cash and cash equivalents....................... 549 23,608
Cash and cash equivalents:
Opening balance........................................... 2,087 2,636
------- -------
Closing balance........................................... 2,636 26,244
======= =======
</TABLE>
112
<PAGE> 114
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND FINANCIAL
DISCLOSURE
Subsequent to the acquisition of Circo Craft, the Company dismissed the
former accountants and on January 7, 1997, the Company named Coopers & Lybrand,
L.L.P., the accountants for Viasystems Group, Inc. and Viasystems, Inc., as the
auditor of Circo Craft. The former accountants report did not contain an adverse
opinion or disclaimer of opinion nor was it modified as to an uncertainty, audit
scope, or accounting principle. Such change to the accountant was approved by
the stockholder of Circo Craft. There was no disagreement with the former
accountant on any matter which, if not resolved to the satisfaction of the
former accountant, would have caused the former accountant to make reference to
the subject matter of the disagreement in connection with their reports.
Subsequent to the Acquisition of Forward Group and Chips, the Company
dismissed the former accountants and on November 12, 1997, the Company named
Coopers & Lybrand, L.L.P., the accountants for Viasystems Group, Inc. and
Viasystems, Inc., as the auditor of Forward Group and Chips. The former
accountants' reports did not contain an adverse opinions or disclaimers of
opinion nor were they modified as to an uncertainty, audit scope, or accounting
principle. Such changes to the accountants was approved by the stockholder of
Forward Group and Chips. There were no disagreements with the former accountants
on any matter which, if not resolved to the satisfaction of the former
accountants, would have caused the former accountants to make reference to the
subject matter of the disagreement in connection with their reports.
ITEM 10. 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....................... 60 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........................ 38 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.................... 40 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...................... 36 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, Inc. 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 and International Wire Group, Inc. Mr. Mills was Chairman of the Board
and Chief Executive Officer of Crain Holdings Corp. and Crain Industries, Inc.
from August 1995 through December 1997 and 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
113
<PAGE> 115
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.
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. and Cooperative Computing
Holding Company, Inc.
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
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 Omni America Holdings, Inc., 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 previously served as President of Berg
Electronics Corp. from June 1995 through December 1996 and as Chief Operating
Officer of Berg Electronics Corp. and as President and Chief Executive Officer
of Berg Electronics Group from March 1993 through December 1996. 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, Inc., Berg Electronics Corp.
and International Wire Holding
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<PAGE> 116
Company. Mr. Sindelar was Senior Vice President and Chief Financial Officer of
Crain Industries, Inc. and Crain Holdings Corp. from August 1995 through
December 1997 and 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, Inc., Berg Electronics Corp.
and International Wire Holding Company. Mr. Bacon was Senior Vice President of
Crain Industries, Inc. and Crain Holdings Corp. from August 1995 through
December 1997 and 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. 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. and Berg Electronics Corp. Mr. McGhee was
Secretary and General Counsel of Crain Industries, Inc. and Crain Holdings Corp.
from August 1995 through December 1997.
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.
ITEM 11. EXECUTIVE COMPENSATION
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 receive
no compensation for their services as directors. Each director of Viasystems
Group or the Company who is not also an officer, employee or an affiliate of
Viasystems Group or the Company (an "Outside Director") will receive an annual
retainer of $12,000 and a fee of $1,000 for each meeting of the board of
directors at which the director is present. Directors of Viasystems Group and
the Company are entitled to reimbursement of their reasonable out-of-pocket
expenses in connection with their travel to and attendance at the meetings of
the board of directors or committees thereof.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash and non-cash compensation earned
during the fiscal year ended December 31, 1997 by the Chief Executive Officer
and the four other most highly compensated executive officers of the Company.
The executive officers of Viasystems Group and the Company did not receive any
115
<PAGE> 117
compensation from either Viasystems Group or the Company during the period from
inception (August 28, 1996) to December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) SECURITIES
----------------------- UNDERLYING ALL OTHER
YEAR SALARY($) BONUS($)(2) OPTIONS(#)(3) COMPENSATION($)
---- --------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
James N. Mills, Chairman of the Board
and Chief Executive Officer........... 1997 395,000 550,000 2,132,392(4) --
Robert N. Mills, President and Chief
Operating Officer..................... 1997 482,000 313,300 -- --
Barry Brigmann, President of the
Americas.............................. 1997 310,000 201,500 750,000 66,285(5)
Gerald C. Nelson, Executive Vice
President............................. 1997 289,678 188,290 750,000 --
James G. Powers, Vice
President -- Finance.................. 1997 190,094 123,500 750,000 --
</TABLE>
- ---------------
(1) The Company provides a car allowance, reimbursement of club memberships and
other benefits to certain executives. The aggregate incremental costs of
these benefits to the Company do not exceed the lesser of either $50,000 or
10% of the total of annual salary and bonus reported for each executive.
(2) Bonuses were paid in 1998 for 1997.
(3) Options were granted under the Viasystems Group, Inc. 1997 Stock Option Plan
(the "Stock Option Plan") pursuant to which incentive and non-qualified
stock options may be issued to certain of its Holdings or the Company's
officers, key employees and directors.
(4) Reflects Performance Options (as hereinafter defined) granted by Viasystems
Group, Inc. For a description of the material terms of such options, see
"Benefit Plans -- Performance Options." The Performance Options are
exercisable only in the event that Hicks, Muse Equity Fund III, as of the
exercise date, realized an overall rate of return of at least 35% per annum,
compounded annually on its equity funds invested in Viasystems Group, Inc.
(5) Mr. Brigmann received compensation in the form of reimbursement of
relocation expenses during 1997.
The following table summarizes option grants made with respect to the
common stock, par value $.01 per share of Viasystems Group, Inc.'s common stock
during fiscal year 1997 to the executive officers named above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES PRICE EXPIRATION
OPTIONS(#) IN FISCAL YEAR ($/SHARE) DATE
---------- --------------- --------- ------------------
<S> <C> <C> <C> <C>
James N. Mills (1)............. 2,132,392 26.2% 1.00 September 30, 2006
Robert N. Mills (2)............ -- N/A N/A N/A
Barry Brigmann (2)............. 750,000 14.3% 1.00 February 4, 2007
Gerald C. Nelson (2)........... 750,000 14.3% 1.00 February 4, 2007
James G. Powers (2)............ 750,000 14.3% 1.00 February 4, 2007
</TABLE>
116
<PAGE> 118
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
OF
STOCK PRICE APPRECIATION
FOR OPTION TERM(3)
-------------------------
5%($) 10%($)
---------- ------------
<S> <C> <C>
James N. Mills.............................................. -- 768,000
Robert N. Mills............................................. N/A N/A
Barry Brigmann.............................................. 413,000 1,020,000
Gerald Nelson............................................... 413,000 1,020,000
James G. Powers............................................. 413,000 1,020,000
</TABLE>
- ---------------
(1) Reflects Performance Options granted by Viasystems Group, Inc. for a
description of the material terms of such options, See "Benefit
Plans -- Performance Options:"
(2) Reflects Options to purchase Viasystems Group Inc.'s Common Stock granted
under the Stock Option Plan. For a description of the material terms of such
options, See "Benefit Plans -- Stock Option Plan."
(3) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the option immediately
prior to the expiration of its term, assuming the specified compound rules
of appreciation of Viasystems Group, Inc.'s Common Stock over the term of
the options. Actual gains on the exercise of the options are dependent on
the future performance of Viasystems Group, Inc.'s Common Stock. There can
be no assurance that the potential values reflected in this table will be
achieved. All amounts have been rounded to the nearest whole dollar.
The following table summarizes the number of options exercised during the
fiscal year ended December 31, 1997 for the above named executive officers and
the value of unexercised options as of December 31, 1997:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS AT
FISCAL YEAR END
ACQUIRED ON VALUE ---------------------------------
EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#)
----------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
James N. Mills..................... -- -- -- 2,468,800
Robert N. Mills.................... -- -- -- --
Barry Brigmann..................... -- -- -- 750,000
Gerald C. Nelson................... -- -- -- 750,000
James G. Powers.................... -- -- -- 750,000
</TABLE>
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN-THE-MONEY
OPTIONS AT
FISCAL YEAR END(1)
---------------------------------
EXERCISABLE($) UNEXERCISABLE($)
-------------- ----------------
<S> <C> <C>
James N. Mills.......................................... -- --
Robert N. Mills......................................... -- --
Barry Brigmann.......................................... -- --
Gerald C. Nelson........................................ -- --
James G. Powers......................................... -- --
</TABLE>
- ---------------
(1) Represents the difference between the value at December 31, 1997 of
Viasystems Group, Inc.'s Common Stock underlying the options and the
exercise price of such options.
117
<PAGE> 119
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions are made by the Board of Directors. James N. Mills
served as both and Executive Officer and Director during 1997 and is expected to
serve in such capacity in 1997.
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.
The compensation provided to Mr. J. Mills under his executive employment
agreement includes an annual base salary of not less than $685,000, 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 $685,000, 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 $510,000, 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 $510,000, 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.
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<PAGE> 120
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 $230,000, 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. 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 $230,000, 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.
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, 1999, 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 $300,000 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 $300,000, 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. As of
119
<PAGE> 121
December 31, 1997, options to purchase an aggregate of 5,235,000 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 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. On June 2, 1997, Viasystems Group granted Performance
Options to purchase an additional 8,138,904 shares of Viasystems Group Common
Stock. Messrs. J. Mills and Sindelar were granted additional Performance Options
to purchase 2,132,392 and 1,318,501 shares of Viasystems Group Common Stock,
respectively, and additional 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> 122
ITEM 12. 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 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. 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 PERCENT NUMBER PERCENT PERCENT
OF SHARES OF CLASS OF SHARES OF CLASS OF TOTAL
----------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDERS:
HM Parties(2)............................ 254,980,004 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)...................... 200,000 -- 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...................... 400,000 * -- -- *
Kenneth F. Yontz(4).................... 200,000 * -- -- *
Robert N. Mills(5)..................... -- -- 7,140,000 20.5% 2.5%
David M. Sindelar(6)................... -- -- 7,333,331 21.1% 2.5%
Larry S. Bacon(7)...................... -- -- 1,700,000 4.9% *
W. Thomas McGhee(8).................... -- -- 1,700,000 4.9% *
All executive officers and directors as
a group (11 persons)(9)............. 256,200,004 100.0% 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 Fund
III. Thomas O. Hicks is a
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<PAGE> 123
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, David R. Deneger 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) Excludes 400,000 shares of Viasystems Group Common Stock owned of record by
the Kenneth F. Yontz 1997 Family Trust, a trust of which Mr. Yontz does not
have the power to vote or dispose of such stock. Mr. Yontz disclaims
beneficial ownership of Viasystems Group Common Stock not owned of record by
him.
(5) Includes 7,090,000 shares held of record by the Robert N. Mills Revocable
Living Trust, a trust of which Mr. R. Mills is a trustee having the power to
vote and dispose of such stock, and 50,000 shares owned of record by another
individual, subject to an irrevocable proxy in favor of Mr. R. Mills. Mr. R.
Mills disclaims beneficial ownership of Viasystems Group Class A Common
Stock not owned of record by him.
(6) Includes 200,000 shares owned of record by two children's trusts, of which
Mr. Sindelar is a trustee having the power to vote and dispose of such
stock, Mr. Sindelar disclaims beneficial ownership of Viasystems Group Class
A Common Stock not owned of record by him. Does not include 1,546,390 shares
of Viasystems Group Common Stock issuable to Mr. Sindelar upon exercise of
Performance Options that are not exercisable within the next 60 days. See
"Management -- Benefit Plans -- Performance Options"
(7) Does not include 1,454,149 shares of Viasystems Group Common Stock issuable
to Mr. Bacon upon exercise of Performance Options that are not exercisable
within the next 60 days. See "Management -- Benefit Plans -- Performance
Options."
(8) Includes 500,000 shares held of record by the McGhee Family Limited
Partnership, of which Mr. McGhee is the general partner having the power to
vote and dispose of such stock, and 1,200,000 shares held of record by the
W. Thomas McGhee Revocable Living Trust, of which Mr. McGhee is the trustee
having the power to vote and dispose of such stock. Mr. McGhee disclaims
beneficial ownership of Viasystems Group Class A Common Stock not owned of
record by him. Does not include 1,454,149 shares of Viasystems Group Common
Stock issuable to Mr. McGhee upon exercise of Performance Options that are
not exercisable within the next 60 days. See "Management -- Benefit
Plans -- Performance Options."
(9) Does not include 10,724,091 shares of Viasystems Group Common Stock issuable
to executive officers of Viasystems Group upon the exercise of Performance
Options or options issued under the Stock Option Plan, or Performance
Options to be issued in connection with the Equity Contribution, none of
which are exercisable within the next 60 day. See "Management -- Benefit
Plans -- Performance Options."
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<PAGE> 124
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED 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 and assumed debt), which was funded with $216.0 million of borrowings
under a tender offer facility with a financial institution (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 1997 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 employees 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 Chips Merger, 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 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
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<PAGE> 125
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 was
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.
Each investor in any class of common stock of Viasystems Group has 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. 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 backplanes from Berg. Prior to the Company's acquisition of
the Lucent Division, the Lucent Division
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<PAGE> 126
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 1997, the company purchased approximately $41.0 million of product
from 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.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) The following financial statements, schedules and exhibits are filed as part
of this report.
(1) Financial Statements
See Index to Financial Statements and Schedules at Item 8 on page 29.
(2) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<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).(1)
2.2 -- Acquisition Agreement, dated as of November 26, 1996,
among Lucent Technologies Inc., Circo Technologies Group,
Inc. and Circo Craft Technologies, Inc.(1)
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.(1)
2.4 -- Agreement and Plan of Merger, dated as of June 6, 1997,
by and between Viasystems Group, Inc. and Chips Holdings,
Inc.(1)
2.5 -- Agreement and Plan of Merger dated, as of June 6, 1997,
by and between Viasystems, Inc. and Chips Acquisition,
Inc.(1)
2.6 -- Acquisition Agreement, dated as of January 29, 1998,
among Viasystems B.V. and Print Service Holding N.V.*
2.7 -- Sale and Purchase Agreement, dated as of February 11,
1998, between Viasystems, S.r.1., as purchaser, European
Circuits SA and individuals named therein, as sellers.*
3.1 -- Certificate of Incorporation of Viasystems, Inc.(1)
3.2 -- Bylaws of Viasystems, Inc.(1)
4.1 -- Indenture, dated as of June 6, 1997, by and between
Viasystems, Inc. and The Bank of New York, as Trustee.(1)
4.2 -- Form of the Old Note (included in Exhibit 4.1, Exhibit
A).(1)
4.3 -- Form of the New Note (included in Exhibit 4.1, Exhibit
B).(1)
</TABLE>
125
<PAGE> 127
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
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, Chase Manhattan International Limited and The
Chase Manhattan Bank.(1)
4.5 -- Amended and Restated Guarantee and Collateral Agreement,
dated as of April 11, 1997.(1)
4.6 -- Supplement to Guarantee and Collateral Agreement, dated
as of June 5, 1997.(1)
4.7 -- Indenture, dated as of February 17, 1998, by and between
Viasystems, Inc. and the Bank of New York, as Trustee.*
4.8 -- Form of Initial Note (included in Exhibit 4.7, Exhibit
A).*
4.9 -- Form of Exchange Note (included in Exhibit 4.8, Exhibit
B).*
4.10 -- First Amendment, dated as of August 29, 1997, to the
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, Chase Manhattan International Limited and The
Chase Manhattan Bank.*
4.11 -- Second Amendment, dated as of February 3, 1998, to the
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, Chase Manhattan International Limited and The
Chase Manhattan Bank.*
10.1 -- Supply Agreement dated as of November 26, 1996, by and
between Lucent Technologies Inc. and Circa Craft
Technologies, Inc. (confidential Treatment was granted
with respect to certain portions of this exhibit).(1)
10.2 -- [Intentionally omitted.]
10.3 -- Amended and Restated Viasystems Group, Inc. 1997 Stock
Option Plan.(1)
10.4 -- Amended and Restated Stock Option Agreement dated, as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and James N.
Mills.(1)
10.5 -- Amended and Restated Stock Option Agreement dated, as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and David M.
Sindelar.(1)
10.6 -- Amended and Restated Stock Option Agreement, dated as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and Larry S.
Bacon.(1)
10.7 -- Amended and Restated Stock Option Agreement, dated as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and W. Thomas
McGhee.(1)
10.8 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and James N. Mills.(1)
10.9 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and David M. Sindelar.(1)
</TABLE>
126
<PAGE> 128
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.10 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and Larry S. Bacon.(1)
10.11 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and W. Thomas McGhee.(1)
10.12 -- Viasystems Group, Inc. Stock Option Agreement, dated as
of February 4, 1997, with Richard W. Vieser.(1)
10.13 -- Viasystems Group, Inc. Stock Option Agreement, dated as
of February 4, 1997, with Kenneth F. Yontz.(1)
10.14 -- Third Amended and Restated Monitoring and Oversight
Agreement, dated as of 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.(1)
10.15 -- Third Amended and Restated Financial Advisory Agreement,
dated as of 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.(1)
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.(1)
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.(1)
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.(1)
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.(1)
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.(1)
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.(1)
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.(1)
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.(1)
10.24 -- Agreement, dated as of December 30, 1996, between Circo
Craft Technologies, Inc. and the Communication Workers of
America.(1)
10.25 -- Environmental, Health and Safety Agreement, dated as of
November 26, 1996, between Lucent Technologies and Circo
Craft Technologies, Inc.(1)
</TABLE>
127
<PAGE> 129
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.26 -- Purchase Agreement, dated as of February 9, 1998, among
Viasystems Inc., Chase Securities Inc. and NatWest
Capital Markets Limited.*
10.27 -- Exchange and Registration Rights Agreement, dated as of
February 17, 1998, by and between Viasystems, Inc., Chase
Securities Inc. and NatWest Capital Markets Limited.*
16.1 -- Letter from Deloitte & Touche regarding change in
certifying accountant for Circo Craft Co. Inc.*
16.2 -- Letter from KPMG Audit PLC regarding change in auditors
for Forward Group PLC.*
16.3 -- Letter from Ernst & Young regarding change in auditors
for Interconnection Systems (Holdings) Limited.*
21.1 -- Subsidiaries of Viasystems, Inc.*
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.(1)
27.1 -- Financial Data Schedule.*
99.1 -- Form of Letter of Transmittal.(1)
99.2 -- Form of Notice of Guaranteed Delivery. (1)
</TABLE>
- ---------------
(1) Previously filed.
* Filed herewith.
(B) No reports on Form 8-K were filed by the Registrant during the last quarter
of 1997.
128
<PAGE> 130
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
VIASYSTEMS, INC.
By /s/ DAVID M. SINDELAR
-----------------------------------
David M. Sindelar
Senior Vice President
and Chief Financial Officer
Date: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been duly signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ JAMES N. MILLS Chairman of the Board of Directors March 30, 1998
- ----------------------------------------------------- and Chief Executive Officer
James N. Mills (Principal Executive Officer)
/s/ DAVID M. SINDELAR Senior Vice President and Chief March 30, 1998
- ----------------------------------------------------- Financial Officer (Principal
David M. Sindelar Financial Officer)
/s/ ROBERT N. MILLS Director, President and Chief March 30, 1998
- ----------------------------------------------------- Operating Officer
Robert N. Mills
/s/ THOMAS O. HICKS Director March 30, 1998
- -----------------------------------------------------
Thomas O. Hicks
/s/ JACK D. FURST Director March 30, 1998
- -----------------------------------------------------
Jack D. Furst
/s/ RICHARD W. VIESER Director March 30, 1998
- -----------------------------------------------------
Richard W. Vieser
/s/ KENNETH F. YONTZ Director March 30, 1998
- -----------------------------------------------------
Kenneth F. Yontz
</TABLE>
129
<PAGE> 131
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- Securities Purchase Agreement, dated as of October 1,
1996, among Circo Craft Holding Company and certain
Purchasers (defined therein).(1)
2.2 -- Acquisition Agreement, dated as of November 26, 1996,
among Lucent Technologies Inc., Circo Technologies Group,
Inc. and Circo Craft Technologies, Inc.(1)
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.(1)
2.4 -- Agreement and Plan of Merger, dated as of June 6, 1997,
by and between Viasystems Group, Inc. and Chips Holdings,
Inc.(1)
2.5 -- Agreement and Plan of Merger dated, as of June 6, 1997,
by and between Viasystems, Inc. and Chips Acquisition,
Inc.(1)
2.6 -- Acquisition Agreement, dated as of January 29, 1998,
among Viasystems B.V. and Print Service Holding N.V.*
2.7 -- Sale and Purchase Agreement, dated as of February 11,
1998, between Viasystems, S.r.1., as purchaser, European
Circuits SA and individuals named therein, as sellers.*
3.1 -- Certificate of Incorporation of Viasystems, Inc.(1)
3.2 -- Bylaws of Viasystems, Inc.(1)
4.1 -- Indenture, dated as of June 6, 1997, by and between
Viasystems, Inc. and The Bank of New York, as Trustee.(1)
4.2 -- Form of the Old Note (included in Exhibit 4.1, Exhibit
A).(1)
4.3 -- Form of the New Note (included in Exhibit 4.1, Exhibit
B).(1)
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, Chase Manhattan International Limited and The
Chase Manhattan Bank.(1)
4.5 -- Amended and Restated Guarantee and Collateral Agreement,
dated as of April 11, 1997.(1)
4.6 -- Supplement to Guarantee and Collateral Agreement, dated
as of June 5, 1997.(1)
4.7 -- Indenture, dated as of February 17, 1998, by and between
Viasystems, Inc. and the Bank of New York, as Trustee.*
4.8 -- Form of Initial Note (included in Exhibit 4.7, Exhibit
A).*
4.9 -- Form of Exchange Note (included in Exhibit 4.8, Exhibit
B).*
4.10 -- First Amendment, dated as of August 29, 1997, to the
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, Chase Manhattan International Limited and The
Chase Manhattan Bank.*
</TABLE>
<PAGE> 132
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.11 -- Second Amendment, dated as of February 3, 1998, to the
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, Chase Manhattan International Limited and The
Chase Manhattan Bank.*
10.1 -- Supply Agreement dated as of November 26, 1996, by and
between Lucent Technologies Inc. and Circa Craft
Technologies, Inc. (confidential Treatment was granted
with respect to certain portions of this exhibit).(1)
10.2 -- [Intentionally omitted.]
10.3 -- Amended and Restated Viasystems Group, Inc. 1997 Stock
Option Plan.(1)
10.4 -- Amended and Restated Stock Option Agreement dated, as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and James N.
Mills.(1)
10.5 -- Amended and Restated Stock Option Agreement dated, as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and David M.
Sindelar.(1)
10.6 -- Amended and Restated Stock Option Agreement, dated as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and Larry S.
Bacon.(1)
10.7 -- Amended and Restated Stock Option Agreement, dated as of
November 26, 1996 between Circo Technologies Group, Inc.,
formerly Circo Craft Holding Company and W. Thomas
McGhee.(1)
10.8 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and James N. Mills.(1)
10.9 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and David M. Sindelar.(1)
10.10 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and Larry S. Bacon.(1)
10.11 -- Stock Option Agreement, dated as of June 6, 1997 between
Viasystems Group, Inc. and W. Thomas McGhee.(1)
10.12 -- Viasystems Group, Inc. Stock Option Agreement, dated as
of February 4, 1997, with Richard W. Vieser.(1)
10.13 -- Viasystems Group, Inc. Stock Option Agreement, dated as
of February 4, 1997, with Kenneth F. Yontz.(1)
10.14 -- Third Amended and Restated Monitoring and Oversight
Agreement, dated as of 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.(1)
10.15 -- Third Amended and Restated Financial Advisory Agreement,
dated as of 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.(1)
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.(1)
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.(1)
</TABLE>
<PAGE> 133
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
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.(1)
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.(1)
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.(1)
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.(1)
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.(1)
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.(1)
10.24 -- Agreement, dated as of December 30, 1996, between Circo
Craft Technologies, Inc. and the Communication Workers of
America.(1)
10.25 -- Environmental, Health and Safety Agreement, dated as of
November 26, 1996, between Lucent Technologies and Circo
Craft Technologies, Inc.(1)
10.26 -- Purchase Agreement, dated as of February 9, 1998, among
Viasystems Inc., Chase Securities Inc. and NatWest
Capital Markets Limited.*
10.27 -- Exchange and Registration Rights Agreement, dated as of
February 17, 1998, by and between Viasystems, Inc., Chase
Securities Inc. and NatWest Capital Markets Limited.*
16.1 -- Letter from Deloitte & Touche regarding change in
certifying accountant for Circo Craft Co. Inc.*
16.2 -- Letter from KPMG Audit PLC regarding change in auditors
for Forward Group PLC.*
16.3 -- Letter from Ernst & Young regarding change in auditors
for Interconnection Systems (Holdings) Limited.*
21.1 -- Subsidiaries of Viasystems, Inc.*
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.(1)
27.1 -- Financial Data Schedule.*
99.1 -- Form of Letter of Transmittal.(1)
99.2 -- Form of Notice of Guaranteed Delivery. (1)
</TABLE>
- ---------------
(1) Previously filed.
* Filed herewith.
<PAGE> 1
EXHIBIT 2.6
JANUARY 1998
AGREEMENT
FOR THE SALE AND PURCHASE OF
ALL THE ISSUED SHARE CAPITAL OF
PRINT SERVICE HOLDING N.V.
Weil, Gotshal & Manges
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
SECTION 1 INTERPRETATION.....................................................................................1
SECTION 2 SALE AND PURCHASE OF THE SHARES....................................................................6
SECTION 3 CONSIDERATION......................................................................................6
SECTION 4 COMPLETION DATE....................................................................................7
SECTION 5 WARRANTIES AND LIMITATIONS.........................................................................7
SECTION 6 PRE-COMPLETION UNDERTAKINGS AND DELIVERIES AND DISSOLUTION........................................10
SECTION 7 GUARANTEE BY KM AND PM............................................................................13
SECTION 8 COMPLETION........................................................................................15
SECTION 9 GUARANTEES........................................................................................16
SECTION 11 SELLERS' INDEMNITIES..............................................................................17
SECTION 12 WITHHOLDING TAX AND GROSSING UP...................................................................23
SECTION 13 ENTIRE AGREEMENT..................................................................................23
SECTION 14 VARIATION AND JOINT AND SEVERAL LIABILITY.........................................................23
SECTION 15 ASSIGNMENT........................................................................................24
SECTION 16 CONFIDENTIALITY AND ANNOUNCEMENTS.................................................................24
SECTION 17 COSTS.............................................................................................24
SECTION 18 PARTIAL INVALIDITY................................................................................24
SECTION 19 REMEDIES AND WAIVERS..............................................................................25
SECTION 20 FURTHER ASSURANCE.................................................................................25
SECTION 21 NOTICES...........................................................................................25
SECTION 22 GOVERNING LAW AND CHOICE OF FORUM.................................................................26
SECTION 23 COUNTERPARTS......................................................................................26
SCHEDULE 1........................................................................................28
SCHEDULE 2........................................................................................29
THE COMPANY AND THE SUBSIDIARIES................................................................29
SCHEDULE 3........................................................................................40
THE WARRANTIES..................................................................................40
The Company and the Shares...............................................................................40
The Subsidiaries.........................................................................................41
Other Interests..........................................................................................41
Ownership of Sellers.....................................................................................41
Accounts.................................................................................................41
Position since 30 September..............................................................................43
Accounting and other Records.............................................................................44
Accounting Reference Date................................................................................45
Debts owed to the Group..................................................................................45
Debts owed by the Group..................................................................................45
Licences.................................................................................................46
Compliance with Laws.....................................................................................46
Competition and Fair Trading Laws........................................................................46
Ownership................................................................................................47
Possession and Third Party Facilities....................................................................47
Adequacy of Assets.......................................................................................48
Condition................................................................................................48
Plant Registers..........................................................................................48
Insurances...............................................................................................48
Registered Rights........................................................................................49
Charges..................................................................................................49
Infringement.............................................................................................49
Employee Claims..........................................................................................49
Intellectual Property Licences...........................................................................49
Loss of Rights...........................................................................................50
Confidential Information.................................................................................50
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Records and Software.....................................................................................50
Material Contracts.......................................................................................50
Defaults.................................................................................................52
Trading Relationships....................................................................................52
Principal Suppliers and Customers........................................................................52
Principal Customers......................................................................................52
Grants...................................................................................................52
Litigation...............................................................................................53
Defective Products.......................................................................................53
Employees................................................................................................53
Compliance...............................................................................................54
Disputes.................................................................................................54
Incentive and Savings Schemes............................................................................54
Payments on Termination..................................................................................54
Effect of Sale...........................................................................................55
Redundancy Schemes.......................................................................................55
SCHEDULE 4.........................................................................................62
EXCLUDED CAPITAL LEASES.........................................................................62
SCHEDULE 5 WARRANTIES NOT SUBJECT TO DISCLOSURE................................................62
</TABLE>
DOCUMENTS IN THE AGREED FORM
A Notarial deed of transfer
B Disclosure Letter
C Resignation letters
D Bank Guarantee
EXHIBITS
1 Articles of Company and Subsidiaries
2 Shareholders' Registers of Company and Subsidiaries
3 Extract from Chambers of Commerce
4 TVD Report
5 Arthur Anderson Report
6 Environmental Report
<PAGE> 4
THIS AGREEMENT is made on January 1998 between:
(1) THE PERSONS whose names are specified in column 1 of Schedule 1 (each a
"SELLER" and together, the "SELLERS");
(2) VIASYSTEMS B.V. a company incorporated in the Netherlands (the
"PURCHASER");
(3) DE HEER KAREL JOSEPH MARIE MOMMERS of Negen-Novemberweg 5, 5916 LD, Venlo,
the Netherlands ("KM"); and
(4) MEVROUW PETRONELLA ELIZABETH JOSEPHINA MOMMERS-LINSSEN of Bisschop
Schrijnenstraat 9, 6041 XK, Roermond, the Netherlands ("PM").
(5) VIASYSTEMS GROUP LIMITED a company incorporated in England and Wales,
("VGL").
WHEREAS:
(A) Print Service Holding N.V. (the "COMPANY") is a company limited by shares
incorporated in the Netherlands details of which are set out in Part A of
Schedule 2. The Sellers are together legally and beneficially entitled to
all of the issued share capital of the Company and individually hold the
number of shares set opposite their respective names in column 2 of
Schedule 1; and
(B) The Sellers wish to sell and, in reliance upon (inter alia) the
representations, warranties and undertakings set out in this Agreement, the
Purchaser wishes to purchase all of the issued share capital of the Company
for the consideration and upon the terms set out in this Agreement.
IT IS AGREED as follows:
SECTION 1 INTERPRETATION
CLAUSE 1.1 In this Agreement:
"ACCOUNTS" means the Last Accounts and the Internal Monthly Financial
Statements;
"AFFILIATE" means, in relation to any person, another person which, in relation
to the specified person in question, is:
(a) directly or indirectly controlling, controlled by, or under common control
with, the specified person;
(b) a body corporate or partnership in which the specified person directly or
indirectly owns or holds five percent (5%) or more of any equity interest.
For the purposes of this definition, "controlling", "controlled by" and
"under common control with" means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies
of a company or firm, whether through the ownership of voting securities or
by contract or otherwise; and
(c) where the specified person is an individual, an individual relative of that
person;
<PAGE> 5
"BUSINESS DAY" means a day (excluding Saturdays) on which banks generally are
open in Rotterdam for the transaction of normal banking business;
"CLAIM" means any claim for breach of a Warranty;
"COMPLETION" means completion of the matters referred to in Clauses 8.2 and 8.3
of the Agreement;
"COMPLETION DATE" means the date determined for Completion in accordance with
Clause 4.1;
"COSTS" means liabilities, losses, damages, costs (including reasonable legal
costs) and expenses, in each case of any nature whatsoever;
"DEED OF TRANSFER" means the notarial deed of transfer of the Shares in the
agreed form;
"DISCLOSURE LETTER" means the letter in the agreed form from the Sellers to the
Purchaser executed and delivered immediately before the signing of this
Agreement;
"ENVIRONMENTAL LAWS" shall mean and include the following, each as in existence
at the Completion Date:
(i) all European Community, national or local statutes, codes, or other laws
or legislation concerning Environmental Matters which are applicable to
any Group Company Activity or to the Properties and all rules,
regulations, ordinances, orders, notices and directives made thereunder;
and
(ii) judicial and administrative interpretation of each of the foregoing.
(iii) As far as The Netherlands is concerned the meaning of Environmental Laws
includes, but is not limited to, the Environmental Control Act (Wet
Milieubeheer), Law on Soil Pollution (Wet Bodembescherming) Noise
Abatement Law (Wet Geluidhinder) Surface Water Pollution Law (Wet
Verontreiniging Oppervlaktewateren), Nuisance Law (Hinderwet), Hazardous
Substance Law (Wet Milieugevaarlijke Stoffen), and all other similar laws,
rules and regulations relating to the protection of the Environment of the
Netherlands;
"ENVIRONMENTAL APPROVALS" shall mean and include the permits, consents, licences
and other authorisations and approvals required under the Environmental Laws to
be obtained in connection with the use of the Properties or in connection with
any Group Company Activity.
"ENVIRONMENTAL MATTERS" shall mean and include in relation to any Group Company
Activity and the Properties all matters related to pollution or protection of
the environment including noise; emissions, discharges and releases of Hazardous
Substances into air, water, sewage systems and land; and the manufacture,
processing, distribution, use treatment, storage, disposal, transport and
handling of Hazardous Substances.
"FORMER SUBSIDIARY" any person which was an Affiliate of any Group Company at
any time prior to the date hereof and is not an Affiliate at the date hereof,
including, without prejudice to the generality of the foregoing, Korona BV,
Erven Mommers BV (formerly Torag Trading BV) Momm Jewels BV, Torag Trading
S.A.R.L., Print House c.s. Ltd, NV Buxushof, NV Lay-out Engineering and Lamberto
B.V;
2
<PAGE> 6
"GROUP COMPANY ACTIVITY" shall mean and include any business or other activity
of any nature whatsoever which has been carried on by a Group Company or which
is being carried on by a Group Company at the Completion Date;
"GUARANTORS" means KM and PM, each a "GUARANTOR";
"GROUP" means the Company and the Subsidiaries;
"GROUP COMPANY" means the Company or any other member of the Group;
"HAZARDOUS SUBSTANCES" shall mean and include pollutants, contaminants and
hazardous, flammable and toxic substances materials and waste whether solid,
liquid or gaseous and whether or not such pollutant, contaminant, substance,
material or waste is referred to specifically in any of the Environmental Laws;
"INDEBTEDNESS" shall mean, with respect to each Group Company, (i) all
obligations for borrowed money, (ii) all obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations in respect
of letters of credit or bankers' acceptance or similar instruments (or
reimbursement obligations with respect thereto), (iv) all obligations to pay the
deferred purchase price of property or services, except (a) trade credit
incurred in the ordinary course of business consistent with past practices and
(b) the capital leases listed in Schedule 4, (v) all obligations as lessee under
any capital lease other than the capital leases listed in Schedule 4, (vi) all
indebtedness of others secured by a security interest on any asset of Group
Company, whether or not such indebtedness is assumed, provided that, for the
purpose of determining the amount of any such indebtedness, if recourse with
respect to such indebtedness is limited to the fair market value of such asset,
the amount of such indebtedness shall be limited to the fair market value of
such asset, (vii) all indebtedness of others guaranteed by such person or
entity; and (viii) to the extent not otherwise included, obligations under any
interest rate swap agreements, currency swap agreements and other similar
agreements or arrangements designed to protect such person or entity against
fluctuations in interest rates or currency values or the price of any commodity
used in the business of such person or entity; and all interest, penalties
(including prepayment penalties) and fees (including success fees and "risk
premia") accruing or payable in respect of any of (i) to (viii) above but shall
exclude Surviving Seller Indebtedness;
"INTELLECTUAL PROPERTY RIGHTS" means patents, trade marks, service marks, trade
names, design rights, copyright (including rights in computer software), rights
in know-how and other intellectual property rights, in each case whether
registered or unregistered and including applications for the grant of any such
rights and all rights or forms of protection having equivalent or similar effect
anywhere in the world;
"INTERNAL MONTHLY FINANCIAL STATEMENTS" means the internal monthly financial
statements of the Company (and of the Company and its subsidiary undertakings on
a consolidated basis) for the period 1 January to 30 November 1997;
"KM SELLER" means K.M. Beheer B.V.;
"LAST ACCOUNTS" means the audited and consolidated financial statements of the
Group for the financial year of the Group ended on the Last Accounts Date
including the management representation letter, the management letters from the
auditors, income statements, balance sheets and cash flow statements, together
with any notes, reports or statements included in or annexed to them;
3
<PAGE> 7
"LAST ACCOUNTS DATE" means 31st December 1996;
"MOMMERS" means Mommers Print Service BV;
"NET WORKING CAPITAL" means the sum of trade debtors, other receivables, stocks
including raw and auxiliary materials, technical supplies, work in progress and
finished goods and cash balances less trade creditors, other creditors and Taxes
and social charges;
"NLG" means the lawful currency of The Netherlands;
"PENSION SCHEME" means the scheme referred to in the Disclosure Letter;
"PENSION WARRANTIES" means the representations and warranties set out in Part D
of Schedule 3;
"PM SELLER" means Beheermaatschappij Mommers Print Service B.V.;
"PROPERTIES" means the freehold and leasehold properties of the Group at the
date of this Agreement;
"PROPERTY WARRANTIES" means the representations and warranties set out in Part B
of Schedule 3;
"PURCHASER'S ACCOUNTANTS" means Arthur Andersen;
"PURCHASER'S DUE DILIGENCE REPORTS" means together the legal, financial and
environmental due diligence reports of TVD, Arthur Andersen and Weil Gotshal
attached as Exhibits 4, 5 and 6;
"PURCHASER'S GROUP" means Viasystems Group, Inc. and its subsidiaries;
"PURCHASE PRICE" means the amount of consideration determined in accordance with
Clause 3.1 as defined therein;
"SCHEDULES" means Schedules 1 to 3 to this Agreement and Schedule shall be
construed accordingly;
"SECURITY INTEREST" means any security interest of any nature whatsoever
including, without limitation, any mortgage, charge, pledge, lien, assignment by
way of security or other encumbrance;
"SELLER INDEBTEDNESS" means Indebtedness owed to any of the Sellers, the
Guarantors or any of their Affiliates;
"SELLERS' SOLICITORS" means De Brauw Blackstone Westbroek of Coolsingel 139,
Rotterdam, Holland;
"SHARES" means the 1,245,000 issued and outstanding ordinary shares with a
nominal value of NLG 1 each in the capital of the Company and the 1,255,000
issued and outstanding 6% preference shares with a nominal value of NLG 1 each
in the capital of the Company, together comprising the whole of the issued share
capital of the Company;
"SUBSIDIARIES" means the companies, details of which are set out in Part B of
Schedule 2;
4
<PAGE> 8
"SUBSIDIARIES" means dochtervennootschappen for the purposes of Section 24a of
Book 2 of the Dutch Civil Code and "subsidiary" means any of them;
"SURVIVING SELLER INDEBTEDNESS" means (A) amounts due until July 1998, not
exceeding NLG 30,000 per month, from the Company to Mommers Beheer B.V. pursuant
to an agreement between the Company and Mommers Beheer B.V. of 1 October 1997
and (B) amounts due to KPM and her children by way of pension entitlement not
exceeding NLG 124,678 per annum pursuant to an agreement dated 25 November 1982
between Mommers and WMA Mommers;
"THIRD PARTY INDEBTEDNESS" means Indebtedness owed to anyone other than the
Sellers or their Affiliates; "TITLE WARRANTIES" bears the meaning ascribed to it
in Clause 5.9;
"TVD" means Trenite van Doorne of Churchillplein 5, PO Box 17207, The Hague, The
Netherlands;
"US$" means the lawful currency of the United States of America;
"WARRANTIES" means the representations and warranties set out in Schedule 3 made
in accordance with Clause 5.1; and
"WGM" means Weil, Gotshal & Manges of One South Place, London EC2M 2WG;
CLAUSE 1.2 In this Agreement, unless the context otherwise requires:
(a) references to "PERSONS" shall include individuals, bodies corporate
(wherever incorporated), unincorporated associations and partnerships;
(b) the headings are inserted for convenience only and do not affect the
interpretation of this Agreement;
(c) any reference to an "ENACTMENT" is a reference to it as from time to time
amended, consolidated or re-enacted (with or without modification) (except
where that such amendment, consolidation or re-enactment would put any
party in a worse position) and includes all instruments or orders made
under such enactment;
(d) any statement qualified by the expression "TO THE BEST KNOWLEDGE OF THE
SELLERS" or "SO FAR AS THE SELLERS ARE AWARE" or any similar expression
shall be deemed to include an additional statement that it has been made
after due and careful enquiry and shall be deemed also to include the
knowledge of each Group Company;
(e) any reference to a document "IN THE AGREED FORM" is to the form of the
relevant document agreed between the parties and for the purpose of
identification initialled by each of them or on their behalf (in each case
with such amendments as may be agreed by or on behalf of the Sellers and
the Purchaser);
(f) references to any Dutch legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any
other legal concept shall, in respect of any jurisdiction other than The
Netherlands, be deemed to include the legal concept which most nearly
approximates in that jurisdiction to the Dutch legal term;
5
<PAGE> 9
(g) references to the singular include the plural and references to any gender
include any other gender; and
(h) references to any Schedule or Exhibit are references to the relevant
Schedule or Exhibit to this Agreement.
SECTION 2 SALE AND PURCHASE OF THE SHARES
CLAUSE 2.1 The Sellers hereby agree to sell and the Purchaser hereby agrees to
purchase from the Seller the Shares with effect from the close of business on
the Completion Date, with the understanding that each of the Sellers sells the
Shares referred to opposite its respective name in column 2 of Schedule 1. The
Shares are sold free from all security interests, options, equities, claims or
other third party rights (including rights of pre-emption) of any nature
whatsoever, together with all rights attaching to them at the date hereof and
subsequently.
CLAUSE 2.2 The Sellers shall, immediately following the execution of this
Agreement, transfer the Shares to the Purchaser and the Purchaser shall accept
the Shares from the Sellers at Completion by execution of the Deed of Transfer
before Mr. R.M. Reiter civil law notary in The Hague, The Netherlands.
SECTION 3 CONSIDERATION
CLAUSE 3.1 The total consideration for sale of the Shares (the "PURCHASE PRICE")
shall be US$37,500,000 less the aggregate of:
(a) the amount of the Seller Indebtedness at Completion;
(b) the amount by which the Third Party Indebtedness at Completion exceeds the
relevant amount. For the purpose of this Clause 3.1(b), the "relevant
amount" means US$25,000,000, provided however that if and to the extent
that as a result of capital expenditure made by the Company between the
date hereof and Completion that was consented to by the Purchaser Third
Party Indebtedness at Completion exceeds US$25,000,000, the relevant amount
shall be increased by the amount of Indebtedness incurred in connection
with the making of such capital expenditure consented to by the Purchaser;
(c) any Transfer Costs (as defined in Clause 17.1) the amount of which can be
ascertained at Completion; and
(d) the aggregate amount of consideration paid or payable for all assets
transferred to the Sellers since 30 September 1997 provided that, if in
relation to any such asset the consideration paid or payable (the "RELEVANT
CONSIDERATION") was paid by way of a reduction in Seller Indebtedness and
was materially less than the market value of such asset at the time of
transfer (the "RELEVANT MARKET VALUE") than for the purposes of calculating
such aggregate amount pursuant to this Clause 3.1(d), the relevant market
value of such asset shall be substituted for the relevant consideration.
CLAUSE 3.2 The Purchase Price shall be paid to the bank account specified in
Clause 8.2.
CLAUSE 3.3 If any payment is made by the Sellers or the Guarantors to the
Purchaser under or in respect of any breach of this Agreement (including,
without limitation, any payment pursuant
6
<PAGE> 10
to any Claim or any indemnity contained in this Agreement), the payment shall so
far as possible be treated as a reduction in the Purchase Price.
SECTION 4 COMPLETION DATE
Completion of the sale and purchase of the Shares shall occur on second Business
Day (the "COMPLETION DATE") after the date on which the Purchaser notifies the
Sellers that it is ready to complete such sale and purchase. The parties
acknowledge that, in order to complete the sale and purchase of the Shares, the
Purchaser must have received a waiver and/or consent relating to the
transactions contemplated by this Agreement from or on behalf of The Chase
Manhattan Bank pursuant to a Second Amended and Restated Credit Agreement of
June 5, 1997. The Purchaser undertakes to use its reasonable endeavours to
ensure that it obtains such waiver and consent, and immediately thereafter
serves such notice, as soon as reasonably practicable after the date of this
Agreement The Purchaser further undertakes that it shall, in any event, serve
such notice not later than 4 pm. (Rotterdam time) on 13 February 1998 so that
Completion shall, in any event, occur not later than 17 February 1998.
SECTION 5 WARRANTIES AND LIMITATIONS
CLAUSE 5.1 The Sellers jointly and severally represent and warrant to the
Purchaser as at the date hereof in the terms of the Warranties and acknowledge
that the Purchaser has entered into this Agreement in reliance upon the
Warranties. The Warranties, other than the Warranties listed in Schedule 5, are
given subject to (i) the facts which are fairly and reasonably disclosed in the
Disclosure Letter; (ii) the facts which are apparent on the face of the
documents referred to in the Disclosure Letter; and (iii) the facts which are
readily apparent from the Purchaser's Due Diligence Reports.
CLAUSE 5.2 Each of the Warranties is separate and independent and (save as
expressly provided to the contrary) shall not be limited or restricted by
(a) reference to any other Warranty;
(b) anything in this Agreement other than the limitations set out in this
Clause 5; or
(c) anything in the Disclosure Letter except to the extent that it is readily
apparent that a fact or point of information referred to therein qualifies
a Warranty;
and, save as provided in Clause 5.1, none of the Warranties shall be treated as
qualified by any actual or constructive knowledge on the part of the Purchaser
or any of its agents whether obtained through any investigation by or on behalf
of the Purchaser or otherwise.
CLAUSE 5.3 The Sellers agree to waive the benefit of all rights (if any) which
they may have against any Group Company arising from any rights the Sellers may
have against any present or former officer or employee of any such company, on
whom the Sellers may have relied in agreeing to any term of this Agreement or
any statement set out in the Disclosure Letter and the Sellers undertake not to
make any claim against any Group Company in respect of such reliance.
CLAUSE 5.4 The Warranties shall be deemed to be repeated immediately before
Completion with reference to the facts and circumstances then existing. The
rights and remedies of the Purchaser in respect of the Warranties shall not be
affected by Completion. The Sellers undertake to notify the Purchaser in writing
promptly if they become aware of any circumstance which would cause any Warranty
(if the Warranties were repeated with reference to the facts and
7
<PAGE> 11
circumstances then existing) to become untrue or inaccurate or misleading in any
respect which is material to the financial or trading position of the Group
taken as a whole, whether such circumstances arose before or after the date
hereof; provided, however, that such notification shall not serve to modify or
cure any breach of the Warranties made herein and Completion shall be without
prejudice to the Purchaser's right to make a Claim in relation to the matters so
notified to it.
CLAUSE 5.5 The Sellers shall jointly and severally indemnify the Purchaser for
all damages (including all Costs) incurred by the Purchaser as a result of or in
connection with a breach of any Warranty, and shall, at the Purchaser's option,
pay in cash to the Purchaser (or, if so directed by the Purchaser, to the Group
Company in question) on demand a sum equal to the aggregate of:
(a) the amount which, if received by the relevant Group Company, would be
necessary to put that Group Company into the financial position which would
have existed had there been no breach of the Warranty in question; and
(b) all reasonable Costs suffered or incurred by the Purchaser and/or such
Group Company, directly or indirectly, as a result of or in connection with
such breach of Warranty.
CLAUSE 5.6 The Sellers shall not be liable for any Claim unless they receive
from the Purchaser written notice containing reasonable details of the Claim
including the Purchaser's estimate (on a without prejudice basis) of the amount
of such Claim:
(a) in the case of a Claim for breach of any of the Warranties other than the
Pensions Warranties and the Warranties referred to under (c) below on or
before 30 April 1999;
(b) on or before the sixth anniversary of Completion in the case of a Claim for
breach of the Pensions Warranties;
(c) on or before the tenth anniversary of Completion in the case of any Claim
for breach of any of the Warranties set out in sections 2.1 and 2.2 of
Schedule 3 (Company and Shares).
CLAUSE 5.7 The Sellers shall not be liable for any Claim until the aggregate
amount of the liability of the Sellers for all Claims exceeds US$417,000 (in
which event the Purchaser shall be entitled to claim the whole of such amount).
CLAUSE 5.8 The aggregate amount of the liability of the KM Seller for all Claims
shall not exceed $5,000,000 (converted into NLG at the date(s) of the relevant
Claim(s). The aggregate amount of the liability of the PM Seller for all Claims
shall not exceed $10,000,000 (converted into NLG at the date(s) of the relevant
Claim(s).
CLAUSE 5.9 None of the limitations contained in this Clause 5 shall apply to any
breach of any Warranty which (or the delay in discovery of which) is the
consequence of dishonest, deliberate or reckless misrepresentation by or on
behalf of any of the Sellers. The limitations contained in Clauses 5.7 and 5.8
shall not apply to any Claim for breach of any of the Warranties set out in
sections 2.1 (d), (e) and (f) of Schedule 3 (the "TITLE WARRANTIES"). The
maximum liability of the PM Seller for Claims in relation to the Title
Warranties shall be US $25,000,000. The maximum liability of the KM Seller for
Claims in relation to the Title Warranties shall be US $12,500,000.
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CLAUSE 5.10 If the Purchaser becomes aware that any claim has been made against
any Group Company by a third party after Completion (a "THIRD PARTY CLAIM")
which is likely to result in the Purchaser being entitled to make a Claim
against the Sellers in respect of a breach of any Warranty, the Purchaser shall
give notice of such claim to the Sellers as soon as reasonably practicable, and
in any event within 30 days specifying the Claim in reasonable detail; and
(a) if the Purchaser wishes to contest such third party claim, the Purchaser
shall cause the relevant Group Company to consult as fully as is reasonably
practicable with the Sellers as regards the conduct of any proceedings
arising out of such claim; and
(b) if the Purchaser does not wish to contest such third party claim the
Purchaser shall cause the relevant Group Company to take such action as the
Sellers shall reasonably request to avoid, resist or compromise any such
claim (subject to the relevant Group Company being entitled to employ its
own legal advisers and being indemnified and secured to its reasonable
satisfaction by the Sellers against all losses, costs, damages and
expenses, including those of its legal advisers, incurred in connection
with such claim) provided that the Purchaser shall not be required to take
any action which could, in its opinion, materially interfere with the
conduct of the business of any Group Company.
CLAUSE 5.11 The Sellers will not be liable in respect of any Claim if and to the
extent that it is attributable to any voluntary transaction act or omission of
the Purchaser or the Company outside the ordinary course of business after the
date of this Agreement which the Purchaser was aware, or ought reasonably to
have been aware, would give rise to the Claim:
(a) other than pursuant to a legally binding obligation entered into on or
before Completion;
(b) not being the disclosure of any matter or return to any Taxation Authority.
CLAUSE 5.12 The Sellers shall not be liable for any Claim for breach of the
Warranties if and to the extent that:
(a) the relevant Group Company is insured against any loss or damage suffered
by that Group Company forming the basis of the Claim in question under the
terms of any insurance policy of a Group Company for the time being in
force provided that the Sellers shall indemnify the Purchaser and each
Group Company in respect of the reasonable out of pocket costs of making
such insurance claim and any additional out of pocket costs arising from
such claim (which would not have arisen but for such claim) including any
increased insurance premium arising therefrom; or
(b) a specific provision for the loss to which the Claim relates has been
provided for in the Accounts; or
(c) the Purchaser or a Group Company subsequently receives from any tax
authority in the financial year in which the Claim is made a sum which is
referable to the matter giving rise to the Claim or obtains in such year a
tax relief which is so referable, in which case the Purchaser shall (or, as
appropriate, shall procure that the Group Company shall) forthwith repay to
the Sellers (a) an amount equal to the sum recovered from the tax authority
(or the value of the relief obtained, calculated by reference to the amount
saved) less any reasonable out-of-pocket costs and expenses incurred by the
Purchaser or the Group Company in recovering the same and any tax suffered
on the receipt or (b) if the figure resulting under (a) is greater than the
amount paid by the Sellers to the Purchaser
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or the Group Company in respect of the relevant Claim, such lesser amount
as shall have been so paid by the Seller.
The Purchaser will not be entitled to recover any sum in respect of any Claim
for breach of any of the Warranties or the indemnity set out in Clause 11 or
otherwise obtain damages, reimbursement or restitution more than once in respect
of any fact matter misrepresentation or breach of any of the Warranties or the
indemnity set out in Clause 11.
CLAUSE 5.13 Without prejudice to Clause 5.6, a failure to give timely notice or
to include any specified information in any notice as provided in Clauses 5.10
will not affect the rights or obligations of any party hereunder.
CLAUSE 5.14 In the event of a Claim based on more than one Warranty, it shall be
at the sole option of the Purchaser to decide which Warranty or Warranties it
shall invoke.
CLAUSE 5.15 Nothing contained in this clause 5 shall relieve the Purchaser from
any obligation it may otherwise have to mitigate its loss arising from any
matter which is or may be the subject of a Claim.
CLAUSE 5.16 Mommers Beleggingen Echt B.V. shall have no liability for any
Claims, provided that the amount received by it on distribution of the
Consideration does not exceed 2,500,000 NLG.
SECTION 6 PRE-COMPLETION UNDERTAKINGS AND DELIVERIES AND DISSOLUTION
CLAUSE 6.1 Pending Completion, the Sellers shall ensure that between the date
hereof and Completion:
(a) each Group Company shall carry on its business in the ordinary and usual
course consistent with past practices and shall not make (or agree to make)
any payment or dispose of any assets other than routine payments or
disposals made in the ordinary and usual course of trading consistent with
past practices. In particular, and without prejudice to the generality of
the foregoing, the Sellers shall ensure that no Group Company makes any
payment to any Seller or any Affiliate of any Seller, by way of repayment
of Indebtedness or otherwise, or transfers any asset to any Seller or any
Affiliate of any Seller;
(b) each Group Company shall take all reasonable steps to preserve and protect
its assets;
(c) no Group Company shall do, allow or procure any act or omission which would
constitute or give rise to a breach of any Warranty if the Warranties were
to be repeated on or at any time before Completion by reference to the
facts and circumstances then existing;
(d) prompt disclosure is made to the Purchaser of all relevant information
which comes to the notice of any of the Sellers or any Group Company in
relation to any fact or matter (whether existing on or before the date of
this Agreement or arising afterwards) which may constitute a breach of any
Warranty if the Warranties were to be repeated on or at any time before
Completion by reference to the facts and circumstances then existing;
(e) no dividend or other distribution shall be declared, paid or made by any
Group Company;
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(f) no share or loan capital, securities, options or warrants shall be allotted
or issued or agreed to be allotted or issued by any Group Company;
(g) no change shall be made in terms of employment, including pension fund
commitments, by any Group Company (other than those required by law)
without the prior consent of the Purchaser;
(h) no action is taken by any of the Sellers or any Group Company which is
inconsistent with the provisions of this Agreement or the consummation of
the transactions contemplated by this Agreement;
(i) as soon as available (but in any event within 10 days after the end of each
calendar month) the Internal Monthly Financial Statements for each calendar
month ending prior to the Completion Date are delivered to the Purchaser;
(j) all of the tangible assets of the Group Companies are maintained in good
repair;
(k) each Group Company preserves intact its present business and operations,
keeps available the services of its officers and employees and preserves
its relationships with licensors, suppliers, distributors, customers, and
other persons having material business relationships with them;
(l) no transfers of the legal or beneficial ownership of any Shares are made by
the Sellers;
(m) no Group Company enters into any transaction, contract or agreement with
any Seller or any Company connected therewith;
(n) no Group Company takes or omits to take any action which has the effect of
reducing its working capital; and
(o) each Group Company pays its debts as they fall due or otherwise in
accordance with its past practice.
CLAUSE 6.2 Pending Completion, the Sellers shall ensure that the Company
consults fully with the Purchaser in relation to any matters which may have a
material effect upon the Group and that, without the prior consent of the
Purchaser, no Group Company shall:
(a) enter into any contract or commitment (or make a bid or offer which may
lead to a contract or commitment) (i) for capital expenditure (of any
amount) or (ii) having a value or involving expenditure in excess of NLG
150,000 or which is of a long term or unusual nature or which could involve
an obligation of a material nature or which may result in any material
change in the nature or scope of the operations of the Group;
(b) agree to any variation, amendment, modification or cancellation of any
existing contract to which that Group Company is a party and which may have
a material effect upon the business, condition (financial or otherwise),
results of operations or prospects of the Group;
(c) (whether in the ordinary and usual course of business or otherwise) acquire
or dispose of, or agree to acquire or dispose of, or grant, or agree to
grant, any charge, mortgage, lien,
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assignment, encumbrance or other security interest over, or any business or
any asset having a value in excess of NLG 150,000; or
(d) enter into any agreement, contract, arrangement or transaction (whether or
not legally binding) other than in the ordinary and usual course of
business;
(e) enter into any material transaction, contract or agreement with any Seller
or any Affiliate of any Group Company;
(f) amend its Articles of Association;
(g) incur or discharge any Indebtedness, obligation or liability, whether
absolute or contingent, or make any extension of credit or any loans to,
guarantee the obligations of, or make any additional investments in any
other person, in each case other than in the ordinary course of business;
(h) cancel or allow any of the existing insurance policies of the Company or
any of its Subsidiaries to lapse;
(i) write off as uncollectible any accounts receivable or cancel, waive, or
release any debts of or claims against any person, except in the ordinary
course of business and consistent with past practice; or
(j) make any change in its financial or tax accounting methods, principles or
practices unless required by applicable law or regulation.
CLAUSE 6.3 None of the Sellers will before Completion:
(a) dispose of any interest in the Shares or any of them or grant any option or
right of pre-emption over, or mortgage, charge or otherwise encumber the
Shares or any of them;
(b) permit any Group Company to pass any resolution in general meeting;
(c) do or omit to do or cause or allow to be done or omitted to be done any act
or thing which would result (or be likely to result) in a breach of any of
the Warranties if the Warranties were repeated at Completion.
CLAUSE 6.4 Except for the transactions contemplated by this Agreement, each
Seller will refrain from, and will cause the Group Companies and each other
person or entity acting for or on behalf of the Group Companies or any Seller to
refrain from, taking, directly or indirectly, any action:
(a) to seek or encourage any offer or proposal from any person or entity to
acquire any material assets of the Company or any of the Subsidiaries, or
any shares or other securities of the Company or any of the Subsidiaries
(or interests therein);
(b) to liquidate, dissolve, or reorganise any Group Company in any manner;
(c) to acquire or transfer any material assets of any Group Company or any
interests therein;
(d) to reach any agreement or understanding (whether or not such agreement or
understanding is absolute, revocable, contingent, or conditional) for, or
otherwise to
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attempt to complete, any such acquisition, transfer, consolidation,
combination, or reorganisation; or
(e) to furnish or cause to be furnished any information with respect to any
Group Company to any person or entity (other than the Purchaser or any
person or entity acting for or on behalf of the Purchaser) that any Group
Company or any Seller (or any person or entity acting for or on behalf of
any Group Company or any Seller) knows or has reason to believe is in the
process of attempting or considering any such acquisition, transfer,
consolidation, combination, liquidation, dissolution, or reorganisation.
CLAUSE 6.5 If any Group Company or any Seller receives from any person or entity
(other than the Purchaser) any written offer, proposal, or informational request
of a nature referred to in Clause 6.4, the Sellers will promptly advise such
person or entity, by written notice, of the terms of this clause and will
promptly deliver a copy of such notice to the Purchaser.
CLAUSE 6.6 Not less than three business days prior to Completion, the Sellers
shall deliver to the Purchaser a written statement confirming the amount of
Seller Indebtedness and Third Party Indebtedness at Completion. Such statement
shall be accompanied by a statement from ABN Amro confirming the amount of Third
Party Indebtedness payable to ABN Amro.
CLAUSE 6.7 If (i) the Sellers make any notification pursuant to Clause 5.4 or
(ii) any fact, matter or event (whether existing or occurring on or before the
date of this Agreement or arising or occurring afterwards) comes to the notice
of the Purchaser at any time prior to Completion which:
(a) constitutes a material breach by the Sellers of this Agreement (including,
without limitation, any breach of the undertakings in Section 6
(Pre-Completion Undertakings)).
(b) would constitute a breach of any Warranty (being material in the context of
the Group taken as a whole) if the Warranties were repeated on or at any
time before Completion by reference to the facts and circumstances then
existing; or
(c) affects or is likely to affect in a materially adverse manner the business
condition (financial or otherwise), results of operations or prospects of
the Group taken as a whole;
the Purchaser may by written notice given to the Sellers at any time prior to
Completion dissolve this Agreement without liability on the part of the
Purchaser.
SECTION 7 GUARANTEE BY KM AND PM
CLAUSE 7.1 In consideration of the Purchaser entering into and acting in
accordance with this Agreement:
(a) PM hereby irrevocably and unconditionally undertakes as surety (borg) to
pay as its own principal debt, any and all amounts that the PM Seller or
its successor is liable vis-a-vis the Purchaser under the Agreement. In the
event PM Seller is in default of any of his obligations under the
Agreement, PM is from that moment onwards, notwithstanding any of its
(statutory) rights, liable to the Purchaser for any damages in connection
with or arising from such default. PM shall be required to make such
payment upon the receipt of a copy by PM of (i) a judgment of a competent
court of law, which is enforceable at once, notwithstanding appeal,
(uitvoerbaar bij voorraad) or no longer subject to appeal
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(in kracht van gewijsde), or a valid arbitral award, in which PM, the PM
Seller or both or their respective successors has been ordered to pay to
the Purchaser or its successor the amounts determined therein or (ii) an
amicable settlement signed by or on behalf of the Purchaser and the PM
Seller or their respective successors, stating that the PM Seller or its
successor is due to pay a certain amount of money to the Purchaser under
the Agreement.
For the avoidance of doubt, the Purchaser is entitled to bring legal
proceedings against PM solely, in order to determine the amounts that the
PM Seller or its successor is due to pay to the Purchaser under the
Agreement, including in the event that the PM Seller or its successor is
declared bankrupt (failissement), granted a suspension of payment
(surseance van betaling) or is wound-up (ontbinding). The Purchaser is also
entitled to join PM in any legal proceedings against the PM Seller.
The Purchaser is allowed to claim several amounts under this surety, taking
into account the above-mentioned maximum amount of liability of PM.
(b) KM hereby irrevocably and unconditionally undertakes as surety (borg) to
pay as its own principal debt, any and all amounts that the KPM Seller or
its successor is liable vis-a-vis the Purchaser under the Agreement. In the
event KM Seller is in default of any of his obligations under the
Agreement, KM is from that moment onwards, notwithstanding any of its
(statutory) rights, liable to the Purchaser for any damages in connection
with or arising from such default. KM shall be entitled to make such
payment upon the receipt of a copy by KM of (i) a judgment of a competent
court of law, which is enforceable at once, notwithstanding appeal,
(uitvoerbaar bij voorraad) or no longer subject to appeal (in kracht van
gewijsde), or a valid arbitral award, in which KM, the KM Seller or both or
their respective successors has been ordered to pay to the Purchaser or its
successor the amounts determined therein or (ii) an amicable settlement
signed by or on behalf of the Purchaser and the KM Seller or their
respective successors, stating that the KPM Seller or its successor is due
to pay a certain amount of money to the Purchaser under the Agreement.
For the avoidance of doubt, the Purchaser is entitled to bring legal
proceedings against KM solely, in order to determine the amounts that the
KM Seller or its successor is due to pay to the Purchaser under the
Agreement, including in the event that the KM Seller or its successor is
declared bankrupt (failissement), granted a suspension of payment
(surseance van betaling) or is wound-up (ontbinding). The Purchaser is also
entitled to join KM in any legal proceedings against the KM Seller.
The Purchaser is allowed to claim several amounts under this surety, taking
into account the above-mentioned maximum amount of liability of KM.
CLAUSE 7.2 The Guarantors' liability hereunder shall not be discharged or
impaired by any amendment to or variation of this Agreement, any release of, or
granting of time or other indulgence to, either Sellers or any third party, any
liquidation, administration, receivership or winding-up of either Seller or by
any other act or omission or any other events or circumstances whatsoever
(whether or not known to the Sellers, the Purchaser or the Guarantors) which
would or might (but for this Clause) operate to impair or discharge the
Guarantors' liability under this guarantee.
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CLAUSE 7.3 As a separate, continuing and primary obligation, the Guarantors
undertake to indemnify the Purchaser on demand against all losses, claims or
costs suffered or incurred by the Purchaser while acting in good faith should
any amounts which would otherwise be due under this Agreement not be recoverable
for any reason whatsoever including (but not limited to) the Agreement being or
becoming void, voidable or unenforceable as against the Sellers.
CLAUSE 7.4 The maximum amount required to be paid by the PM Seller pursuant to
clause 7.1 shall not exceed (a) US $25,000,000 in aggregate, (b) US $10,000,000
in respect of Claims other than title Claims and (c) US $3,000,000 in respect of
Environmental Losses. For the avoidance of doubt, PM's liability pursuant to
this Clause 7 in respect of any matter may not exceed the PM Seller's liability
under this Agreement in respect of that matter. The maximum amount required to
be paid by the KM Seller pursuant to clause 7.1 shall not exceed (a) US
$12,500,000 in aggregate, (b) US $5,000,000 in respect of Claims other than
title Claims and (c) US $3,000,000 in respect of Environmental Losses. For the
avoidance of doubt, KM's liability pursuant to this Clause 7 in respect of any
matter may not exceed the KM Seller's liability under this Agreement in respect
of that matter.
CLAUSE 7.5 VGL (as principal obligor and not merely as a surety) unconditionally
and irrevocably guarantees as a continuing obligation the proper and punctual
performance by the Purchaser of all its obligations under or pursuant to this
Agreement.
SECTION 8 COMPLETION
CLAUSE 8.1 The sale and purchase of the Shares shall be completed at the offices
of TVD on the Completion Date.
CLAUSE 8.2 The following events and the events set out in Clause 8.3 shall take
place at Completion (in the order set out below):
(a) The Sellers shall procure the delivery to the Purchaser of:
(i) written confirmations in the agreed form as to the respective bank
indebtedness of each Group Company as at the close of business on the
last Business Day prior to Completion, together with directions, in
the agreed form, varying and/or replacing the mandates given to such
banks by each Group Company together with releases of all security
granted to ABN Amro Bank NV;
(ii) a letter of resignation in the agreed form marked "C" duly executed
as a deed by each of the Members of the Supervisory Board of any
Group Company required to resign by the Purchaser;
(iii) confirmation from Arthur D. Little that all fees payable to it by any
Group Company have been paid in full;
(iv) evidence, in a form satisfactory to the Purchaser, that Substrate
Technologies Limited has waived its right to terminate the agreement
between the Company and Substrate Technologies Ltd. of 5 August 1997
following the change of control of the Company;
(b) the Sellers will deliver to the Purchaser two forms of bank guarantee, in
the agreed form marked "D", in an amount equal to US$1,875,000 in
aggregate;
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(c) the civil law notary shall execute the Deed of Transfer;
(d) the transfer of the Shares shall be registered in the Company's
Shareholders' Register;
(e) the parties shall instruct the civil law notary to transfer from its
account numbered 48.13.85.207 at ABN Amro Bank in Rijswijk in the name of
Stichting Derdengelden Notariaat Trenite Van Doome (reference 503009499) by
electronic funds transfer the Purchase Price to the bank account of the
Sellers whose details are Mees Pierson, 251534871, Stichting Notariaat, De
Brauw Blackstone Westbroek; and
(f) the shareholders of the Company will appoint David Sindelar and Edwin
Parkinson to its management board;
(g) each Seller and Guarantor will make or procure the making of full and final
payment in respect of any amounts owing by them or their Affiliates to any
Group Company.
CLAUSE 8.3 Simultaneously with completion of all the matters referred to in
Clause 8.2, the Purchaser shall procure the payment on behalf of the Company of
an amount equal to the aggregate of the Seller Indebtedness at Completion. Each
of the Sellers and Guarantors hereby irrevocably waives and discharges and
agrees to procure the waiver and discharge by each of its Affiliates, of all and
any amounts due from any Group Company to any such person, including all Seller
Indebtedness at the Completion Date to the extent that the aggregate amount of
such Seller Indebtedness at the Completion Date exceeds the amount paid pursuant
to this Clause 8.3.
CLAUSE 8.4 If any party fails or is unable to perform any material obligation
required to be performed by it pursuant to Clause 8.2 or 8.3 on the date hereof,
the other party (being the Sellers in a case of a failure by the Purchaser and
the Purchaser in the case of a failure by any Seller) shall not be obliged to
complete the sale and purchase and transfer of the Shares and may, in its
absolute discretion, by written notice to the other party:
(a) dissolve this Agreement without liability on the party dissolving; or
(b) elect to complete this Agreement on that date, to the extent that the other
party is ready, able and willing to do so, and specify a later date on
which the other party shall be obliged to complete its outstanding
obligations; or
(c) elect to defer the completion of this Agreement by not more than thirty
(30) Business Days to such other date as it may specify in such notice, in
which event the provisions of this Clause 8.4 shall apply, mutatis
mutandis, if the other party fails or is unable to perform any such
obligations on such other date.
SECTION 9 GUARANTEES
The Sellers shall procure that on Completion each Group Company is released from
all guarantees and indemnities given by it and all liabilities arising from any
article 2:403 Civil Code declaration made by it, in each case in respect of the
obligations of the Sellers, the Guarantors, their respective Affiliates and any
Former Subsidiaries.
SECTION 10 PROTECTIVE COVENANTS
CLAUSE 10.1 The Sellers (each severally a "RESTRICTED PARTY") shall not (whether
alone or jointly with another and whether directly or indirectly) carry on or be
engaged or (except as the
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owner for investment of securities dealt in on a stock exchange and not
exceeding 3 per cent. in nominal value of the securities of that class) be
interested in any Competing Business during a period of three years after
Completion. For this purpose, "COMPETING BUSINESS" means a business:
(a) which involves any business carried on by any Group Company or any member
of the Purchaser's Group as at Completion; and
(b) which is carried on within the area in which any member of the Purchaser's
Group or any Group Company carries on business as at Completion.
CLAUSE 10.2 Each Restricted Party shall not within a period of three years after
Completion, directly or indirectly, solicit or endeavour to entice away from any
Group Company, offer employment to or employ, or offer or conclude any contract
for services with, any person who was employed by any Group Company in skilled
or managerial work at any time during the 12 months prior to Completion.
CLAUSE 10.3 Each Restricted Party shall not, within a period of three years
after Completion, directly or indirectly cause or attempt to cause (a) any
customer to whom any Group Company supplies products or services to terminate
any supply or other similar contract, agreement or relationship with such Group
Company or to replace any Group Company as a supplier of products or services,
in whole or in part, with any other person or entity, or (b) any manufacturer
from whom any Group Company purchases such products or services to terminate any
purchase or other similar contract, agreement, or relationship with any such
Group Company.
CLAUSE 10.4 Each Restricted Party shall not at any time use to the detriment of
any Group Company or except so far as may be required by law and in the
circumstances only after prior consultation with the Purchaser, disclose to any
person to the detriment of any Group Company, any trade secret or other
confidential information of a technical character which it holds in relation to
any Group Company or its affairs.
CLAUSE 10.5 Each Restricted Party acknowledges and agrees that each of Clauses
10.1, 10.2, 10.3 and 10.4 constitutes an entirely separate and independent
restriction and that the duration, extent and application of each restriction
are no greater than is reasonable and necessary for the protection of the
interests of the Purchaser but that, if any such restriction shall be adjudged
by any court or authority of competent jurisdiction to be void or unenforceable
but would be valid if part of the wording thereof were to be deleted and/or the
period thereof were to be reduced and/or the area dealt with thereby were to be
reduced, the said restriction shall apply within the jurisdiction of that court
or competent authority with the least amount of modifications necessary to make
it valid and effective.
SECTION 11 SELLERS' INDEMNITIES
ENVIRONMENTAL INDEMNITY
CLAUSE 11.1 The Sellers hereby agree to indemnify and hold the Purchaser
harmless from and against, and to reimburse the Purchaser with respect to, any
and all losses, damages, liabilities, claims and expenses, including, without
limitation, fines, penalties, clean-up costs, activities and obligations, legal
fees, technical consultants', engineers' and experts' fees, incidental and
consequential damages and lost profits, (collectively "Environmental Losses")
which may be sustained or suffered by the Purchaser or any Group Company (a) as
a direct or indirect result of
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(i) the breach by any Group Company of any Environmental Laws or (ii) the breach
by any Group Company of or any failure to obtain any Environmental Approvals or
(b) otherwise arising (i) under or pursuant to any Environmental Laws out of,
based upon, or by reason of any act or omission by any person at the Properties
or any other real property owned or formerly owned by any Group Company or (ii)
in the conduct of any Group Company's business prior to Completion; in each case
whether or not the facts or matters giving rise to such Environmental Losses
were known to the Sellers or could reasonably have been known by the Sellers and
notwithstanding that all reasonable enquiries were made as to such facts or
matters by the Sellers prior to Completion.
CLAUSE 11.2 Clause 11.1 shall not apply to any costs or Environmental Losses
arising in relation to (a) the construction of a biological-based waste water
treatment facility along the NorthWest corner of the Company's site in Echt (the
"Site") or (b) measures taken to resolve currently outstanding complaints
relating to (i) noise emanating from the printed circuit board building at the
Site or (ii) odour emanating from the automated tin and lead soldering
operations conducted at that building. The Sellers shall not be liable for any
Environmental Losses until the aggregate amount of the liability of the Sellers
for all Environmental Losses exceeds US$500,000 (in which event the Purchaser
shall be entitled to claim the excess of such amount). The aggregate amount of
the liability of the Sellers for all Environmental Losses shall not exceed
$3,000,000.
INDEBTEDNESS INDEMNITY
CLAUSE 11.3 In the event that Third Party Indebtedness at Completion is greater
than the relevant amount (as defined in Clause 3.1(b)) (converted at the rate
published in Het Financieele Dagblad on the Completion Date under the heading
"Valuta's"), the Sellers hereby agree, to indemnify and upon demand immediately
to reimburse the Purchaser on a Guilder (NLG) for Guilder basis in respect of
any excess Third Party Indebtedness above that amount, whether or not the
Sellers knew or could reasonably have known of any such excess and
notwithstanding that all reasonable enquiries were made as to the level of Third
Party Indebtedness by the Sellers at Completion.
FORMER SUBSIDIARIES
CLAUSE 11.4 The Sellers shall indemnify the Purchaser against any actual or
contingent liabilities or obligations of any Group Company and against all Costs
in relation to any such liabilities or obligations which relate, directly or
indirectly, to (i) any Former Subsidiaries or (ii) any business formerly carried
on by any Group Company which was sold or otherwise transferred as a going
concern prior to the date hereof.
CHANGE OF CONTROL PAYMENTS
CLAUSE 11.5 The Sellers shall indemnify the Purchaser in respect of any amounts
payable by any Group Company which would not have become payable but for the
change of ownership of the Company pursuant to any pre-existing agreement or
arrangement including, without prejudice to the generality of the foregoing, all
and any amounts payable to Substrate Technologies Ltd. following termination of
the agreement between the Company and Substrate Technologies Ltd. of 5 August
1997.
CLAUSE 11.6 [Intentionally Blank.]
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<PAGE> 22
TAXATION
CLAUSE 11.7.1 For the purposes of this Clause 11.7:
"DEFERRED RELIEF" means any Relief (other than a right to a repayment of Tax)
which:
(a) is taken into account in computing any provision for deferred tax which
appears in the Last Accounts or in eliminating such provision; or
(b) is taken into account in the Last Accounts as an asset;
"PRE-COMPLETION RELIEF" means a Relief which arose to any Group Company in
respect of a period ended on or before the Last Accounts Date and is neither:
(a) a Deferred Relief; nor
(b) a repayment of Tax which is taken into account in the Last Accounts as an
asset;
"RELIEF" means loss, allowance, credit, relief, deduction or set-off or any
right to a repayment of Tax available for set-off;
"TAX CLAIM" means any notice, demand, assessment, letter or other document
issued by a Taxation Authority indicating that a Company may be required to make
an actual or suffer a deemed payment of Tax or to suffer the non-availability,
loss, cancellation or reduction of a right to a repayment of Tax which may give
rise to a claim against the Sellers under this Clause 11.7;
"TAX" means any and all forms of taxation, duties, imposts, levies and rates of
any kind whatsoever and wherever imposed and all charges, interest, penalties,
fines and expenses in connection with or incidental to any taxation. With
respect to The Netherlands the definition of "Tax" includes, but is not limited
to:
(a) corporate income tax (vennootschapsbelasting) including disinvestment
payments WIR (WIR desinvesteringsbetalingen);
(b) wage withholding tax (loonbelasting);
(c) social security contributions (both national contributions
(volksverzekeringen) and employee social security contributions
(werknemersverzekeringen));
(d) value added tax (omzetbelasting);
(e) customs and excise duties (invoerrechten en accinzen);
(f) capital tax (kapitaalsbelasting) and other legal transaction taxes
(belastingen van rechtsverkeer);
(g) dividend withholding tax (dividendbelasting);
(h) municipal real estate taxes (gemeentelijke onroerende zaakbelasting), other
municipal taxes and duties (overige gemeentelijke belastingen en leges);
and
(i) environmental taxes and duties (milieuheffingen),
19
<PAGE> 23
(j) transfer taxes including real estate transfer taxes,
together with any interest (heffings en invorderingsrente) and penalties
(verhogingen en boete) relating thereto, due, payable, levied, imposed upon or
claimed to be owed in the Netherlands.;
"TAXATION AUTHORITY" means any local, municipal, governmental, state, federal or
other fiscal or revenue authority, body or official competent to impose
Taxation;
"TRANSACTION" means any transaction, act, event or omission of whatever nature
including, without prejudice to the generality of the foregoing:
(a) the sale of real estate and moveables by Mommers Vastgoed B.V. to
Beheermaatschapij Mommers Print Service B.V. and K. Mommers Beheer BV and
the sale of cars by Alex Cars BV;
(b) the sale of know how to Vinho B.V.;
(c) the making of loans by any Group Company to the Sellers, the Guarantors or
their respective Affiliates;
(d) the entry into and performance of a management agreement with K. Mommers
Beheer B.V.;
(e) any restructurings of the Group including the restructurings occurring in
December 1988 and December 1993;
(f) the transfer out of the Group of any Former Subsidiary, including Lamberto
BV;
(g) the transfer out of the Group of any business formerly carried on by any
member of the Group at the time of transfer;
references to "PROFITS" include income, profits or gains (including capital
gains) of any description and from any source and references to "PROFITS EARNED"
include profits earned, accrued or received and profits deemed to have been
treated as earned, accrued or received for Tax purposes;
references to a "REPAYMENT OF TAX" include any repayment supplement or interest
in respect of it;
references to a "RESULT OF A TRANSACTION OCCURRING ON OR BEFORE COMPLETION"
include a result of a series of or combined result of two or more Transactions,
the first of which was a Transaction occurring on or before Completion or which
commenced on or before Completion;
references to "TAX" include, in a case where Tax for which a Group Company is
liable is discharged by another person, the amount corresponding to that TAX for
which the Company is, after that discharge, liable; and
references to any "TRANSACTION OCCURRING ON OR BEFORE COMPLETION" include the
entering into and performance of the Agreement.
20
<PAGE> 24
11.7.2 For the purposes of this Clause 11.7, payment of Tax shall be deemed to
be made by a Group Company if a payment of Tax would have been due to be made by
that Company but for the utilisation of any Relief other than a Pre-Completion
Relief.
11.7.3 For the purposes of this Clause 11.7, a payment of Tax deemed to be made
in accordance with the provisions of Clause 11.7.2 shall be deemed to be due on
the date on which that Tax would have been due (assuming that an assessment or
other notification of that Tax had been made at the earliest permissible time
and no appeal had been made against the assessment or notification) but for the
availability of a Relief concerned.
11.7.4 The Sellers shall pay to the Purchaser or to a Group Company, as directed
by the Purchaser, whether or not a Group Company is or may be entitled to claim
reimbursement of the payment from any person, an amount equal to:
(a) any payment of Tax made or to be made by any Group Company by reference to
any profits earned on or before Completion or as a result of any
Transaction occurring on or before Completion;
(b) any repayment of Tax to the extent that the repayment has been taken into
account in the Last Accounts but is not available or is lost, reduced or
cancelled;
(c) any payment of Tax which would not have been made but for a Deferred Relief
not being available or being lost, reduced or cancelled;
(d) any payment of Tax made or to be made by the Purchaser or any Group Company
as a result of its receiving any payment under this Agreement; and
any costs or expenses incurred by the Purchaser or any Group Company in
connection with any payment of Tax or the non-availability, loss, reduction or
cancellation of a repayment of Tax or of a Deferred Relief as is referred to in
the preceding paragraphs or in connection with any action taken in avoiding,
resisting or settling any payment of Tax or the non-availability, loss,
reduction or cancellation of a repayment of Tax or of a Deferred Relief.
11.7.5 A payment to be made by the Sellers under Clause 11.7.4 shall be made on
the following dates:
(a) as regards any payment of Tax within paragraphs (a), (c) or (d) of Clause
11.7.4, the later of (i) two business days before the date on which the
payment of Tax is finally due and (ii) ten days after a demand in writing
is served on the Sellers by the Purchaser or the relevant Group Company;
(b) as regards any non-availability, loss, reduction or cancellation of a
repayment of Tax within paragraph (b) of Clause 11.7.4, the date on which
Tax would have been due in respect of the period to which the right of
repayment related or, if later or if there is no such date, seven days
after the service of notice on the Sellers by the Purchaser or the relevant
Group Company that the auditors for the time being of the relevant Group
Company have certified, at the request and expense of the Purchaser or the
relevant Group Company, the extent of such non-availability, loss,
reduction or cancellation, such notice to be accompanied by a copy of the
certificate;
21
<PAGE> 25
(c) as regards costs and expenses within paragraph (e) of Clause 11.7.4, seven
days after notice of the costs and expenses is given by the Purchaser or
the relevant Company to the Sellers.
11.7.6 No payment shall be treated as made by the Sellers under Clause 11.7.4
until and to the extent that cleared funds are available in respect of it to a
Company or to the Purchaser.
11.7.7 If the Sellers fail to pay any sum due from them under this Clause 11.7
on the due date for payment they shall pay interest on that sum from the due
date until actual payment at the rate of 3 per cent. per annum above the base
rate for the time being of ABN Amro Bank N.V.
(i) 11.7.8 The obligation contained in paragraph (a) of Clause 11.7.4
does not apply to a payment of Tax by a Group Company, nor do the
obligations contained in paragraphs (b) and (c) of Clause 11.7.4
apply to the non-availability, loss, cancellation or reduction of a
repayment of Tax or of a Deferred Relief: (a) to the extent that
allowance, provision or reserve for the payment is made in the Last
Accounts; or (b) to the extent that it arises or is increased as a
result only of a retrospective change in tax law (including increases
in the rates of Tax and changes in published practice) announced
after the date of this Agreement; or (c) which would not have arisen
but for a voluntary act carried out by the Purchaser or a Company
after the date of this Clause 11.7 being an act which: (i) is not in
the ordinary course of its normal business; (ii) could reasonably
have been avoided; (iii) the Purchaser or the Company was aware or
ought reasonably to have been aware would give rise to the Tax in
question;
(b) to the extent that it arises directly or indirectly as a result of a
transaction or other matter in the ordinary course of business of any of
the Companies between the Last Accounts Date and Completion;
11.7.9 No liability on the part of the Sellers under this Clause 11.7 shall
exist for any Taxation after the ninetieth day following the expiry of the
limitation period applying to the relevant authorities in respect of that
Taxation.
11.7.10 If the Sellers make a payment under sub-clause 11.7.4 and subsequently
and before the [first] anniversary of Completion, the Purchaser or the Company
receives from another person (other than the Purchaser) a payment in respect of
the Tax in question (which is not received by reason of a Relief other than a
Pre-Completion Relief), the Purchaser shall repay to the Sellers the amount
received (less any costs of recovering the amount and any payment of Tax on such
amount) to the extent it does not exceed the payment originally made by the
Sellers.
11.8 For the avoidance of doubt, it is understood that the liability of the
Sellers under this Clause 11 is not limited or restricted by the contents of the
Disclosure Letter or the Purchaser's Due Diligence Reports or by any actual or
constructive knowledge on the part of the Purchaser or any of its agents,
whether obtained through any investigation or otherwise.
11.8.1 If the Purchaser or a Group Company becomes aware of any Tax Claim, the
Purchaser shall give or procure that notice in writing is given to the Sellers
as soon as reasonably practicable, and in any event within 30 days specifying
the Tax Claim in reasonable detail; and
22
<PAGE> 26
(a) if the Purchaser wishes to contest such Tax Claim, shall cause the relevant
Group Company to consult as fully as is reasonably practicable with the
Sellers as regards the conduct of any proceedings arising out of such Tax
Claim; and
(b) if the Purchaser does not wish to contest such Tax Claim, the Purchaser
shall cause the relevant Group Company to take such action as the Sellers
shall reasonably request to avoid, resist or compromise any such Tax Claim
(subject to the relevant Group Company being entitled to employ its own
legal advisers and being indemnified and secured to its reasonable
satisfaction by the Sellers against all losses, costs, damages and
expenses, including those of its legal advisers, incurred in connection
with such Tax Claim) provided that the Purchaser shall not be required to
take any action which could, in its opinion, materially interfere with the
conduct of the business of any Group Company.
SECTION 12 WITHHOLDING TAX AND GROSSING UP
CLAUSE 12.1 All sums payable by the Sellers under this Agreement shall be paid
free and clear of all deductions or withholdings unless and to the extent that
the deduction or withholding is required by law, in which event the Sellers
shall pay such additional amount as shall be required to ensure that the net
amount received by the payee hereunder will equal the full amount which would
have been received by it had no such deduction or withholding been required to
be made.
SECTION 13 ENTIRE AGREEMENT
CLAUSE 13.1 This Agreement, the Disclosure Letter, the Confidentiality Agreement
and (to the extent that it constitutes a qualification of the Warranties) the
Purchaser's Due Diligence Reports together with the documents in the agreed form
constitute the entire agreement and understanding between the parties in
connection with the sale and purchase of the Shares. This Agreement shall, with
effect from Completion, supersede all prior written and/or oral agreements
between the parties, including without limitation the Proposal Letter dated 6
October 1997, which shall cease to have any further force or effect, and neither
party has entered into this Agreement in reliance upon any representation,
warranty or undertaking which is not set out or referred to in this Agreement.
No party shall be under any liability or shall have any remedy in respect of
misrepresentation or untrue statement unless and to the extent that a claim lies
under this Agreement.
CLAUSE 13.2 Each party hereby irrevocably waives its right to seek dissolution
of this Agreement after Completion.
SECTION 14 VARIATION AND JOINT AND SEVERAL LIABILITY
CLAUSE 14.1 No variation of this Agreement (or of any of the documents referred
to herein) shall be valid unless it is in writing and signed by or on behalf of
each of the parties hereto. The expression "variation" shall include any
variation, supplement, deletion or replacement however effected.
CLAUSE 14.2 Where in this Agreement any liability is undertaken by two or more
persons the liability of each of them shall be joint and several.
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<PAGE> 27
SECTION 15 ASSIGNMENT
CLAUSE 15.1 It is agreed and acknowledged by the Sellers that the Purchaser may
at any time assign its rights to acquire the Shares hereunder or, after
Completion, sell all of the Shares to any other member of the Purchaser's Group.
Accordingly, the Sellers agree that the benefit of the Warranties may be
assigned (in whole or in part) by the Purchaser to any other member of the
Purchaser's Group without any further consent of the Sellers being required, and
may be enforced by any member of the Purchaser's Group which is the legal and
beneficial owner for the time being of all or part of the Shares as if it were
the Purchaser under this Agreement.
CLAUSE 15.2 Subject to Clause(s) 15.1 and 15.3, no party shall be entitled to
assign the benefit of any provision of this Agreement without the prior written
approval of the other parties.
CLAUSE 15.3 The Purchaser may (if required) assign its rights under this
Agreement by way of security to any bank(s) and/or financial institution(s)
lending money or making other banking facilities available to the Purchaser or
any other member of the Purchaser's Group for the acquisition of the Shares.
SECTION 16 CONFIDENTIALITY AND ANNOUNCEMENTS
CLAUSE 16.1 No announcement or circular in connection with the existence or the
subject matter of this Agreement shall be made or issued by or on behalf of the
Sellers or the Purchaser without the prior written approval of the other (such
approval not to be unreasonably withheld or delayed). This shall not affect any
announcement or circular required by law or regulatory authority or the rules of
any stock exchange.
CLAUSE 16.2 The parties to this Agreement shall keep the contents of this
Agreement confidential and none of the parties shall disclose any matter
contained herein or in any of the agreed documents to any third party without
the express prior written consent of the other parties save where, and only to
the extent, required by law, regulatory authority or the rules of any Stock
Exchange to do so.
SECTION 17 COSTS
CLAUSE 17.1 Each of the parties shall pay its own Costs incurred in connection
with the negotiation, preparation and implementation of this Agreement. The
Sellers agree that any expenses, including any advisors' fees and stamp and
transfer taxes, incurred by any Group Company in connection with the sale of the
Company and the execution and performance of this Agreement ("TRANSFER COSTS")
shall be for the account of the Sellers and accordingly jointly and severally
agree to reimburse the relevant Group Company on demand in respect of any
Transfer Costs born by any such Group Company other than any Transfer Costs
which were ascertainable at Completion and which reduced the Purchase Price in
accordance with Clause 3.1. For the avoidance of doubt, the Purchaser shall bear
its own advisor's fees and any stamp and transfer taxes attributable to the
Purchaser in respect of the sale of the Company.
SECTION 18 PARTIAL INVALIDITY
CLAUSE 18.1 PARTIAL INVALIDITY If, at any time, any provision hereof is or
becomes illegal, invalid or unenforceable in any respect under the law of any
applicable jurisdiction, neither the legality, validity or enforceability of the
remaining provisions hereof nor the legality, validity or
24
<PAGE> 28
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
SECTION 19 REMEDIES AND WAIVERS
CLAUSE 19.1 REMEDIES AND WAIVERS No failure by the Purchaser to exercise, nor
any delay by the Purchaser in exercising any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 20 FURTHER ASSURANCE
CLAUSE 20.1 Each party shall do or procure to be done all such further acts and
things, and execute or procure the execution of all such other documents, as the
other party, (being the Sellers in relation to the Purchaser and the Purchaser
in relation to the Sellers) may from time to time reasonably require, whether on
or after Completion, for the purpose of giving to the other party the full
benefit of all of the provisions of this Agreement.
CLAUSE 20.2 The Sellers shall procure that there is made available to the
Purchaser at such time(s) and place(s) as the Purchaser may reasonably direct
all information in the possession or under the control of the Sellers which the
Purchaser may from time to time reasonably require, whether before or after
Completion, in relation to the business and affairs of the Group.
SECTION 21 NOTICES
CLAUSE 21.1 COMMUNICATIONS IN WRITING Each communication to be made hereunder
shall be made in writing and, unless otherwise stated, shall be made by fax or
letter.
CLAUSE 21.2 DELIVERY Any communication or document to be made or delivered by
one person to another pursuant to this Agreement shall (unless that other person
has by 15 days' written notice to the other specified another address) be made
or delivered to that other person at the address identified in clause 21.3 with
its signature and shall be deemed to have been made or delivered when despatched
(in the case of any communication made by fax or (in the case of any
communication made by letter) when left at the address or (as the case may be) 5
days after being deposited in the post postage prepaid in an envelope addressed
to it at that address provided that any communication or document to be made or
delivered by any party shall be effective only when received by the other
party(ies) and then only if the same is expressly marked for the attention of
such department or officer as the Purchaser shall from time to time specify for
this purpose.
CLAUSE 21.3 COMMUNICATION DETAILS The address of the parties for the purpose of
Clause 21.1 are as follows:
SELLERS: The address and fax numbers set out in column (3) of
Schedule 1.
GUARANTORS:
K. Mommers
Address: Negen-Novemberweg 5
5916 LD Venlo, The Netherlands
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<PAGE> 29
P. Mommers
Address: Bisschopp Schrijnenstraat 9
6041 XK, Roermond, The Netherlands
PURCHASER/VGL: Address:
101 South Hanley Road, Suite 400
St. Louis, MO 63105
For the attention of: David M. Sindelar
Fax: (314) 746 2299
WITH COPIES TO: Hicks, Muse, Tate & Furst Incorporated
Address: 200 Crescent Court
Suite 1600
Dallas, Texas 75201
For the attention of: Lawrence D. Stuart, Jr.
Fax: (314) 740 7313
Address: Mills & Partners
101 South Hanley Road, Suite 400
St. Louis, MO 63105
For the attention of: David M. Sindelar
Fax: (314) 746 2251
SECTION 22 GOVERNING LAW AND CHOICE OF FORUM
CLAUSE 22.1 DUTCH LAW This Agreement shall be governed by, and shall be
construed in accordance with, the laws of the Netherlands.
CLAUSE 22.2 ARBITRATION Any differences arising out of this Agreement or any
further agreements resulting herefrom shall be referred to arbitration in
Amsterdam where the rules of the Netherlands Arbitration Institute shall apply.
The arbitral panel shall consist of three arbitrators appointed by agreement
between the parties or, in default of agreement, nominated on application of
either party by the President for the time being of the Law Society of England
and Wales. The arbitration shall take place in Amsterdam and the proceedings
shall be conducted in the English language.
SECTION 23 COUNTERPARTS
CLAUSE 23.1 COUNTERPARTS This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
26
<PAGE> 30
AS WITNESS this Agreement has been signed on behalf of the parties the day and
year first before written.
27
<PAGE> 31
SCHEDULE 1
<TABLE>
<CAPTION>
(1) (2) (3) (4)
SELLER SHARES ADDRESS & FAX PERCENTAGE
<S> <C> <C> <C>
Mommers 1,255,000 Peutenweg 2, 6101 50.2
Beleggingen Echt 6% preference VZ ECHT, the
BV shares of NLG 1 Netherlands
Beheermaatschappij 830,000 Postbus 34, 6100 AA 33.2
Mommers Print ordinary shares of Echt,
Service B.V. NLG 1
K.Mommers Beheer 415,000 Negen-Novemberweg 16.6
Bv ordinary shares of 5, 5916 LD Venlo,
NLG 1 the Netherlands
</TABLE>
28
<PAGE> 32
SCHEDULE 2
THE COMPANY AND THE SUBSIDIARIES
PART A
DETAILS OF THE COMPANY
1. NAME: Print Service Holding N.V.
2. DATE OF INCORPORATION: 19th January 1988
3. REGISTERED OFFICE: Roermond
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: J. Michiels
6. MEMBERS OF SUPERVISORY BOARD: M. Sprengers, A. van Oijen, P.
Mommers-Linssen
7. SHARE CAPITAL: NLG 5,000,000 authorised
NLG 2,500,000 issued (1,255,000
6% preference shares of NLG 1
and 1,245,000 ordinary shares
of NLG 1)
8. SHAREHOLDERS: Beheermaatschappij Mommers Print
Service BV (830,000 ordinary),
K. Mommers Beheer BV (415,000
ordinary), Mommers Beleggingen
Echt BV(1,255,000 preference)
9. LAST ACCOUNTS DATE: 31st December 1996
10. TAX RESIDENCE: The Netherlands
11. SUBSIDIARIES: Print Belgie Beheer BV
Mommers Vastgoed BV
Mommers Print Service BV
Momm BV
Alex Cars BV
MPS France SARL (5%)
29
<PAGE> 33
PART B
DETAILS OF SUBSIDIARIES
1. NAME: Mommers Print Service B.V.
2. DATE OF INCORPORATION: 13th May 1983
3. REGISTERED OFFICE: Roermond
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: Company, G. Macssen, F. Smulders, J.
Michiels
6. MEMBERS OF SUPERVISORY BOARD: None registered
7. SHARE CAPITAL: NLG 100,000 authorised
NLG 35,000 issued (35 shares of NLG
1,000)
8. SHAREHOLDERS: Company
9. BUSINESS: Manufacturing of circuit boards,
holding companies with same activities
10. LAST ACCOUNTS DATE: 31st December 1996
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES: None
30
<PAGE> 34
PART B
DETAILS OF SUBSIDIARIES
1. NAME: Print Belgie Beheer B.V.
2. DATE OF INCORPORATION: 1st October 1987
3. REGISTERED OFFICE: Roermond
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: Company
6. MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: NLG 2,000,000 authorised
NLG 2,000,000 issued (2,000 shares of
NLG 1,000)
8. SHAREHOLDERS: Company
9. BUSINESS: Holding activities (dormant)
10. LAST ACCOUNTS DATE: 31 December 1996
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES: Print Belgie Holding BV
31
<PAGE> 35
PART B
DETAILS OF SUBSIDIARIES
1. NAME: Print Belgie Holding B.V.
2. DATE OF INCORPORATION: 1st October 1987
3. REGISTERED OFFICE: Roermond
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: Print Belgie Beheer BV
6. MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: NLG 100,000 authorised
NLG 50,000 issued (50 shares of
NLG 1,000)
8. SHAREHOLDERS: Print Belgie Beheer BV
9. BUSINESS: Holding activities (dormant)
10. LAST ACCOUNTS DATE: 31 December 1996
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES: None
32
<PAGE> 36
PART B
DETAILS OF SUBSIDIARIES
1. NAME: Mommers Vastgoed B.V.
2. DATE OF INCORPORATION: 13 May 1983
3. REGISTERED OFFICE: Roermond
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: Company
6. MEMBERS OF SUPERVISORY BOARD: None registered
7. SHARE CAPITAL: NLG 100,000 authorised
NLG 35,000 issued
8. SHAREHOLDERS: Company
9. BUSINESS: Sale, purchase and rent of real estate
and construction
10. LAST ACCOUNTS DATE: 31 December 1996
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES: None
33
<PAGE> 37
PART B
DETAILS OF SUBSIDIARIES
1. NAME: Momm B.V.
2. DATE OF INCORPORATION: 1 October 1987
3. REGISTERED OFFICE: Roermond
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: Company
6. MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: NLG 100,000 authorised
NLG 50,000 issued (50 shares of NLG 1,000)
8. SHAREHOLDERS: Company
9. BUSINESS: Holding activities (dormant)
10. LAST ACCOUNTS DATE: 31 December 1996
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES: Mommers Print Service France SARL(95%)
Masthof BV (25%)
Eurasem B.V. (1.44%)
Toray Trading A.G.
34
<PAGE> 38
PART B
DETAILS OF SUBSIDIARIES
1. NAME: European Semiconductor Assembly
(Eurasem) B.V.
2. DATE OF INCORPORATION: 1 May 1987
3. REGISTERED OFFICE: Nijmegen
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: G. De Clercq
6. MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: NLG 40,000,000 authorised
NLG 9,034,612 issued
8. SHAREHOLDERS: Momm BV (1.44%)
9. BUSINESS: Assembly of integrated switches
10. LAST ACCOUNTS DATE: 31 December 1996
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES: None
35
<PAGE> 39
PART B
DETAILS OF SUBSIDIARIES
1. NAME: Masthof B.V.
2. DATE OF INCORPORATION: 23 September 1987
3. REGISTERED OFFICE: Beek, Limburg
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: L. Masthoff
6 MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: NLG 100,000 authorised
NLG 40,000 issued (40 shares of NLG 1,000)
8. SHAREHOLDERS: Momm BV (25%), L. Masthoff, J. Habets,
N. Bechtel
9. BUSINESS: Realisation of building projects and sale
of inventory and producers' goods
10. LAST ACCOUNTS DATE:
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES:
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PART B
DETAILS OF SUBSIDIARIES
1. NAME: Torag Trading A.G.
2. DATE OF INCORPORATION: 15 August 1974
3. REGISTERED OFFICE: Neuhausen am Rheinfall, Switzerland
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: K. Mommers, E. Huber, M. Hirt,
M. Huber-Tussinger
6. MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: CHF 50,000 issued (50 shares of CHF 1,000)
8. SHAREHOLDERS: Momm B.V.
9. BUSINESS: [Swiss representative office]
10. LAST ACCOUNTS DATE: 31.12.96
11. TAX RESIDENCE: Switzerland
12. SUBSIDIARIES: None
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PART B
DETAILS OF SUBSIDIARIES
1. NAME: Mommers Print Service France SARL
2. DATE OF ESTABLISHMENT: 20 January 1983
3. REGISTERED OFFICE: Les Thilliers en Vexin, France
4. CLASS OF COMPANY: Societe autonyme
5. MEMBERS OF MANAGEMENT BOARD: K. Mommers
6. MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: FF 100,000 authorised
FF 100,000 issued (400 shares of FF 250)
8. SHAREHOLDERS: Company (5%)
Momm BV (95%)
9. BUSINESS: French representative office
10. LAST ACCOUNTS DATE: 31.12.96
11. TAX RESIDENCE: [France]
12. SUBSIDIARIES: None
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PART B
DETAILS OF SUBSIDIARIES
1. NAME: Alex Cars B.V.
2. DATE OF INCORPORATION: 4 September 1986
3. REGISTERED OFFICE: Roermond
4. CLASS OF COMPANY: Private
5. MEMBERS OF MANAGEMENT BOARD: Company
6. MEMBERS OF SUPERVISORY BOARD: None
7. SHARE CAPITAL: NLG 100,000 authorised
NLG 40,000 issued (40 shares of
NLG 1,000)
8. SHAREHOLDERS: Company
9. BUSINESS: (Whole)sale and lease of means of
transportation
10. LAST ACCOUNTS DATE: 31 December 1996
11. TAX RESIDENCE: The Netherlands
12. SUBSIDIARIES: None
39
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SCHEDULE 3
THE WARRANTIES
PART A : GENERAL
INFORMATION
DISCLOSURE
1.1(a) There are fully and accurately set out in or annexed to the Disclosure
Letter all facts and matters which are necessary to qualify the
statements set out in this Schedule in order that such statements, as
so qualified, are true, accurate and not misleading.
(b) As at 31 December 1997, there were no other facts or matters which
might reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), results of operations or
prospects of the Group, taken as a whole.
(c) All information set out in or annexed to the Disclosure Letter is
true, complete and accurate and not misleading in any respect.
THE GROUP
THE COMPANY AND THE SHARES
2.1(a) All of the Subsidiaries, except for Torag Trading AG and M.P.S. France
SARL are private companies with limited liability (besloten
vennootschappen met beperkte aansprakelijkheid), duly organised and
validly existing under the laws of The Netherlands, with all requisite
power to carry on their business as presently conducted.
(b) Torag Trading AG and M.P.S. France SARL are duly incorporated and
validly existing at the date hereof under the laws of Switzerland and
France respectively with all requisite power to carry on its business
as presently conducted.
(c) All Group Companies are registered at the commercial registry of the
relevant Chamber of Commerce (respectively at the equivalent thereof
in respect of the non-Dutch subsidiaries) in accordance with
applicable law, and the information contained in the extracts of such
registrations at the Chamber of Commerce is true, accurate and
complete.
(d) The Sellers are the sole legal and beneficial owners, free from all
security interests, options, equities, claims or other third party
rights (including voting rights and rights of pre-emption) of any
nature whatsoever, of the Shares referred to opposite their respective
names in Schedule 1, and have full authority to sell and transfer such
Shares.
(e) The Shares constitute all of the issued and outstanding share capital
of the Company. In the aggregate the Sellers hold all of the
outstanding issued share capital of the Company. All of the Shares and
the shares in the Subsidiaries have been duly authorised, validly
issued and are all paid up in full.
(f) No person is entitled or has claimed to be entitled to require any
Group Company to issue any share capital either now or at any future
date, and no decision to such effect has been
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made. There is no option, right of pre-emption, right to acquire,
charge, pledge, encumbrance or any other form of security right on,
over or affecting any of the Shares or any shares in the capital of
any Subsidiary nor is there any commitment to give or create any of
the foregoing, and no person had claimed to be entitled to any of the
forgoing.
(g) The information in respect of the Company set out in Part A of
Schedule 2 is true and accurate.
(h) The Company is a public company with limited liability (naamloze
vennootschap), duly organised and validly existing under the laws of
The Netherlands, with all requisite power to carry on its business as
presently conducted. No resolution has been adopted and no other
action has been taken to amend these Articles.
(i) There are no existing agreements with, options or rights of, or
commitments to any person to acquire any of the Shares or any of the
assets of the Company or any interest therein.
THE SUBSIDIARIES
2.2(a) The Company is (or a Subsidiary is) the sole legal and beneficial
owner of the whole of the issued share capital of each of the
Subsidiaries free from all security interests, options, equities,
claims or other third party rights (including, without limitation,
rights of pre-emption) of any nature whatsoever.
(b) The information in respect of each of the Subsidiaries set out in Part
B of Schedule 2 is true and accurate.
OTHER INTERESTS
2.3 No Group Company owns or has any interest of any nature whatsoever in
any shares, debentures or other securities issued by any undertaking other than
the Subsidiaries, nor has it any branch, agency or other place of business or
permanent establishment, except as shown in Schedule 2.
OWNERSHIP OF SELLERS
2.4 The Guarantors are the ultimate beneficial owners of the Sellers and
no other person owns or is otherwise interested in any equity share capital of
either of the Sellers.
FINANCIAL MATTERS
ACCOUNTS
3.1(a) The Last Accounts give a true and fair view of the state of affairs of
the Company and its subsidiary undertakings as at the Last Accounts
Date and of their results for the financial year ended on the Last
Accounts Date, have been prepared under the historical cost convention
and in accordance with generally accepted accounting principles of the
Netherlands consistently applied throughout the periods involved, in
accordance with the annual accounts specimen decree (Besluit Modellen
jaarrekening). The balance sheets contained in the Last Accounts
fairly, accurately and completely present the consolidated financial
position, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of the Company and its Subsidiaries at the
dates indicated, and the statements
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of income, cash flow and changes in shareholders equity contained in
the Accounts fairly, accurately and completely present the
consolidated results of operations, cash flow and changes in
shareholders equity of the Company and its Subsidiaries for the
periods indicated.
3.2(a) The Internal Monthly Financial Statements have been prepared in
accordance with generally accepted accounting principles of the
Netherlands consistently applied throughout the periods involved,
except for the preparation thereof without footnotes and except for
adjustments necessary to present fairly the consolidated financial
position and results of operations of the Company and its Subsidiaries
for the periods then ended (all of which adjustments are of a normal
recurring nature and none of which individually or in the aggregate
would be material to the Company and its Subsidiaries). The
consolidated balance sheets contained in the Internal Monthly
Financial Statements fairly, accurately and completely present the
consolidated financial position, assets and liabilities (whether
accrued, absolute, contingent or otherwise) of the Company and its
Subsidiaries other than Momm B.V. and Print Belgie Beheer B.V. at the
dates indicated, and the consolidated statements of income, cash flow
and changes in shareholders equity contained in the Internal Monthly
Financial Statements fairly, accurately and completely present the
consolidated results of operations, cash flow and changes in
shareholders equity of the Company and its Subsidiaries other than
Momm B.V. and Print Belgie Beheer B.V. for the periods indicated.
(b) Without limiting the generality of paragraph (a):
(i) the Accounts of each Group Company either make full
provision for or disclose all liabilities and Indebtedness
or Surviving Seller Indebtedness, all outstanding capital
commitments and all bad or doubtful debts of the relevant
Group Company and its subsidiary undertakings as at the date
to which they are made up, in accordance with generally
accepted accounting principles of the Netherlands;
(ii) all work-in-progress valued in the Accounts of each Group
Company was valued on a basis excluding profit;
(iii) except as stated in the Last Accounts, no changes in the
accounting policies were made by any Group Company in the
financial year ended on the Last Accounts Date or in the
period covered by the Internal Monthly Financial Statements;
(iv) the results shown by the Accounts of each Group Company for
the period covered by the Accounts were not (except as
therein disclosed) affected by any extraordinary or
exceptional item or by any other factor rendering such
results for all or any of such periods unusually high or
low;
(v) the accounts receivable of each Group Company which are
either reflected in the Accounts or were created subsequent
to the Accounts and which will be reflected in the books of
each Group Company on the Completion Date have arisen or
will arise, as the case may be, out of transactions in the
ordinary course of business consistent with past practice,
are not subject to valid defences, set-offs, or
counterclaims, and are on average collectible within [90]
days after billing at the full recorded amount thereof less,
in the case of accounts receivable appearing in the
Accounts, the recorded allowance for collection losses in
the Accounts,
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determined in accordance with generally accepted accounting
principles of the Netherlands consistent with past practice;
and
(vi) all stock of each Group Company used in the conduct of its
business, including without limitation raw materials,
work-in-progress, and finished goods, reflected in the
Accounts or acquired since the date thereof (A) was acquired
and has been maintained in the ordinary course of business,
(B) is of good and merchantable quality, (C) consists
substantially of a quality, quantity, and condition usable,
leasable, or saleable in the ordinary course of business,
(D) is valued at the lower of cost or market, and (E) is not
subject to any extraordinary write-down or write-off.
POSITION SINCE 30 SEPTEMBER
3.3(a) Since 30 September 1997 there has been no material adverse change in
the business, condition (financial or otherwise), results of
operations or prospects of any Group Company and no event, fact or
matter has occurred which is reasonably likely to give rise to any
such change.
(b) Since 30 September 1997:
(i) the business of each Group Company has been carried on in
the ordinary and usual course consistent with past practices
and no Group Company has made or agreed to make any payment
other than routine payments in the ordinary and usual course
consistent with past practices;
(ii) no dividend or other distribution has been declared, paid or
made by any Group Company (except for during the period from
30 September 1997 to 30 December 1997 only, for any
dividends provided for in the Internal Monthly Financial
Statements of that Group Company);
(iii) no share or loan capital, options, warrants or other
securities has been allotted or issued or agreed to be
allotted or issued by any Group Company (other than to
another Group Company);
(iv) there has been no material change in the level of borrowing
or in the working capital requirements of any Group Company;
(v) there have been no material transactions between any Group
Company and any Seller or any officer or Board Member of any
Group Company;
(vi) no contract, liability or commitment (whether in respect of
capital expenditure or otherwise) has been entered into by
any Group Company which provides for a term of more than six
months or which involved or could involve an obligation of a
material nature or magnitude (a liability for expenditure in
excess of NLG 150,000 being included as "material" for this
purpose);
(vii) no Group Company has (whether in the ordinary and usual
course of business or otherwise) acquired or disposed of, or
agreed to acquire or dispose of, any business or any asset
having a value in excess of NLG 150,000;
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(viii) no debtor has been released by any Group Company on terms
that it pays less than the book value of its debt and no
debt in excess of NLG 150,000 owing to any Group Company has
been deferred, subordinated or written off or has proved to
any extent irrecoverable;
(ix) no change has been made in terms of employment, including
pension fund commitments, by any Group Company (other than
those required by law) which could increase the total staff
costs of the Group by more than NLG 300,000 per annum or the
remuneration of any one director or employee by more than
NLG 50,000 per annum; (X) there has been no unusual increase
or decrease in the level of the stock and/or
work-in-progress of any Group Company;
(xi) there has been no material increase or decrease in the
levels of debtors or creditors or in the average collection
or payment periods for the debtors and creditors
respectively;
(xii) no Group Company has repaid any borrowing or indebtedness in
advance of its stated maturity;
(xiii) no resolution of the members of any Group Company has been
passed whether in general meeting or otherwise (other than
resolutions relating to the routine business of annual
general meetings); and
(xiv) the business of each Group Company has not been materially
affected by any abnormal factor not affecting to a similar
extent generally all companies carrying on similar
businesses in the Netherlands.
ACCOUNTING AND OTHER RECORDS
3.4(a) The statutory books, books of account and other records of each Group
Company:
(i) are up-to-date and have been maintained in accordance with
all applicable laws and generally accepted accounting
practices of the Netherlands on a proper and consistent
basis;
(ii) comprise complete and accurate records of all information
required to be recorded therein; and
(iii) are in its possession or under its control together with all
documents of title and executed copies of all existing
agreements to which the relevant Group Company is a party.
(b) All accounts, documents and returns required by law to be delivered or
made by any Group Company to the Commercial Register of the Chamber of
Commerce or any other authority have been duly and correctly delivered
or made.
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ACCOUNTING REFERENCE DATE
3.5 The Accounts Date of each Group Company is, and during the last five
years always has been, the last day of the last month of the year specified in
Schedule 1 in respect of that Group Company.
PROJECTIONS
3.6 The financial projections for the Group for the financial year ending
on 31 December 1998, copies of which have been provided to the Purchaser and are
annexed to the Disclosure Letter, have been prepared in good faith and are based
on reasonable assumptions.
3.7 Neither Print Belgie Beheer B.V. nor Momm B.V. has any liabilities or
is subject to any obligations, whether conditional or unconditional, contingent
or vested.
DEBT POSITION
DEBTS OWED TO THE GROUP
4.1(a) There are no debts owing to any Group Company other than:
(i) the intra-group indebtedness; and
(ii) other trade debts incurred in the ordinary and usual course
of business, consistent with past practices which do not
exceed NLG 600,000 in aggregate for the Group as a whole
(and none of which individually exceeds NLG 150,000).
(b) The book debts shown in the Internal Monthly Financial Statements of
each Group Company have realised, or will realise within a period of
three (3) months, their nominal amount less any specific provision for
bad or doubtful debts included in such accounts. The book debts
incurred by each Group Company since the accounting date of the last
Internal Monthly Financial Statements and which are outstanding as at
the date of this Agreement will realise within three (3) months from
such date not less than 95 per cent. of their nominal amount.
DEBTS OWED BY THE GROUP
4.2(a) No Group Company has outstanding any borrowing or Indebtedness or
Surviving Seller Indebtedness other than borrowings and Indebtedness
or Surviving Seller Indebtedness the details of which as at the date
hereof are set out in the Accounts.
(b) No Group Company has received any notice to repay under any agreement
relating to any borrowing or Indebtedness or Surviving Seller
Indebtedness which is repayable on demand.
(c) There has not occurred any event of default or any other event or
circumstance which would entitle any person to call for early
repayment under any agreement relating to any borrowing or
Indebtedness or Surviving Seller Indebtedness of any Group Company or
to enforce any security given by any Group Company (or, in either
case, any event or circumstance which with the giving of notice and/or
the lapse of time and/or a relevant determination would constitute
such an event or circumstance).
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(d) except as set out in the Disclosure Letter, no Group Company has any
liability or obligation to the Sellers, the Guarantors, any of their
respective Affiliates or any Former Subsidiary.
REPAYMENT OF SELLER DEBT
4.3 No repayment of Seller Indebtedness or Surviving Seller Indebtedness
has been made or agreed to be made at or prior to Completion, other than
pursuant to this Agreement.
REGULATORY MATTERS
LICENCES
5.1(a) Each Group Company has obtained all licences, permissions,
authorisations and consents required for carrying on its business
effectively in the places and in the manner in which such business is
now carried on and a summary of all such licences, permissions,
authorisations and consents is set out in the Disclosure Letter.
(b) The licences, permissions, authorisations and consents referred to in
paragraph (A) are in full force and effect, are not limited in
duration or subject to any unusual or onerous conditions and have been
complied with in all material respects.
(c) To the best knowledge of the Sellers, there are no circumstances which
indicate that any of the licences, permissions, authorisations or
consents referred to in paragraph (A) will or are reasonably likely to
be revoked or not renewed, in whole or in part, in the ordinary course
of events (whether as a result of the acquisition of the Shares by the
Purchaser or otherwise).
COMPLIANCE WITH LAWS
5.2(a) Each Group Company and each of their corporate bodies has conducted
its business and corporate affairs in accordance with its Articles of
Association and in all material respects with all applicable laws and
regulations (whether of the Netherlands or any other jurisdiction).
(b) No Group Company is subject to any order, decree or judgment of any
court or any governmental or regulatory authority (whether of the
Netherlands or any other jurisdiction).
COMPETITION AND FAIR TRADING LAWS
5.3(a) No Group Company is a party to (or is concerned in) any agreement,
arrangement, concerted practice or course of conduct which (i)
contravenes Dutch Competition Act ("Mededingingwet") or (ii) falls
within Article 85 and/or Article 86 of the Treaty of Rome; or (iii)
falls within Article 53 and/or Article 54 of the Agreement on the
European Economic Area; or (iv) otherwise infringes the competition
legislation or practice of any other jurisdiction.
(b) No Group Company has received any process, notice or other
communication (formal or informal) by or on behalf of Netherlands
competition authorities, the Commission of the European Communities,
the EFTA Surveillance Authority or any other authority having
jurisdiction in competition matters in relation to any aspect of the
business of any Group
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Company or any agreement, arrangement, concerted practice or course of
conduct to which any Group Company is, or is alleged to be, a party.
(c) No Group is involved in any practice or agreement as a result of which
it is reasonably likely to receive any such process, notice or
communication as is referred to in paragraph (b).
(d) No Group Company is subject to any order or judgment given by any
court or governmental or regulatory authority, or party to any
undertaking or assurance given to any such court or authority, in
relation to competition matters which is still in force.
(e) The Group as a whole does not make sales into the United States in an
amount exceeding US$20,000,000 per annum and does not have any assets
in the United States whose value exceeds US$10,000,000.
THE GROUP'S ASSETS
OWNERSHIP
6.1(a) For the purpose of this Warranty 6.1, ASSETS shall not include the
Properties, to which the provisions of Part B of this Schedule shall
apply.
(b) Each of the assets included in the Internal Monthly Financial
Statements of each Group Company or acquired by it since the last
Internal Monthly Financial Statements (other than assets sold in the
ordinary course of business) is the absolute property of that Group
Company. Those assets are not the subject of any security interest or
any assignment, equity, option, right of pre-emption, right of first
refusal, royalty, factoring arrangement, leasing or hiring agreement,
hire purchase agreement, conditional sale or credit sale agreement,
agreement for payment on deferred terms or any similar agreement or
arrangement (or any agreement or obligation, including a conditional
obligation, to create or enter into any of the foregoing) except for:
(i) any hire or lease agreement in the ordinary course of
business involving expenditure of less than NLG 150,000 per
annum (where the aggregate expenditure of the Group under
all such agreements is less than NLG 600,000 per annum);
(ii) title retention provisions in respect of goods and materials
supplied to the Group in the ordinary course of business;
and
(iii) the security interests, if any, reflected in the Internal
Monthly Financial Statements and liens arising in the
ordinary course of business by operation of law.
POSSESSION AND THIRD PARTY FACILITIES
6.2(a) All of the assets owned by each Group Company, or in respect of which
any Group Company has a right of use, are in the possession or under
the control of that Group Company.
(b) Where any assets are used but not owned by any Group Company or any
facilities or services are provided to any Group Company by any third
party, there has not occurred
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any event of default or any other event or circumstance which may
entitle any third party to terminate any agreement or licence in
respect of the provision of such facilities or services (or any event
or circumstance which with the giving of notice and/or the lapse of
time and/or a relevant determination would constitute such an event or
circumstance).
ADEQUACY OF ASSETS
6.3(a) The assets of each Group Company and the facilities and services to
which each Group Company has a contractual right include all material
rights, properties, assets, facilities and services necessary for the
carrying on of the business of that Group Company in the manner in
which it is currently carried on.
(b) No Group Company depends in any material respect upon the use of
assets owned by, or facilities or services provided by, the Sellers,
the Guarantors their respective Affiliates or any Former Subsidiary.
CONDITION
6.4 All the plant, machinery, equipment and vehicles used by each Group
Company are in a good state of repair (ordinary wear and tear
excepted) and have been regularly and properly maintained in
accordance with appropriate technical specifications, safety
regulations and the terms and conditions of any applicable agreement
and are capable of being efficiently and properly used for the
purposes for which they were acquired or are retained.
PLANT REGISTERS
6.5 The plant registers of each Group Company comprise a complete and
accurate record of all the plant, machinery, equipment and vehicles owned or
possessed by that Group Company.
INSURANCES
6.6(a) There is set out in the Disclosure Letter a summary of the insurances
maintained by or covering members of the Group. Such insurances are in
full force and effect and, to the best knowledge of the Sellers, there
are no circumstances which might lead to any liability under such
insurance being avoided by the insurers or the premiums being
increased and Completion will not have the effect of terminating, or
entitling any insurer to terminate, cover under any such insurance.
(b) All material claims under the insurances have been timely filed and
there are no present circumstances giving rise to any further claim
under any insurance.
PROPERTY TRANSFERS
6.7 Since 1 October, 1997, except as disclosed no transfer of any assets
has been made or agreed to be made between the Company and Seller (other than
the Company) or any affiliate thereof.
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INTELLECTUAL PROPERTY RIGHTS
REGISTERED RIGHTS
7.1(a) The Disclosure Letter contains true, complete and accurate lists of
all Intellectual Property Rights registered or sought to be registered
in any jurisdiction which are held or beneficially owned by each Group
Company. The relevant Group Company is the sole legal holder of such
Intellectual Property Rights.
(b) No act has been done or omitted to be done and no event has occurred
or is reasonably likely to occur which may render any of such
Intellectual Property Rights subject to revocation, compulsory
licence, cancellation or amendment or may prevent the grant or
registration of a valid Intellectual Property Right pursuant to a
pending application.
CHARGES
7.2 The Intellectual Property Rights which are owned or otherwise used by
a Group Company are not subject to any mortgage, charge, lien or other security
interest.
INFRINGEMENT
7.3(a) None of the operations of the Group infringe, or are reasonably likely
to infringe, any rights held by any third party or involve the
unauthorised use of confidential information disclosed to any Group
Company in circumstances which might entitle a third party to make a
claim against a Group Company.
(b) No claim has been made by any third party which alleges any infringing
act or process which would fall within paragraph (A) above or which
otherwise disputes the right of any Group Company to use any
Intellectual Property Rights relating to its business and the Sellers
are not aware of any circumstances (including any act or omission to
act) reasonably likely to give rise to such a claim.
(c) There exists no actual or threatened infringement by any third party
of any Intellectual Property Rights held or used by a Group Company
(including misuse of confidential information) or any event reasonably
likely to constitute such an infringement nor has a Group Company
acquiesced in the unauthorised use by any third party of any such
Intellectual Property Rights.
EMPLOYEE CLAIMS
7.4 No claims have been made or threatened by employees or ex-employees
under any statutory inventor compensation provision, or like employee
compensation provision, in any jurisdiction.
INTELLECTUAL PROPERTY LICENCES
7.5(a) Details of all licences granted to or by any Group Company in respect
of Intellectual Property Rights are set out in the Disclosure Letter
including details of any limit as to time or right of termination
affecting the use of the Intellectual Property Rights.
(b) No Group Company is in default under any licence, sub-licence or
assignment granted to it in respect of any Intellectual Property
Rights used by any Group Company.
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LOSS OF RIGHTS
7.6 No Intellectual Property Rights owned or used by a Group Company and
no licence of Intellectual Property Rights of which a Group Company has the
benefit will be lost, or rendered liable to any right of termination or
cessation by any third party, by virtue of the acquisition by the Purchaser of
the Shares.
CONFIDENTIAL INFORMATION
7.7 Where information of a confidential nature has been developed or
acquired by any Group Company for the purposes of its business in the three (3)
year period prior to the date of this Agreement, such information (except
insofar as it has fallen into the public domain through no fault of a Group
Company) has been kept strictly confidential and has not been disclosed
otherwise than subject to an obligation of confidentiality being imposed on the
person to whom the information was disclosed or as required by law. The Sellers
are not aware of any breach of such confidentiality obligations by any third
party.
RECORDS AND SOFTWARE
7.8(a) All the accounting records and systems (including but not limited to
computerised accounting systems) of the Group are recorded, stored,
maintained or operated or otherwise held by a Group Company and are
not wholly or partly dependent on any facilities or systems which are
not under the exclusive ownership or control of a Group Company.
(b) Each Group Company is licensed to use all software reasonably
necessary to enable it to continue to use its computerised records for
the foreseeable future in the same manner in which they have been used
prior to the date of this Agreement and does not share any user rights
in respect of such software with any other person.
CONTRACTUAL MATTERS
MATERIAL CONTRACTS
8.1 The Disclosure Letter lists all agreements and arrangements of the
kinds described in this Warranty 8.1 to which any Group Company is a party.
Except as specified in the Disclosure Letter, there is not outstanding any
agreement or arrangement to which any Group Company is a party:
(a) which, by virtue of the acquisition of the Shares by the Purchaser or
other performance of the terms of this Agreement, will result in:
(i) any other party being relieved of any obligation or becoming
entitled to exercise any right (including any right of
termination or any right of pre-emption or other option); or
(ii) any Group Company being in default under any such agreement
or arrangement or losing any benefit, right or licence which
it currently enjoys or in a liability or obligation of any
Group Company being created, accelerated or increased;
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(b) which will result in any Group Company or Purchaser becoming liable
for any finder's fee, brokerage or other commission in connection with
the acquisition of the Shares by the Purchaser;
(c) entered into otherwise than by way of a bargain at arm's length;
(d) which requires (or confers any right to require) the allotment or
issue of any shares, debentures or other securities (including options
or warrants) of any Group Company now or at any time in the future;
(e) which establishes any guarantee, indemnity, suretyship, form of
comfort or support (whether or not legally binding) given by any Group
Company in respect of the obligations or solvency of any third party;
(f) pursuant to which any Group Company has sold or otherwise disposed of
any company business or assets in circumstances such that it remains
subject to any liability (whether contingent or otherwise) which is
not fully provided for in its Internal Monthly Financial Statements;
(g) which, upon completion by a Group Company of its work or the
performance of its other obligations under it, is likely to result in
a loss for that Group Company which is not fully provided for in its
Internal Monthly Financial Statements;
(h) which establishes any joint venture, consortium, partnership or profit
(or loss) sharing agreement or arrangement to which any Group Company
is a party;
(i) which involves or is likely to involve (i) expenditure by any Group
Company in excess of NLG 150,000 individually or NLG 600,000 in the
aggregate or (ii) obligations or restrictions of any Group Company of
an unusual or exceptional nature or magnitude and not in the ordinary
and usual course of business consistent with past practices;
(j) which establishes any material agency, distributorship, marketing,
consulting, purchasing, manufacturing or licensing agreement or
arrangement to which any Group Company is a party;
(k) which is a currency and/or interest rate swap agreement, asset swap,
future rate or forward rate agreement, interest cap, collar and/or
floor agreement or other exchange or rate protection transaction or
combination thereof or any option with respect to any such transaction
or any other similar transaction to which any Group Company is a
party;
(l) which is a recognition, procedural or other agreement between any
Group Company and any recognised independent trade union;
(m) which is any other agreement or arrangement having or reasonably
likely to have a material effect on the business, condition (financial
or otherwise), results of operations or prospects of the Group;
(n) which is entered into between any Group Company and any of the Sellers
or Guarantors or their Affiliates of; or
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<PAGE> 55
(o) which is a bid, tender, proposal or offer which, if accepted, would
result in any Group Company becoming a party to any agreement or
arrangement of a kind described in sub-paragraphs (A) to (N) above;
and
DEFAULTS
8.2(a) No Group Company is in material default under any agreement to which
it is a party and, to the best of the knowledge of the Sellers, there
are no circumstances likely to give rise to any such default.
(b) To the best of the knowledge of the Sellers, no party with whom any
Group Company has entered into any agreement or arrangement is in
material default under such agreement or arrangement and there are no
circumstances likely to give rise to any such default.
TRADING RELATIONSHIPS
8.3 During the twelve months preceding the date of this Agreement no
significant customer of or supplier to any Group Company has ceased to deal with
that Group Company or has indicated an intention to cease to deal with that
Group Company, either in whole or in part, and, to the best knowledge of the
Sellers, no such person is reasonably likely to cease to deal with that Group
Company or deal with that Group Company on a materially smaller scale (whether
as a result of the acquisition of the Shares by the Purchaser or other
performance of the terms of this Agreement or for any other reason).
PRINCIPAL SUPPLIERS AND CUSTOMERS
8.4 No supplier or customer (including any person connected in any way
with any such supplier or customer) accounted either for more than ten per cent.
of the aggregate value of all purchases or for more than ten per cent. of the
aggregate value of all sales of any Group Company for the period covered by the
Internal Monthly Financial Statements.
PRINCIPAL CUSTOMERS
8.5 The Sellers have supplied to the Purchaser lists of those customers
of the Purchaser who, during the 12 months ended 31 December 96 and the nine
months ended 30 September 97 respectively, comprised the ten largest customers
of the Company by sales value in each of those periods.
GRANTS
8.5 No Group Company has done or agreed to do anything as a result of
which, and the acquisition of the Shares by the Purchaser or other performance
of the terms of this Agreement is not likely to have the result that, either:
(a) any investment or other grant or allowance paid to any Group Company
is or will be liable to be refunded in whole or in part; or
(b) any such grant or allowance for which application has been made by any
Group Company will not be paid or will be reduced.
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LITIGATION AND INVESTIGATIONS
LITIGATION
9.1(a) Except as plaintiff in the collection of debts arising in the ordinary
course of business (none of which exceeds NLG 50,000 and which do not
exceed NLG 150,000 in aggregate), no Group Company is a plaintiff or
defendant in or otherwise a party to any litigation, arbitration or
administrative proceedings which are in progress or threatened or
pending by or against or concerning any Group Company or any of its
assets.
(b) No governmental or official investigation or inquiry concerning any
Group Company is in progress or pending.
(c) The Sellers are not aware of any circumstances which are reasonably
likely to give rise to any such proceeding, investigation or inquiry
as is referred to in paragraph (a) or paragraph (b).
DEFECTIVE PRODUCTS
9.2 No Group Company has manufactured, sold or supplied any product or
service which is or was or is reasonably likely to become in any material
respect faulty, defective or dangerous (inherently or otherwise) or which does
not comply in any material respect with any warranties or representations
expressly or impliedly made by any Group Company or with all applicable laws,
regulations, standards and requirements in circumstances where the liability of
the relevant Group Company is not fully covered by product liability insurance
and will or is reasonably likely to exceed any provision or reserve for product
liability claims included in the Internal Monthly Financial Statements.
DIRECTORS AND EMPLOYEES
EMPLOYEES
10.1(a) The Disclosure Letter sets out or refers to a complete and accurate
list of managing directors and employees of each Group Company,
including those non-active managing directors and employees receiving
Disability Act ("Wet Arbeidsongeschiktheid") benefits, showing for
each of them the date of birth, number of years of employment, and by
reference to appropriate grades or categories, the remuneration
payable and other principal benefits which the relevant Group Company
is bound to provide. The basis of remuneration and other terms of
employment are the same as those in force on the Last Accounting Date.
(b) There are no consultancy or management services agreements with any of
the Group Companies.
(c) Except as provided for in the Internal Monthly Financial Statements,
no managing director or employee has accrued any right to vacation
time or compensation for vacation time that has not been consumed.
(d) No collective labour agreements are applicable in any of the Group
Companies.
(e) No Group Company has entered into any arrangements regarding any
future variation in any contract of employment in respect of any of
its directors and employees or any
53
<PAGE> 57
agreement imposing an obligation on the Group Company to increase the
basis and/or rates of remuneration and/or the provision of other
benefits in kind to or on behalf of any of its directors or employees
at any future date.
COMPLIANCE
10.2 Each Group Company has in relation to each of its employees (and so
far as relevant to each of its former employees) complied in all material
respects with all statutes, regulations, codes of conduct, collective
agreements, terms and conditions of employment, orders and awards relevant to
their conditions of service or to the relations between it and its employees (or
former employees, as the case may be) or any recognised trade union or Works
Council.
DISPUTES
10.3(a) No dispute has arisen within the last five (5) years between any Group
Company and a material number or category of its employees (or any
trade union or other body representing all or any of such employees)
and there are no present circumstances which are likely to give rise
to any such dispute.
(b) There are no enquiries or investigations affecting any Group Company
pending or, to the best of the knowledge of the Sellers, threatened by
the Labour Inspection Authorities ("I-SZW, Dienst voor Inspectie en
Informatie").
(c) Except as specified in the Disclosure Letter, no Group Company is
involved in any labour dispute.
INCENTIVE AND SAVINGS SCHEMES
10.4 Except as specified in the Disclosure Letter, no Group Company has in
existence (or is proposing or committed to introduce) any share incentive
scheme, share option scheme or profit sharing, bonus, commission or other
incentive or savings scheme for all or any of its members of the Management
Board or employees. The Disclosure Letter accurately states all amounts payable
under any such scheme at the date hereof.
PAYMENTS ON TERMINATION
10.5 Except to the extent (if any) to which provision or allowance has
been made in the Internal Monthly Financial Statements of each Group Company:
(a) no liability has been incurred by any Group Company for breach of any
contract of employment or for services or redundancy payments,
protective awards, compensation for wrongful dismissal or unfair
dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee or for any other
liability accruing from the termination of any contract of employment
or for services, whether under the Dutch Civil Code or otherwise other
than a payment by the Company to J.J.M Linssen in relation to pension
back service obligations, not exceeding NLG135,000 in aggregate; and
(b) no gratuitous payment has been made or benefit given (or promised to
be made or given) by any Group Company in connection with the actual
or proposed termination or suspension of employment, or variation of
any contract of employment, of any present or former director or
employee of any Group Company.
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EFFECT OF SALE
10.6 To the best knowledge of the Sellers, no officer of any Group Company
intends to resign as a result of the acquisition of the Shares by the Purchaser
or other performance of the terms of this Agreement.
REDUNDANCY SCHEMES
10.7 Except as specified in the Disclosure Letter, no Group Company has in
existence (or is proposing or committed to introduce) redundancy scheme for all
or any of its members of the Management Board or employees. The Disclosure
Letter accurately states all amounts payable under any such scheme at the date
hereof.
INSOLVENCY ETC.
11.1 No Group Company is or has been involved in proceedings for its
winding-up, liquidation, moratorium or debt relief or for the appointment of a
receiver, administrator or liquidator, and no order or resolution has been made,
petition presented or meeting convened for the purpose of considering a
resolution to such effect. No petition has been presented for an administration
order to be made in relation to any Group Company, and no receiver (curator) or
administrative receiver (bewindvoerder) has been appointed in respect of the
whole or any part of any of the property, assets and/or undertaking of any Group
Company.
11.2 No composition in satisfaction of the debts of any Group Company, or
scheme of arrangement of its affairs, or compromise or arrangement between it
and its creditors and/or members or any class of its creditors and/or members,
has been proposed, sanctioned or approved.
11.3 No distress, distraint, charging order, execution or other process
has been levied or applied for in respect of the whole or any part of any of the
property, assets and/or undertaking of any Group Company.
11.4 No Group Company has been party to a transaction pursuant to or as a
result of which an asset owned, purportedly owned or otherwise held by any Group
Company is liable to be transferred or retransferred to another person or which
gives or may give rise to any right of compensation or other payment in favour
of another person.
11.5 All charges in favour of any Group Company required to be registered
in accordance with the applicable legislation have been so registered or comply
with all necessary formalities as to registration or otherwise in any foreign
jurisdiction.
11.6 No events or circumstances analogous to any of those referred to in
Warranties 11.1 to 11.6 have occurred in any jurisdiction outside the
Netherlands.
11.7 To the best knowledge of the Sellers, no circumstances exist which are
likely to give rise to the occurrence of any events or circumstances described
in Warranties 11.1 to 11.6 if the Warranties were to be repeated at any time on
or before Completion.
12. BREACH OF COVENANT
(a) No Group Company is in breach of any covenant, restriction,
stipulation or other obligation affecting any of the Properties, or
the employment or health or safety of staff
55
<PAGE> 59
at, or conduct of the business of any Group Company upon, the
Properties, nor has any breach been committed by any person in
occupation of or deriving title under any Group Company to any of the
Properties for which any Group Company may be actually or contingently
liable.
(b) There is no reason why any of such covenants, restrictions,
stipulations and other obligations should not continue to be complied
with.
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PART B: PROPERTY WARRANTIES
1. GENERAL
(a) The Properties comprise all the land and buildings owned, occupied or
used by any Group Company or in which any Group Company has any rights
or interest.
2. POSSESSION
(a) Save as mentioned in the Disclosure Letter, there are no leases,
underleases, tenancies or licences affecting any of the Properties nor
is there any agreement to grant the same.
(b) A Group Company is in possession of the whole of the Properties, none
of which is vacant.
3. TITLE
(a) The Group has a good and marketable title to each of the Properties
and all relevant deeds and documents are in its possession or under
its control (except for those Properties subject to the mortgages or
charges referred to in the Disclosure Letter, in which case they are
held by the first mortgagees or chargees therein mentioned).
4. ADVERSE INTERESTS
The Properties are free from any:
(a) security interest, option, right of pre-emption or matter registrable
or registered as a local land charge;
(b) material exception, reservation, right, privilege, covenant,
restriction or encumbrance (including any arising under statute or any
statutory power);
(c) right of occupation or enjoyment by any third party or the public, nor
is any such right being acquired;
and there is no agreement to create any of the foregoing.
5. EASEMENTS ETC.
(a) The Properties have the benefit of all rights of way and for drainage
and the supply of services required for their present use and for any
use for which they have been valued in the Last Accounts.
(b) All such rights and all rights of light, air and support are
unconditional and perpetual and are enjoyed as of right.
6. OUTGOINGS
The Properties are not subject to the payment of any outgoings other than the
usual rates and taxes and, in the case of leaseholds, rent.
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7. FIXTURES AND FITTINGS
All fixtures, fittings, plant and equipment at the Properties are the absolute
property of the Group free from any encumbrance or security interest.
8. DISPUTES
There are no current, contingent or, to the best knowledge of the Sellers,
anticipated notices, actions, disputes, complaints, liabilities, claims or
demands relating to or in respect of the Properties or their use, nor, to the
best knowledge of the Sellers, are there any circumstances rendering any of the
foregoing reasonably likely.
9. PLANNING MATTERS
(a) The Properties and all uses of and developments on the Properties
comply in all material respects with all town and country planning
legislation and any legislation intended to control or regulate the
construction, demolition, alternation or use of land or buildings or
to preserve or protect the national heritage and any orders,
regulations, consents or permissions made or granted under any of the
same ("PLANNING LEGISLATION").
(b) No planning permission in respect of any of the Properties is for a
limited period or personal, and there are no other unusual or onerous
planning conditions.
(c) All amounts required to be paid by each Group Company to the
Municipality of Echt other than disputed amounts not exceeding 10,000
NLG in aggregate have been paid in full.
10. COSTS
No Group Company is for any reason anticipating the expenditure of any material
sum of money in respect of any of the Properties.
11. COMPULSORY ACQUISITION
There is no resolution or proposal for the compulsory acquisition of the
Properties or any means of access thereto or egress therefrom.
12. BREACH OF COVENANT
No Group Company is in material breach of any covenant, restriction, stipulation
or other obligation affecting any of the Properties, or the employment or health
or safety of staff at, or conduct of the business of any Group Company upon, the
Properties.
13. CONTINGENT LIABILITIES
No Group Company is actually or contingently liable as an original contracting
party to, or as guarantor of any party to, or otherwise contractually liable in
respect of, any lease or leasehold property or licence connected therewith other
than the leases of the Properties referred to in the Disclosure Letter.
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14. STATE OF PROPERTIES
The buildings and other structures on the Properties are in good and substantial
repair and fit for the purposes for which they are presently used.
15. LEASEHOLD PROPERTIES
15.1 In relation to such of the Properties as are leasehold:-
(a) all material covenants, conditions and agreements contained
in the relevant leases, on the part of the landlord and the
tenant, have been complied with;
(b) there has been no complaint alleging any breach or any
refusal to accept rent;
(c) none of the leases, other than leases at a full rack rent,
contains any provision for forfeiture on insolvency or
liquidation or any prohibition against or requirement to
obtain landlord's consent for charging or assignment;
(d) none of the leases requires the tenant to offer to surrender
the same before or as a pre-condition of an assignment or
under-letting or contains requirements to be satisfied on a
change of ownership of the share capital or control of the
tenant;
(e) the title of the landlord to grant the relevant lease and
all superior titles have been investigated on behalf of the
Group and found to be satisfactory, and any consents
required for the granting of the lease were duly obtained.
15.2 In respect of such of the Properties as are let or occupied otherwise
than by the Group:-
(a) the tenants or other occupants have complied in all material
respects with the terms of their occupancy and no Group
Company has had any cause to complain of breach;
(b) no tenant or other person in occupation has commuted any
rent or other payment or made any improvements which could
give rise to a claim for compensation or which will be
disregarded on a rent review or on fixing a new rent on a
renewal of the tenancy;
(c) all necessary consents have been duly obtained and
registrations made with the landlord and any superior
landlords;
(d) no surety has been released, expressly or by implication;
(e) no collateral assurances, side letters, undertakings or
concessions have been made or given by or to any party to
any such lease, tenancy, licence or agreement;
(f) there are no provisions which entitle the tenant or licensee
to compensation on quitting.
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PART C: PENSION WARRANTIES
1. Except under the Pension Scheme, no Group Company is or has been a
party to any occupational pension scheme or any scheme, agreement, arrangement
or understanding (whether contractual or otherwise) for the provision or funding
of any relevant benefits for any past or present officer or employee, or for any
dependant of any such person, under or in connection with which the Company has
or may have any liability (actual or contingent, present or future).
2. MPS B.V. is the principal employer for the purposes of the Pension
Scheme.
3. MPS B.V. is a participating employer in the Pension Scheme and there
are no, and never have been any, participating employers in the Pension Scheme
other than MPS B.V..
4. No Group Company has any liability (including any liability connected
with the making of transfer payments by the Pension Scheme) to any person who is
not a member of the Pension Scheme in respect of or connected with the
membership or former membership or future membership of the Pension Scheme of
any person.
5. Except as may be disclosed in the Disclosure Letter:
(a) no agreements, undertakings or assurances have been given to all or
any of the past, present or future officers or employees of any Group
Company or any other person as to the continuance, introduction,
increase or improvement of any retirement, death or disability
benefits (whether or not there is any legal obligation to do so); and
(b) no power or discretion has been exercised under the Pension Scheme to
augment benefits or to provide in respect of any past or present
officer or employee of any Group Company or beneficiary of the Pension
Scheme a benefit which would not otherwise have been augmented or
provided under the Pension Scheme in respect of such officer, employee
or beneficiary.
6. The benefits referred to in all booklets published and announcements
made to employees concerning the Pension Scheme have been incorporated in the
terms of the deeds governing the Pension Scheme and are contained in the
Disclosure Letter. There is nothing in any booklet or announcement issued or
made available generally which is inconsistent with, or constitutes, envisages
or requires an augmentation under the terms of, the deeds governing the Pension
Scheme.
7. The records and books of the Pension Scheme are under the control of
MPS B.V. and the trustees of the Pension Scheme, are complete and up to date and
have been maintained in accordance with best practice.
8. All benefits (other than a refund of contributions with interest where
appropriate) payable under the Pension Scheme on the death of a member or
beneficiary while in an employment to which the Pension Scheme relates or during
a period of sickness or disability of a member or beneficiary are fully insured
under a policy effected in the name of the trustees of the Pension Scheme with
an insurance company of good repute and each member and beneficiary has been
covered for such insurance by such insurance company at its normal rates and on
its normal terms for persons in good health; neither the trustees of the Pension
Scheme nor any other person
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has done or omitted to do anything which has or might render any such policies
of insurance void or voidable.
9. As at the close of business on the date (the "Valuation Date") on
which this warranty is given or deemed to be given, the aggregate value of the
assets of the Pension Scheme are greater than the aggregate value of the
liabilities (whether immediate, prospective or contingent) of the Pension Scheme
calculated by reference to the actuarial bases and assumptions used in the
latest actuarial valuation disclosed to the Purchaser:
(a) when calculating the value of the assets of the Pension Scheme no
account shall be taken of any contributions payable to the Pension
Scheme after the Valuation Date or of any liabilities of the Vendor or
any of the Group Companies to the Pension Scheme or its trustees;
(b) when calculating the liability for any benefits no account shall be
taken of benefits in respect of pensionable service after the
Valuation Date but allowance shall be made for projected future
increases in earnings up to normal retirement date under the Pension
Scheme or earlier cessation of pensionable service and increases
(whether payable pursuant to a legal obligation or not) to pensions in
payment or in deferment;
(c) the Normal Retirement Date under the Pension Scheme shall be deemed to
be age 60, 62 or 65 for both males and females; and
(d) any improvements to the benefits under the Pension Scheme which have
been promised or announced or are otherwise proposed shall be deemed
to have been duly effected under the Pension Scheme and to have come
into force before the date of this Agreement.
10. All information which has been made available to the Purchaser or its
agents or advisers before the date of this Agreement concerning the Pension
Scheme is true, complete and fairly presented.
11.(a) No employee or former employee of the Company has been excluded from,
or has had benefits limited under, the Pension Scheme whether directly
or indirectly on grounds of sex or because of part-time employment;
and
(b) the Pension Scheme has, at all time, complied with the requirements of
Article 119 of the Treaty of Rome.
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SCHEDULE 4
EXCLUDED CAPITAL LEASES
o Agreement between MPS B.V. and Schmoll Maschinen GmbH to obtain
drilling machinery.
o Agreement between MPS B.V. and Atotech for a panelplater machine
(November 1996)
o Agreement between MPS B.V. and ATG for a "Leiterplattenster" machine
(August 1997)
o Agreement between MPS B.V. and Orbotech S.A. for an automatel optical
inoperation system (July 1997)
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SCHEDULE 5
WARRANTIES NOT SUBJECT TO DISCLOSURE
Part A 2.1 (d), (e), (f) and (i)
2.3
2.4
3.3 (b)(i), (ii), (iii), (v), (vii) and (ix)
4.2 (d)
6.3
8.1 (a), (b) and (n)
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SIGNED by )
for and on behalf of )
MOMMERS BELEGGINGEN ECHT B.V. )
SIGNED by )
for and on behalf of )
K.MOMMERS BEHEER B.V. )
SIGNED by )
for and on behalf of )
BEHEERMAATSCHAPPIJ )
MOMMERS PRINT SERVICE HOLDING N.V. )
SIGNED by )
for and on behalf of )
VIASYSTEMS GROUP B.V. )
SIGNED by )
for and on behalf of )
VIASYSTEMS GROUP LIMITED )
SIGNED by ) Approved for the purposes of
KAREL JOSEPH MARIE MOMMERS ) Article 1:88 of the Dutch civil
in the presence of: ) code by the spouse of Karel Joseph
Marie Mommers
..................................
Witness name:
Witness occupation:
Witness address:
Witness signature: ...................
......................................
......................................
......................................
(Guarantee confirmation)
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<PAGE> 68
SIGNED by ) Approved for the purposes of
PETRONELLA ELIZABETH JOSEPHINA ) Article 1:88 of the Dutch civil
MOMMERS - LINSENN ) code by the spouse of Petronella
in the presence of: ) Elizabeth Josephina Mommers-Linsenn
..................................
Witness name:
Witness occupation:
Witness address:
Witness signature: ...................
......................................
......................................
......................................
(Guarantee confirmation)
65
<PAGE> 1
EXHIBIT 2.7
CONFORMED COPY
11 FEBRUARY, 1998
AGREEMENT
FOR THE SALE AND PURCHASE OF
ALL THE ISSUED SHARE CAPITAL OF
ZINCOCELERE SPA
Weil, Gotshal & Manges
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
SECTION 1 INTERPRETATION......................................................1
SECTION 2 SALE AND PURCHASE OF THE SHARES AND ASSIGNMENT OF THE LOANS.........7
SECTION 3 CONDITION PRECEDENT.................................................8
SECTION 4 CONSIDERATION.......................................................9
SECTION 5 PURCHASER AND SELLER TITLE WARRANTIES AND LIMITATIONS..............10
SECTION 6 WARRANTIES AND LIMITATIONS.........................................12
SECTION 7 INSTITUTIONAL COVENANTS AND LIMITATIONS AND VGL GUARANTEE..........18
SECTION 8 PRE-COMPLETION UNDERTAKINGS AND DELIVERIES.........................19
SECTION 9 TERMINATION, RESCISSION AND EXCLUSIVE REMEDY.......................21
SECTION 10 COMPLETION........................................................22
SECTION 11 WARRANTORS TAX INDEMNITY..........................................24
SECTION 12 PROTECTIVE COVENANTS..............................................27
SECTION 13 ENTIRE AGREEMENT..................................................28
SECTION 14 VARIATION.........................................................28
SECTION 15 ASSIGNMENT........................................................28
SECTION 16 ANNOUNCEMENTS.....................................................29
SECTION 17 COSTS.............................................................29
SECTION 18 PARTIAL INVALIDITY................................................30
SECTION 19 REMEDIES AND WAIVERS..............................................30
SECTION 20 FURTHER ASSURANCE.................................................30
SECTION 21 NOTICES...........................................................30
SECTION 22 GOVERNING LAW.....................................................32
SECTION 23 ARBITRATION.......................................................32
SECTION 24 COUNTERPARTS......................................................32
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SCHEDULE 1 - THE SELLERS.....................................................31
SCHEDULE 2 - THE COMPANY AND THE SUBSIDIARIES................................32
SCHEDULE 3 - THE COMMERCIAL WARRANTIES.......................................35
SCHEDULE 4 - PROPERTY DETAILS................................................53
SCHEDULE 5 - LOAN WARRANTIES.................................................54
Agreed form documents:
"A" Escrow Agreement
"B" Resignation Letters
"C" Legal Opinion relating to ECSA
"D" Pro-Forma Estimated Net Debt
</TABLE>
<PAGE> 4
THIS AGREEMENT is made on 11 February, 1998 among:
(1) the persons listed in Schedule 1 hereto (the "SELLERS");
(2) Viasystems S.r.l., a company incorporated in Italy (the "PURCHASER");
(3) Viasystems Group Limited, a company incorporated in England and Wales
with registered number 3327056 ("VGL");
(4) NatWest Ventures (Nominees) Limited ("NWV NOMINEES"), a company
incorporated in England and Wales;
(5) Citicorp Capital Investors Europe Limited, a company incorporated in
Delaware ("CCIEL");
(6) CVC European Equity Partners, L.P., a Delaware limited partnership
("CVCEEP");
(7) CVC European Equity Partners (Jersey), L.P. a limited partnership
organized in Jersey ("CVCEEP JERSEY"); and
(8) NatWest Ventures Investments Limited, a company incorporated in England
and Wales ("NWV INVESTMENTS").
WHEREAS:
(A) The Sellers are the legal and beneficial owners of all of the issued
and outstanding share capital of the Company;
(B) The Lenders are the legal and beneficial owners of the Loans;
(C) Without prejudice to its right to rely upon the Warranties and upon the
undertakings of the Sellers and the Institutions set out in this
Agreement, the Purchaser acknowledges it has conducted, together with
advisers of its own choice, a due diligence exercise in respect of the
Group;
(D) The Sellers wish to sell and, in reliance upon (inter alia) the
Warranties and upon the undertakings of the Sellers and the
Institutions set out in this Agreement, the Purchaser wishes to
purchase all of the issued share capital of the Company for the
consideration and upon the terms set out in this Agreement; and
(E) The Lenders wish to assign and, in reliance upon (inter alia) the
Warranties and undertakings of the Lenders set out in this Agreement,
VGL wishes to accept an assignment of the Loans for the consideration
and upon the terms set out in this Agreement.
IT IS AGREED as follows:
SECTION 1 INTERPRETATION
CLAUSE 1.1 In this Agreement:
"ACCOUNTANTS" bears the meaning ascribed to it in Clause 4.2(a);
1
<PAGE> 5
"ACCOUNTS" means the audited consolidated accounts of the Group for each of the
years ended at 31 December, 1995 and at the Last Accounts Date, and in relation
to each such financial year of the Group means:
(a) the audited consolidated balance sheet of the Company and its
Subsidiaries as at the Accounts Date in respect of that financial year;
(b) the audited consolidated profit and loss account of the Company and its
Subsidiaries in respect of that financial year; and
(c) the audited consolidated statements of cash flow of the Company and its
Subsidiaries in respect of that financial year,
together with any notes, directors' and auditors' reports or statements
included in them;
"ACCOUNTS DATE" means, in relation to any financial year of any Group Company,
the last day of that financial year;
"1997 ACCOUNTS" means the audited consolidated accounts (i.e., consolidated
balance sheet, profit and loss account, statement of cash flows, together with
notes, director's and auditor's reports and statements) of the Group for the
financial year ended at 31 December, 1997;
"AFFILIATE" means with respect to any person, an individual, corporation,
partnership, firm, association, unincorporated organisation or other entity
directly or indirectly controlling, controlled by, or under common control with,
such person;
"APPLICABLE SHARE" bears the meaning ascribed to it in Clause 4.4;
"APPLICABLE INSTITUTIONAL PERCENTAGE" bears the meaning ascribed to it in Clause
5.4;
"COMMERCIAL WARRANTY CLAIM" means a claim for a breach of a Commercial Warranty;
"COMMERCIAL WARRANTIES" means the warranties set out in Schedule 3 made by the
Warrantors in accordance with Clause 6.1.1(a), each a "COMMERCIAL WARRANTY";
"COMPANY" means Zincocelere SpA, a company incorporated in Italy, whose details
appear in Part A of Schedule 2 to this Agreement;
"COMPETITION CONDITION" means the Condition Precedent specified in Clause
3.1(a);
"COMPLETION" means completion of the sale and purchase of the Shares and the
assignment of the Loans pursuant to Section 10 of this Agreement;
"COMPLETION AND POST-COMPLETION COVENANTS" means the covenants of the parties
set forth in Sections 2, 4 , 10, 12, 17 and 20 and Clauses 6.12 and 6.13;
"COMPLETION DATE" means 12.01a.m. (Milan, Italy local time) on the date
specified for Completion in Clause 10.1;
"CONDITION PRECEDENT" means the condition precedent set forth in Section 3;
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<PAGE> 6
"CONTROL, CONTROLLING AND CONTROLLED" has the meaning indicated in article 2359,
paragraphs 1 and 2, of the Italian Civil Code;
"COSTS" means liabilities, losses, damages, reasonably incurred costs (including
legal costs) and reasonably incurred expenses, in each case of any nature
whatsoever;
"COVENANTS" means any of the covenants of the parties set forth in this
Agreement, including without limitation the Institutional Warranty Covenant, the
Pre-Completion Commercial Covenants and the Fundamental Covenants;
"COVENANT CLAIM" means any claim for breach of the Covenants;
"CVC ENTITIES" means CCIEL, CVCEEP and CVCEEP Jersey;
"CVC LENDERS" means jointly and severally CCIEL, CVCEEP and CVCEEP Jersey;
"DISCLOSURE LETTER" means the letter from the Warrantors to the Purchaser
executed and delivered on the date of this Agreement making certain disclosures
against the Commercial Warranties and the Tax Indemnity;
"DISCLOSURE LETTER AS UPDATED" bears the meaning ascribed to it in Clause 6.1.2;
"ECSA" means European Circuits SA, a company incorporated in Luxembourg;
"ESCROW AGENT" means National Westminster Bank plc Princes Street London branch;
"ESCROW AGREEMENT" means the escrow agreement to be entered into at Completion
in the agreed form marked "A";
"ESCROW SUM" means 2,000,000,000 Lire or such sum as remains at any time
standing to the credit of the Escrow Account;
"ESTIMATED NET DEBT" bears the meaning ascribed to it in Clause 4.2(a);
"FUNDAMENTAL COVENANTS" means collectively the Pre-Completion Primary Covenants,
Completion and Post-Completion Covenants and the Institutional Seller Covenants;
"FUNDAMENTAL COVENANT CLAIM" means any claim for breach of any of the
Fundamental Covenants;
"GIANNI ORIGONI" means Gianni, Origoni & Partners of City Tower, 40 Basinghall
Street London EC2V 5DE;
"GROUP" means the Company and the Subsidiaries;
"GROUP COMPANY" means the Company or any other member of the Group at the date
hereof;
"ITALIAN GAAP" means the accounting principles set forth or contained at the
date hereof in the Italian Civil Code in any applicable Italian law as
interpreted by the Italia Accounting Profession ("Principi Contabili Predisposti
dai Consiglio Nazionale dei Dottori Commercialisti e dei Ragionieri");
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<PAGE> 7
"INDEBTEDNESS" shall mean, with respect to each Group Company, (i) all
obligations for borrowed money, (ii) all obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations in respect
of letters of credit, other than trade letters of credit, or bankers' acceptance
or similar instruments (or reimbursement obligations with respect thereto), (iv)
all obligations to pay the deferred purchase price of property or services,
except trade credit incurred in the ordinary course of business consistent with
past practices (which for the avoidance of doubt may include the payment of
trade creditors past their due date) and except ordinary course obligations
requiring payment (without interest) not more than twelve months from the date
of purchase, (v) all obligations as lessee under any capital lease, (vi) all
indebtedness of others secured by a security interest (other than a lien arising
by operation of law or a retention of title claim, in each case arising in the
ordinary course of business with respect to items covered by paragraph (iv)) on
any asset of any Group Company, whether or not such indebtedness is assumed,
provided that, for the purpose of determining the amount of any such
indebtedness, if recourse with respect to such indebtedness is limited to the
fair market value of such asset, the amount of such indebtedness shall be
limited to the fair market value of such asset, (vii) all indebtedness of others
guaranteed by such person or entity, (viii) to the extent not otherwise
included, aggregate net obligations under any interest rate swap agreements,
currency swap agreements (other than those entered into with the object of
hedging the Group's exposure to movements in foreign currency arising from the
Group's expected or contracted purchases of raw materials and the sale of
finished goods in another currency) and other similar agreements or arrangements
designed to protect such person or entity against fluctuations in interest rates
or currency values (other than those entered into with the aforementioned
object) or the price of any commodity used in the business of such person or
entity and (ix) an amount equal to the provision of LIT 270 million made in
respect of the tax liability arising on the disposal of APL Italia S.r.l. by the
Company; and all penalties and fees accruing in respect of any of (i) to (viii)
above;
"INSTITUTIONS" means together the NWV Entities and the CVC Entities;
"INSTITUTIONAL SELLER COVENANTS" bears the meaning ascribed to it in Clause 7.1;
"INSTITUTIONAL COVENANT CLAIMS" means any claim for breach of an Institutional
Seller Covenant;
"INSTITUTIONAL SELLER" means ECSA;
"INSTITUTIONAL TITLE CLAIM" means any claim for breach of the Title Warranties
given by each of the Institutions on behalf of the Institutional Seller;
"INSTITUTIONAL WARRANTY COVENANT" bears the meaning ascribed to it in Clause
7.2;
"INTELLECTUAL PROPERTY RIGHTS" means patents, trade marks, service marks, trade
names, design rights, copyright (including rights in computer software), rights
in know-how and other intellectual property rights, in each case whether
registered or unregistered and including applications for the grant of any such
rights and all rights or forms of protection having equivalent or similar effect
anywhere in the world;
"LAST ACCOUNTS" means, in relation to any Group Company, the Accounts of that
company in respect of its financial year ended on the Last Accounts Date;
"LAST ACCOUNTS DATE" means 31 December 1996;
"LENDER PRE-COMPLETION PRIMARY COVENANT CLAIM" means any claim for a breach of
the Covenants of the Lenders set forth in Clause 8.4;
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"LENDERS" means NWV Nominees and the CVC Lenders;
"LIRE" means the lawful currency of the Republic of Italy;
"LOANS" means the subordinated loan agreement between the Company and the
Lenders dated 27 February 1996 and including for the avoidance of doubt the
loans (and interest accrued but unpaid on the Completion Date thereon) due from
the Company to the Lenders thereunder;
"LOAN PURCHASE PRICE" bears the meaning ascribed to it in Clause 4.3;
"LOAN WARRANTIES" means the Warranties set out in Schedule 5 made by the Lenders
in accordance with Clause 6.1(b);
"LOAN WARRANTY CLAIM" means any claim for breach of the Loan Warranties;
"MANAGEMENT ACCOUNTS" means the unaudited consolidated management accounts of
the Group for the period commencing on 1 January 1997 and ending on the
Management Accounts Date;
"MANAGEMENT ACCOUNTS DATE" means November 30, 1997;
"MANAGEMENT AGREEMENT" means the Interim Management Agreement dated 27 February
1996 between Olivetti and the Institutional Seller;
"MANAGEMENT OPTIONS" means options over issued shares in the Company owned by
the Institutional Seller granted to the Warrantors;
"NWV ENTITIES" means NWV Nominees and NWV Investments;
"NET DEBT" means the aggregate amount of the Indebtedness of the Group (other
than the Loans), together with the accrued and unpaid Net Interest thereon, as
of the Completion Date, less the available book cash or cash equivalent balances
of the Group as of the Completion Date;
"NET INTEREST" means accrued and unpaid interest on Indebtedness of the Group
(other than the Loans) as of the Completion Date less any amount in respect of
such accrued and unpaid interest which any Group Company is contractually
entitled to receive reimbursement from a government entity upon the Group's
payment of such interest, but only to the extent of the entitled reimbursement;
"PRE-COMPLETION COMMERCIAL COVENANTS" means the covenants of the Warrantors set
forth in Clauses 8.1 and 8.2;
"PRE-COMPLETION PRIMARY COVENANTS" means the covenants of the Sellers set forth
in Clause 8.3;
"PROPERTIES" means the freehold and leasehold properties of the Group, brief
details of which are set out in Schedule 4;
"PURCHASER'S GROUP" means VGL and its Affiliates;
"PURCHASER'S SOLICITORS" means Weil, Gotshal & Manges of One South Place, London
EC2M 2WG;
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<PAGE> 9
"RELEVANT CLAIM" any claim for breach of any of the terms and conditions of this
Agreement and except a Title Claim or a Fundamental Covenant Claim;
"RESERVED CLAIM AMOUNT" bears the meaning ascribed to it in Clause 6.4(a);
"SCHEDULES" means Schedules 1-5 to this Agreement and Schedule shall be
construed accordingly;
"SECURITY INTEREST" means any security interest of any nature whatsoever
including, without limitation, any mortgage, charge, pledge, lien, assignment by
way of security or other encumbrance;
"SELLERS' SOLICITORS" means Macfarlanes of 10 Norwich Street, London EC4A 1BD;
"SEVERAL FUNDAMENTAL COVENANT" bears the meaning ascribed thereto in Clause
6.8(b);
"SHARES" means all the issued and fully paid ordinary shares, par value 1,000
Lire each in the capital of the Company;
"SHARE PURCHASE PRICE" bears the meaning ascribed to it in Clause 4.1;
"SUBSIDIARIES" means the subsidiaries of the Company, details of which are set
out in Part B of Schedule 2;
"SUBSIDIARY" of a company or corporation means any company or corporation:
(a) which is controlled, directly or indirectly, by the first-mentioned
company or corporation for the purposes of Article 2359, paragraphs 1
and 2, of the Italian Civil Code; or
(b) which is a subsidiary of another subsidiary of the first-mentioned
company or corporation;
and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct its
affairs and/or to control the composition of its board of directors or
equivalent body.
"TAX" means with respect to each Group Company, as applicable, any and all
state, local or foreign tax and duties including, but not limited to, those
relating to income, gross receipts, value added, importation and exportation of
goods and services, registration of acts or documents, license, payroll,
employment, severance, stamp, occupation, environment, capital stock, franchise,
profits, social security (or similar), unemployment disability, real property,
personal property or assets;
"TAXATION AUTHORITY" has the meaning given to it in the Tax Indemnity;
"TAX INDEMNITY" means the indemnity as to Tax matters contained in Section 11;
"TAX INDEMNITY CLAIM" means any claim for breach of the Tax Indemnity;
"TAX WARRANTIES" means those of the Commercial Warranties set out in part D of
Schedule 3;
"THIRD PARTY CLAIM" bears the meaning ascribed to it in Clause 6.12;
"TITLE CLAIM" means any claim for breach of any of the Title Warranties;
"TITLE WARRANTY OR WARRANTIES" means each of the Loan Warranties and the
warranties set out in Clause 5.2.1, Clause 5.2.2 and Clause 5.3;
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<PAGE> 10
"WARRANTIES" means all of the Title Warranties and the Commercial Warranties;
"WARRANTORS" means the all of the Sellers other than the Institutional Seller;
"WARRANTOR TITLE CLAIM" means any claim for breach of any of the Title
Warranties given by each of the Warrantors.
CLAUSE 1.2 In this Agreement, unless the context otherwise requires:
(a) references to "PERSONS" shall include individuals, bodies corporate
(wherever incorporated), unincorporated associations and partnerships;
(b) the headings are inserted for convenience only and do not affect the
interpretation of this Agreement;
(c) any reference to an "ENACTMENT" is a reference to it as from time to
time, but on or prior to the date hereof, amended, consolidated or
re-enacted (with or without modification) and includes all instruments
or orders on or prior to the date hereof made under such enactment;
(d) for the purposes of any statement qualified by the expression "TO THE
BEST KNOWLEDGE OF THE WARRANTORS" or "SO FAR AS THE WARRANTORS ARE
AWARE" or any similar expression the Warrantors shall only be deemed to
have such knowledge or awareness if (i) any of the Warrantors have
actual knowledge or awareness of the relevant matter or (ii) any Group
Company has received or generated written documentation relating to the
relevant matter;
(e) unless otherwise specifically provided herein as to a particular
matter, any matter or set of circumstances (including the absence of
such matter or set of circumstances) qualified as having or not having,
as the case may be, a "MATERIAL ADVERSE EFFECT" means any of the
foregoing whose presence or absence causes a loss to or diminution in
the value of the Group in an amount of at least 5,000,000,000 Lire;
(f) reference to any act being "THREATENED" shall be construed as a
reference to an act which is threatened in writing or otherwise in
circumstances where the Warrantors reasonably believe that the
threatened act will be carried out;
(g) any reference to a document "IN THE AGREED FORM" is to the form of the
relevant document agreed between the parties and for the purpose of
identification initialled by each of them or on their behalf (in each
case with such amendments as may be agreed by or on behalf of the
Sellers and the Purchaser); and
(h) any reference to the plural noun shall import the singular and vice
versa.
SECTION 2. SALE AND PURCHASE OF THE SHARES AND ASSIGNMENT OF THE LOANS
CLAUSE 2.1 Subject to the terms of this Agreement and in particular subject
to the fulfilment of the Condition Precedent, the Sellers hereby sell, and the
Purchaser hereby purchases, the Shares, together with all rights attaching to
the Shares, free from all security interests, options, equities, claims or other
third party rights (including rights of pre-emption) of any nature whatsoever.
CLAUSE 2.2 Subject to the terms of this Agreement and in particular subject to
the fulfilment of the Condition Precedent, the Lenders hereby assign and
transfer to VGL, and VGL hereby accepts
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the assignment and transfer of, the Loans, together with all rights attaching to
the Loans, free from all security interests, options, equities, claims or other
third party rights (including rights of pre-emption) of any nature whatsoever.
For the avoidance of doubt, without prejudice to the Loan Warranties, the
assignment and transfer of the Loans shall be without recourse to the Lenders.
1.1 SECTION 3 CONDITION PRECEDENT
CLAUSE 3.1 The obligations of the Purchaser and VGL under Clauses 2.1 and 2.2
and Section 10 are conditional upon:
(a) the Purchaser having received the clearance of the Italian Anti-Trust
Authority under Article 16 of Law 287/90 of the Italian Civil Code or all
applicable waiting periods thereunder having expired so as to permit the sale of
the Shares on the terms and conditions set forth under this Agreement; and
(b) as at the date of satisfaction of the condition referred to in (a) above
and on the Completion Date;
(i) the Commercial Warranties as qualified by the Disclosure Letter being true
in all material respects as of the date of this Agreement;
(ii) the Commercial Warranties as qualified by the Disclosure Letter as Updated
being true in all material respects at Completion as if made on and as of that
date;
(iii) the Disclosure Letter as Updated containing no material disclosure which
was not disclosed in the Disclosure Letter;
(iv) all Title Warranties being true in all respects as of the date of this
Agreement and (except as otherwise specifically limited as of a prior date in
the Title Warranties) on and as of the Completion Date, as if made on and as of
that date;
(v) the Sellers, the Lenders and the Institutions, as applicable, together
having performed or complied in all material respects with those of their
respective Covenants required to be performed or complied with by the Sellers,
the Lenders and the Institutions, as applicable, on and as of the Completion
Date; and
(vi) there not having occurred since the date of this Agreement any event or
circumstance that has had, or could reasonably be expected to result in, a
material adverse effect on the operations, liabilities, assets, results of
operations or financial condition of the Group. For the purposes of this clause
an event or circumstance shall not include the following occurrences:
(aa) any change in the business climate in Italy, including, but not limited to,
any political, economic or financial changes; or
(bb) any change in the printed circuit board industry in general, including, but
not limited to, those changes affecting selling prices for the Group's products
and the Group's raw material availability or costs; or
(cc) any change in stock or debt market conditions, whether in Italy or
elsewhere, or in the level of exchange or interest rates; or
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(dd) any losses of customers arising solely from the proposed acquisition of the
Group by a member of the Purchaser Group; or
(ee) any losses of customers (net of any gains of customers) of the Group which
are normal in the context of the Group's trading.
CLAUSE 3.2 The obligation of the Sellers under Clause 2.1 and the obligations of
the Lenders under Clause 2.2 will be conditional on the satisfaction of the
Competition Condition.
CLAUSE 3.3 Each of the parties undertakes to use all reasonable endeavours to
ensure that the Competition Condition is fulfilled as soon as reasonably
practicable after the date of this Agreement and in any event by 13 March 1998.
SECTION 4 CONSIDERATION
CLAUSE 4.1 The total consideration for the sale of the Shares (the "SHARE
PURCHASE PRICE") to be paid by the Purchaser to the Sellers pursuant to Clauses
10.5.1(a) and (b) shall be 180,000,000,000 Lire less the aggregate of:
(a) Net Debt; and
(b) the Loan Purchase Price.
CLAUSE 4.2
(a) On or prior to the third business day after satisfaction of the
Competition Condition, the Sellers shall deliver to the Purchaser a
good faith computation of the Net Debt (the "ESTIMATED NET DEBT")
prepared by the Sellers in conjunction with the Milan office of Arthur
Andersen S.p.A. (the "ACCOUNTANTS").
(b) The Sellers and the Purchaser shall proceed to Completion using the
Estimated Net Debt as Net Debt for the purposes of calculating the
amount of the Share Purchase Price to be paid on Completion. If, within
30 days of Completion, the Purchaser disputes the Estimated Net Debt,
and the parties are unable to resolve such dispute within 35 days of
Completion, the determination of the Net Debt shall be referred by any
party for resolution to the Accountants prior to the 36th day following
Completion. The Accountants will act in accordance with Article 1349 of
the Italian Civil Code and make a determination of the amounts in
dispute respecting the Net Debt, which determination will be (i) in
writing, (ii) furnished to each of the parties hereto as promptly as
practicable after the items in dispute have been referred to the
Accountants and, in any event, within 60 days of Completion, (iii) made
neither on a discretional nor on an equitable basis but rather in
accordance with this Agreement, and (iv) conclusive and binding on the
parties hereto. The Accountants, in their sole discretion, will
determine (A) the nature, format, and limitations of the evidence that
the Purchaser and the Sellers may submit to the Accountants for
consideration in connection with the resolution of any disagreement
with the calculation of the amounts in dispute respecting the Net Debt,
(B) the rules and procedures for submitting such evidence, and (C) the
personnel of the Accountants who will review such evidence and resolve
such disagreement. The fees and expenses of the Accountants will be
borne as the Accountants shall direct and otherwise as to one-half by
the Purchaser and one-half by the Sellers. The Purchaser and each
Seller will use commercially reasonable efforts to cause the
Accountants to render their decision as soon as reasonably practicable,
including without limitation by promptly complying with all reasonable
requests by the Accountants for
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information, books, records, and similar items and so as to comply with
the timetable established by this Clause.
(c) If it is determined by the Accountants pursuant to Clause 4.2(b) that
the Net Debt is greater than the Estimated Net Debt the Warrantors and
the Institutions (to the extent of their respective Applicable Shares
and as between the Institutions, to the extent of their respective
Applicable Institutional Percentage) hereby agree upon demand
immediately to reimburse the Purchaser on a Lire for Lire basis in
respect of the amount by which the Estimated Net Debt was less than the
actual amount of Net Debt. Similarly, in the event it is determined by
the Accountants pursuant to Clause 4.2(b) that the Net Debt is less
than the amount of the Estimated Net Debt the Purchaser hereby agrees
to pay on demand immediately to the Sellers (in accordance with their
Applicable Shares) on a Lire for Lire basis an amount in respect of the
amount by which the Estimated Net Debt was greater than the actual
amount of Net Debt.
CLAUSE 4.3 The total consideration (the "LOAN PURCHASE PRICE") for the
assignment and transfer of the Loans to be paid by VGL to the Lenders pursuant
to Clause 10.5.2 shall be the aggregate unpaid principal of, and all accrued and
unpaid interest on, the Loans as of the Completion Date as certified to VGL by
the Lenders and the Group on the Completion Date.
CLAUSE 4.4 The amount of the Share Purchase Price payable to each Seller shall
be the percentage (the "APPLICABLE SHARE") specified opposite that Seller's name
in Column 4 of Schedule 1 multiplied by the Share Purchase Price; provided
however, in the case of a Seller who is also a Warrantor, such amount shall be
determined after deducting the portion of the Escrow Sum paid by the Purchaser
to the Escrow Agent with respect to such Seller. The Escrow Sum shall be paid by
the Purchaser on behalf of the Warrantors (in the proportion, as to each such
Warrantor, that the Applicable Share of each Warrantor bears to the Applicable
Share of all the Warrantors) to the Escrow Agent at Completion and shall be held
by the Escrow Agent in accordance with the terms of the Escrow Agreement.
CLAUSE 4.5 If any payment is made to the Purchaser by any of the Warrantors or
the Institutions under or in respect of any breach of this Agreement (including,
without limitation, any payment pursuant to any Commercial Warranty Claim, Tax
Indemnity Claim or Title Claim, or Fundamental Covenant Claim), the payment
shall so far as possible be treated as a reduction in the Share Purchase Price.
CLAUSE 4.6 Not less than three business days prior to Completion, the Sellers
shall deliver to the Purchaser and the Accountants a written statement
confirming the amount of Indebtedness in respect of borrowed money of each of
the Group's lenders of borrowed money at Completion. Such statement shall be
accompanied by a statement from each such lender confirming the amount of
Indebtedness in respect of borrowed money payable to each such bank lender.
SECTION 5 PURCHASER AND SELLER TITLE WARRANTIES AND LIMITATIONS
CLAUSE 5.1 The Purchaser and VGL hereby jointly and severally warrant and
confirm to the Sellers as of the date of this Agreement and (except as
specifically limited to a prior date below) as of the Completion Date, as
follows:
(a) in the case of the Purchaser, it is a corporation validly existing,
duly incorporated and in good standing under the laws of Italy;
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<PAGE> 14
(b) in the case of VGL, it is a company validly existing, duly incorporated
and in good standing under the laws of England and Wales;
(c) in the case of each of the Purchaser and VGL, it has all necessary
corporate powers to enter into this Agreement and to perform any and
all of its obligations under this Agreement, and the person who has
executed this Agreement on behalf of each of the Purchaser and VGL,
respectively, is a duly authorised director or officer of the Purchaser
and VGL, respectively, vested with full powers to bind the Purchaser
and VGL, respectively, in relation to any and all of such obligations;
(d) as of the date of this Agreement, there are no pending or threatened
judicial or administrative proceedings which would have a materially
adverse effect on the Purchaser's or VGL's performance of its
obligations arising under this Agreement;
(e) the execution of this Agreement and of the transactions contemplated
hereby will not result in the breach of any legal provision affecting
the Purchaser or VGL which would affect the validity or enforceability
of this Agreement as against the Purchaser or VGL.
CLAUSE 5.2.1 Each of the Warrantors (as to himself only) and the Institutions
(as to the Institutional Seller only) severally warrants and confirms (subject
to Clause 5.4) to the Purchaser and VGL as of the date of this Agreement and
(except as specifically limited to a prior date below) as of the Completion Date
that:
(a) as of the date of this Agreement, there are no pending or threatened
judicial or administrative proceedings which would have a materially
adverse effect on such Seller's performance of its obligations arising
under this Agreement;
(b) the execution of this Agreement and of the transactions contemplated
hereby will not result in the breach of any legal provision affecting
such Seller which would affect the validity or enforceability of this
Agreement as against such Seller;
(c) there is no pledge, lien or other encumbrances on, over, or affecting
the Shares of such Seller and there is no agreement or arrangement to
give or create any such encumbrance and no claim has been or will be
made by any person to be entitled to any of the foregoing;
(d) this Agreement constitutes and imposes valid, legal and binding
obligations on such Seller, fully enforceable in accordance with its
terms;
(e) Schedule 1 sets forth the names of each such Seller and respective
number of Shares which will, following exercise of the Management
Options, be owned by each Seller, which Shares collectively constitute
all of the share capital of the Company; and
(f) such Seller is, or will be following the exercise of the Management
Options, the sole legal owner of the Shares recorded on Schedule 1,
free from all security interests, options, equities, claims and other
third party rights (including rights of pre-emption and spouse's rights
deriving from "COMUNIONE LEGALE") of any nature whatsoever.
CLAUSE 5.2.2 The Institutions severally warrant and confirm to the Purchaser
as of the date of this Agreement and as of the Completion Date that the
Institutional Seller and the Institutions are entities validly existing and in
good standing under the laws of their respective jurisdictions of organization,
have all necessary partnership or corporate power to enter into this Agreement
and to perform any and all of their respective obligations under this Agreement
and the persons who have
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executed this Agreement on behalf of the Institutional Seller and the
Institutions (or such Institutions' corporate general partner), respectively,
are duly authorised attorneys, officers or directors of the Institutional Seller
and the Institutions, respectively, vested with full power to bind the
Institutional Seller and the Institutions, respectively, in relation to any and
all of such obligations.
CLAUSE 5.3 Each of the Warrantors and the Institutions severally warrants
(subject to Clause 5.4) to the Purchaser and VGL as of the date of this
Agreement and as of the Completion Date, that the authorised share capital of
the Company consists solely of 8,750,000 ordinary shares of which 8,750,000
shares are issued and outstanding. No other share capital of the Company is
issued and outstanding. The Shares constitute all of the issued and outstanding
shares in the share capital of the Company. There are no securities, options,
warrants, rights, calls, commitments, plans, contracts or other agreements of
any character granted or issued by the Company which provide for the purchase,
issuance of any shares in the capital of the Company, nor are any outstanding
securities granted or issued by the Company that are convertible into or
exchangeable (or are exercisable for any shares of the share capital of the
Company) and none are authorised. The Management Options will have been
exercised in full at Completion.
CLAUSE 5.4 Each of the Warrantor's and the Institutions' several liability for
Costs arising from a breach of any Title Warranty shall be limited to each such
Warrantor's and, in the case of the Institutions, the Institutional Seller's
Applicable Share of the Share Purchase Price. The liability of each of the
Institutions for any such Costs arising from a breach of any such Title Warranty
shall be shared in the following proportions (the "APPLICABLE INSTITUTIONAL
PERCENTAGE"): as to 49.32% by the CVC Entities and as to 50.68% by the NWV
Entities; and the Purchaser shall limit its claim as to each Institution to the
Applicable Institutional Percentage of the Institutional Seller's Applicable
Share of any such Costs and for the purposes of this Clause 5.4 and Clause
7.2(a) "INSTITUTION" shall mean either the CVC Entities taken as whole or the
NWV Entities taken as a whole, as appropriate.
SECTION 6 WARRANTIES AND LIMITATIONS
CLAUSE 6.1.1
(a) Subject in each case to the limitations set forth in this Section 6,
the Warrantors jointly and severally warrant to the Purchaser in the
terms of the Commercial Warranties as of the date of this Agreement
(subject in each case to the matters fairly disclosed in the Disclosure
Letter and in the Disclosure as Updated) and as of the Completion Date
(subject in each case to the matters fairly disclosed in the Disclosure
Letter as Updated).
(b) NWV Nominees on the one hand and the CVC Lenders on the other hand
severally warrant to VGL in the terms of the Loan Warranties as of the
date of this Agreement and as of the Completion Date in each case in
respect of that element of the Loans held by them.
CLAUSE 6.1.2 The Warrantors shall have the right to make further disclosures
to the Purchaser at any time prior to Completion and to deliver to the
Purchaser, immediately prior to Completion, a document (the "DISCLOSURE
LETTER AS UPDATED") which shall comprise the Disclosure Letter together
with such further disclosures.
CLAUSE 6.2.1
(a) Each of the Commercial Warranties and Tax Indemnities is separate and
independent and
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shall not be limited or restricted by:
(i) reference to any other Commercial Warranty or the Tax
Indemnity; or
(ii) except as set forth in the Disclosure Letter or the Disclosure
Letter as Updated, any actual or constructive knowledge on the
part of the Purchaser, VGL or any of their respective agents
or Affiliates, whether obtained through any investigation by
or on behalf of the Purchaser, VGL, their respective agents or
Affiliates or otherwise.
(b) Each Title Warranty is separate and independent and shall not be
limited or restricted by:
(i) any disclosure in the Disclosure Letter or the Disclosure
Letter as Updated; it being acknowledged that the Title
Warranties are not subject to disclosure; or
(ii) any actual or constructive knowledge on the part of the
Purchaser, VGL or any of their respective agents or
Affiliates, whether obtained through any investigation by or
on behalf of the Purchaser, VGL, their respective agents or
Affiliates or otherwise.
CLAUSE 6.2.2 Subject to the provisions of Clause 9.2, the rights and remedies
of the Purchaser and VGL as specifically set forth in this Agreement in respect
of the Warranties, the Covenants and the Tax Indemnity shall not be affected by
Completion.
CLAUSE 6.3 The Sellers and the Institutions hereby waive the benefit of all
rights (if any) which the Sellers or the Institutions may have against any Group
Company, or (absent fraud) any present officer or employee of any such company,
on whom the Sellers or the Institutions may have relied in agreeing to any term
of this Agreement or any statement set out in the Disclosure Letter or the
Disclosure Letter as Updated.
CLAUSE 6.4
(a) Neither the Warrantors nor the Institutions shall be liable for any
Relevant Claim unless they receive from the Purchaser written notice,
served in good faith on or before 31 March, 1999, containing reasonable
details of the Relevant Claim including, if reasonably practicable at
the time, the Purchaser's reasonable estimate (on a without prejudice
basis) of the amount of such Relevant Claim. To the extent the
Purchaser does provide such notice prior to 31 March 1999, an amount
determined in accordance with the Escrow Agreement (the "RESERVED CLAIM
AMOUNT") shall be reserved in escrow subject to the terms of the Escrow
Agreement. Any portion of the Escrow Sum remaining in escrow as of 31
March, 1999 that is in excess of the Reserved Claim Amount shall be
released to the Warrantors on 31 March, 1999.
(b) Neither the Warrantors nor the Institutions shall be liable for any
Fundamental Covenant Claim unless they receive from the Purchaser
written notice, served in good faith on or before the second
anniversary of Completion, containing reasonable details of the
Fundamental Covenant Claim including, if reasonably practicable at the
time, the Purchaser's reasonable estimate (on a without prejudice
basis) of the amount of such Fundamental Covenant Claim.
CLAUSE 6.5 The Purchaser shall not be entitled to recover any amount pursuant
to a Relevant Claim unless the amount recoverable, when aggregated with all
other amounts recoverable for
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Relevant Claims exceeds 700,000,000 Lire, in which event, the Purchaser shall
only be entitled to recover any amount in respect of Relevant Claims in excess
of 700,000,000 Lire.
CLAUSE 6.6
(a) The aggregate amount of the liability of the Warrantors to the
Purchaser for Costs related to all Relevant Claims shall not exceed the
Escrow Sum (except, in the case of any individual Warrantor, to the
extent of the amount, if any, of Costs paid from the Escrow Sum to
satisfy a Warrantor Title Claim or a Several Fundamental Covenant Claim
made against that Warrantor pursuant to Clause 6.6(b) in which event,
the Purchaser shall be entitled to recover from the Warrantor breaching
the Title Warranty or Several Fundamental Covenant giving rise to such
Warrantor Title Claim or Several Fundamental Covenant Claim, an amount
equal to the amount paid from the Escrow Sum to satisfy such Warrantor
Title Claim or Several Fundamental Covenant Claim) and the Purchaser
shall have no right to recover against the Warrantors any Costs in
respect of any Relevant Claims to the extent that any such Costs in
respect of such Relevant Claims exceed the Escrow Sum (except as
aforesaid).
(b) The Purchaser shall only be entitled to recover, from the Escrow Sum,
monies due to the Purchaser pursuant to a Title Claim or a Several
Fundamental Covenant Claim made against a Warrantor to the extent of
the portion of the Escrow Sum paid into the Escrow Account by the
Purchaser with respect to such Warrantor (pursuant to Clause 4.4).
CLAUSE 6.7 For the avoidance of doubt, none of the limitations contained in
Clauses 6.4 (a), 6.5 and 6.6(a) shall apply to any Title Claim or Fundamental
Covenant Claim.
CLAUSE 6.8
(a) From and after Completion, the aggregate amount of the liability of
each Warrantor for all Costs in respect of any Title Claims and
Fundamental Covenant Claims shall not exceed such Warrantor's
Applicable Share of the Share Purchase Price. Similarly, from and after
Completion, (i) the aggregate liability of the Institutions for any
Costs in respect of any Title Claims or Fundamental Covenant Claims
made against the Institutions shall not exceed the Institutional
Seller's Applicable Share of the Share Purchase Price; and (ii) the
aggregate liability of each Institution for any Costs related to any
Title Claim or Fundamental Covenant Claims made against the
Institutions shall not exceed the Applicable Institutional Percentage
of the Institutional Seller's Applicable Share of the Share Purchase
Price.
(b) The Purchaser acknowledges, for the avoidance of doubt, that the
Fundamental Covenants comprised within Clauses 6.12, 6.13, 10.2, 12 and
20 ("SEVERAL FUNDAMENTAL COVENANTS") are given on a several rather than
a joint basis and that only that party in breach of the relevant
covenant shall have any liability in respect of such breach.
CLAUSE 6.9 The aggregate liability of the Lenders for all Costs in respect of
any claim under this Agreement shall be limited to the Loan Purchase Price; and
the respective Lender's liability as between them shall be shared 50.68% by NWV
Nominees and 49.32% by the CVC Entities.
CLAUSE 6.10 The Purchaser, the Institutions and the Warrantors expressly agree
that if Costs recoverable under this Agreement as a result of a Commercial
Warranty Claim give rise to a Relief (as defined in Section 11) which reduces or
eliminates an actual liability to Tax of the Purchaser or a member of the
Purchaser's Group prior to 31 March 1999, the Costs shall be reduced by the
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amount of the actual liability to Tax which is eliminated or the amount by which
it is reduced, save that where the Purchaser has to pay income tax on the Costs
received, to the extent that such income tax has not already been taken into
account in calculating the Costs payable, the amount by which the Costs payable
are reduced pursuant to this Clause 6.10(b) shall be reduced by the amount of
income tax so payable.
CLAUSE 6.11 The Warrantors and the Institutions shall have no liability in
respect of any Commercial Warranty Claim or Tax Indemnity Claim:
(a) to the extent that provision or reserve (and only to the extent of the
numerical provision or reserve), in respect of the liability or other
matter giving rise to the Commercial Warranty Claim or Tax Indemnity
Claim in question, was made in the Management Accounts as of the
Management Accounts Date;
(b) to the extent that the Commercial Warranty Claim or Tax Indemnity Claim
in question arises, or the amount of such Commercial Warranty Claim or
Tax Indemnity Claim is increased, as a result of any increase in rates
of taxation or any change in the law or published practice of a revenue
authority made after the date of this Agreement with retrospective
effect;
(c) to the extent that the Commercial Warranty Claim or Tax Indemnity Claim
in question would not have arisen but for a voluntary act or
transaction carried out by the Purchaser or any member of the
Purchaser's Group (including the Company or any of the Subsidiaries)
after the Completion Date otherwise than in the ordinary course of
business (unless required by law or regulation) and which the Purchaser
or such member was aware might give rise to that Commercial Warranty
Claim or Tax Indemnity Claim;
(d) if any member of the Group is insured against any loss or damage
forming the basis of the Commercial Warranty Claim in question under
the terms of any insurance policy for the time being in force, to the
extent that the Company or any such Subsidiary receives payment under
any such policy, and only to that extent; provided that the
Institutions and Warrantors (to the extent of their respective
Applicable Share) shall indemnify the Purchaser and each of its Group
Companies in respect of the reasonable out of pocket Costs of making
such insurance claim and any additional out of pocket Costs arising
from such Commercial Warranty Claim (which would not have arisen but
for such Commercial Warranty Claim) including any increased insurance
premium arising therefrom and; provided that, if any of the Warrantors
and the Institutions, having received notice of the Commercial Warranty
Claim in question under Clause 6.4 shall have requested that a claim be
made under the relevant insurance policy, the Purchaser shall provide
such (non-binding) estimate in good faith as it can of the amount of
any such Costs; and any direct Costs associated with the replacement of
insurance policies which terminate as a result of such claim and
further provided that this paragraph (d) shall not apply if the
Warrantors and the Institutions shall (before any Commercial Warranty
Claim is met under a relevant insurance policy) request that no claim
is made under an insurance policy;
(e) where the matter giving rise to the Commercial Warranty Claim or Tax
Indemnity Claim has been fairly disclosed in the Disclosure Letter or
the Disclosure Letter as Updated or (but without prejudice to the
requirement that disclosure be fair) any document referred to therein;
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(f) in relation to Tax Indemnity Claims or Claims under the Tax Warranties,
to the extent that such claim arises directly or indirectly as a result
of a transaction or other matter in the ordinary course of business of
any Group Company after the Management Accounts Date which would have
given rise to a provision or reserve in the Management Accounts had it
arisen prior to the Management Accounts Date.
CLAUSE 6.12
(a) Without prejudice and subject to the Purchaser's obligations under
Clauses 6.13 and 6.15(a), if a Commercial Warranty Claim, Title Claim
or Tax Indemnity Claim arises as the result of the assertion or
commencement of any action against any Group Company by a third party
or, in the case of a Tax Indemnity Claim, a Taxation Authority (a
"THIRD PARTY CLAIM"), the defence of such Commercial Warranty Claim,
Title Claim or Tax Indemnity Claim shall be totally within the control
and at the direction of the Purchaser and the relevant Group Company.
(b) The Warrantors and the Institutions agree to co-operate and provide all
relevant information necessary to assist the Purchaser and the relevant
Group Company in the defence of any Third Party Claim. Neither the
Warrantors nor the Institutions shall make any admission of liability,
agreement or compromise with any person respecting a Third Party Claim
without the prior written consent of the Purchaser.
CLAUSE 6.13
(a) If the Purchaser and/or any Group Company is or may be entitled to
recover from some other person any sum in respect of any matter giving
rise to a Commercial Warranty Claim, the Purchaser shall procure that
all reasonable steps are taken to enforce recovery and, if any sum is
so recovered, then the amount payable by the Warrantors or the
Institutions (as to their respective Applicable Shares and, as between
the Institutions as to their respective Applicable Institutional
Percentage) in respect of that Commercial Warranty Claim shall be
reduced by an amount equal to the sum recovered or (if any amount shall
already have been paid by the Warrantors or the Institutions (as to
their Applicable Shares and as between the Institutions, as to their
respective Applicable Institutional Percentage) in respect of that
Commercial Warranty Claim) there shall be repaid to the Warrantors or
the Institutions (as to their Applicable Shares and, as between the
Institutions, as to their respective Applicable Institutional
Percentage) an amount equal to the amount recovered or (if less) the
amount of such payment (in either case with any interest paid by such
other person but less both any tax chargeable on any member of the
Purchaser and/or any Group Company in respect of the sums so recovered
and all reasonable costs, charges and expenses of recovery). Neither
Warrantors nor the Institutions shall have rights in respect of any
amount so recovered, or capable of recovery, other than to reduce or
extinguish or effect repayment of (pursuant to this Clause 6.13(a))
amounts otherwise payable or paid by the Warrantors or the
Institutions. Where any such recovery is made by the Purchaser, nothing
in this Clause 6.13(a) shall prevent the Purchaser from making further
recoveries in respect of the same shortfall, damage, deficiency, breach
or other set of circumstances. The Purchaser shall procure that the
Warrantors and the Institutions are kept fully informed of all matters
relating to a Third Party Claim (including being provided with copies
of any relevant documentation relating to such Third Party Claim)
provided that the Purchaser shall not be obliged to provide such
information in breach of any client attorney privilege or any
confidentiality obligation. The Warrantors and the Institutions shall
be entitled to make representations in respect of the conduct of any
negotiations or proceedings relating to such
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Third Party Claim and the Purchaser shall take reasonable note of such
representations in the conduct of such negotiations or proceedings.
(b) Where the Company continues to have the benefit of warranties and
indemnities given by Olivetti S.p.A. ("OLIVETTI") and Olteco-Fin S.p.A.
("OLTECO") (collectively the "O WARRANTIES") pursuant to a supplemental
agreement dated 6 January 1996 and made between Olivetti (1), Olteco
(2) and Caine S.R.L. (3) (as amended on February 27, 1997 by an
Addendum to the Supplemental Agreement, an Agreement and
Acknowledgement and a Funding Agreement), the Purchaser will procure
that, to the extent that matters giving rise to a Commercial Warranty
Claim also give rise to a breach of the O Warranties, the Company shall
enforce recovery from Olivetti and/or Olteco of any loss suffered as a
result of a breach of the O Warranties before seeking recovery under
and in respect of such Commercial Warranty Claim. Where the
Institutional Seller continues to have the benefit of warranties and
indemnities given by Olivetti and Olteco pursuant to the Management
Agreement in respect of matters giving rise to a Commercial Warranty
Claim or a Tax Indemnity Claim the Purchaser shall procure that the
Group Companies make available to the Institutional Seller and the
Institutions all documents and information or copies thereof in the
possession or under the control of each Group Company which are
reasonably required for the enforcement of recovery against Olivetti
and/or Olteco pursuant to such warranties and/or indemnities provided
that the Purchaser shall not be obliged to provide any such information
in breach of any client attorney privilege or any confidentiality
obligation.
CLAUSE 6.14 A failure to give timely notice or to include any specified
information in any notice pursuant to this Sections 6 will not affect the rights
or obligations of any party hereunder, except that the failure to give the
notice required by Section 6.4(a) prior to 31 March, 1999 with respect to the
preservation of Relevant Claims shall be a bar to any assertion of any Relevant
Claims after such date to the extent not included in the notice pursuant to
Clause 6.4(a).
CLAUSE 6.15 For the avoidance of doubt:
(a) nothing in this Agreement shall limit the Purchaser's obligation to
mitigate its loss in respect of any Relevant Claim;
(b) neither the Purchaser nor any Group Company shall be entitled to
recover damages in respect of any one shortfall, damage, deficiency,
breach or other set of circumstances giving rise to one or more
Relevant Claims to the extent that it has previously made recovery in
respect of the same shortfall, damage, deficiency, breach or other set
of circumstances pursuant to another Relevant Claim;
(c) no settlement or compromise of a Third Party Claim without the consent
of the Institutions and the Warrantors shall have the effect of
automatically creating liability for the Institutions and the
Warrantors for Costs arising out of a Commercial Warranty Claim or Tax
Indemnity Claim based upon such Third Party Claim. Similarly no such
settlement or compromise shall relieve the Institutions or the
Warrantors for liability for a Commercial Warranty Claim, Tax Indemnity
Claim or Title Claim arising out of such Third Party Claim to the
extent the Group Company or the Purchaser thereafter successfully
asserts that the existence of such Third Party Claim breached a
Commercial Warranty, or Title Warranty. Notwithstanding anything to the
contrary herein contained, however, reasonable Costs of defence of any
Third Party Claim shall always be recoverable regardless of the merits
of such Third Party Claim if such Third Party Claim would give rise to
a Title Claim; and
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(d) except where the Commercial Warranties specifically refer to the
Disclosure Letter as containing true and complete information
respecting a matter, the Disclosure Letter is a limitation of the
Commercial Warranties and the Tax Indemnity only, and nothing set forth
in the Disclosure Letter shall expand the Commercial Warranties and the
Tax Indemnity beyond the specific Commercial Warranties set out in
Schedule 3 and the specific provisions of Section 11.
CLAUSE 6.16 Subject to the provisions of Clause 6.6(b) the Purchaser shall be
entitled to make any of the Commercial Warranty Claims, Tax Indemnity Claims,
Fundamental Covenant Claims against Warrantors and Warrantor Title Claims (but
not Institutional Title Claims, Institutional Covenant Claims, Loan Warranty
Claims, Lender Pre-Completion Primary Covenant Claims or Fundamental Covenant
Claims against Institutions or the Institutional Seller) against the Escrow Sum
in accordance with the Escrow Agreement. For the avoidance of doubt, the
Warrantors' liabilities in respect of Warrantor Title Claims and Fundamental
Covenant Claims are not limited to the Escrow Sum.
CLAUSE 6.17 For the purposes of Schedule 3 and Clause 6.15(d), references to
the Disclosure Letter shall include a reference to the Disclosure Letter as
Updated.
CLAUSE 6.18 Where a Relevant Claim or a Fundamental Covenant Claim has been
made against any of the Warrantors in circumstances in which such claims have
given rise or may give rise to a Relevant Claim or a Fundamental Covenant Claim
against any of the Institutions or the Institutional Seller, the relevant
Warrantor(s) shall not settle or compromise the claim(s) made against him or
them without the prior written consent of the Institutions or the Institutional
Seller as appropriate, such consent not to be unreasonably withheld.
SECTION 7 INSTITUTIONAL COVENANTS AND LIMITATIONS AND VGL GUARANTEE
CLAUSE 7.1 In consideration of the Purchaser entering into and acting in
accordance with this Agreement, the Institutions (as principal obligors and not
merely as sureties) jointly and severally, unconditionally and irrevocably
guarantee (the "INSTITUTIONAL SELLER COVENANTS") as a continuing obligation the
proper and punctual performance by the Institutional Seller of its Covenants
under this Agreement.
CLAUSE 7.2
(a) In consideration of the Purchaser entering into and acting in
accordance with this Agreement, the Institutions severally undertake
and covenant with the Purchaser (the "INSTITUTIONAL WARRANTY COVENANT")
that, to the extent and only to the extent that any valid Relevant
Claims exist the aggregate amount of which (the "RELEVANT AMOUNT")
would, or would but for the operation of Clause 6.6, exceed the Escrow
Sum, they will each pay to the Purchaser, at the time liability
therefor is determined in accordance with the arbitration provisions of
this Agreement, an amount equal to their respective Applicable
Institutional Percentage of such Relevant Claims, provided that neither
Institution shall be obliged to pay an amount pursuant to this Clause
7.2 which, when aggregated with all amounts paid by the Institutions in
respect of any Relevant Claims, exceeds an amount equal to its
respective Applicable Institutional Percentage of 13,000,000,000 Lire.
(b) The Institutions shall have no liability to the Purchaser in respect of
any Relevant Claim following 31 March 1999, or Fundamental Covenant
Claim following the second
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anniversary of this Agreement, unless and then only to the extent that
notice of such claim has been properly given pursuant to Clause 6.4.
(c) For the avoidance of doubt but without prejudice to the limitations
contained in this Clause 7.2, the Purchaser shall only be entitled to
recover from the Institutions pursuant to this Clause 7.2 that portion
of the aggregate Costs in respect of all Relevant Claims that is in
excess of the Escrow Sum.
(d) The Institutions' liability under the Institutional Warranty Covenant
shall be subject to the same limitations as those in favour the
Warrantors, provided that the Institutions' particular liability shall
not be limited as provided in Clause 6.6. For the avoidance of doubt
therefore, in an action by the Purchaser pursuant to the Institutional
Warranty Covenant, the Institutions shall be entitled to raise the same
defences against and exceptions to liability (other than Clause 6.6) in
respect of any Relevant Claims as the Warrantors would have been
entitled to raise.
CLAUSE 7.3 For the avoidance of doubt, the Institutional Warranty Covenant
shall terminate and the Institutions shall have no further liability thereunder
in respect of a Relevant Claim on 31 March 1999, save to the extent provided in
Clause 6.4(a) or otherwise on the date on which an aggregate of 13,000,000,000
Lire has been recovered from the Institutions pursuant to Clause 7.2 in respect
of any Relevant Claims.
CLAUSE 7.4 The Institutions' liability under this Section 7 shall not be
discharged or impaired by any amendment to or variation of this Agreement, any
release of, or granting of time or other indulgence to, the Institutional
Seller, the Warrantors or any third party, any liquidation, administration,
receivership or winding-up of the Institutional Seller, the Warrantors or by any
other act or omission or any other events or circumstances whatsoever (whether
or not known to any party) which would or might (but for this Clause) operate to
impair or discharge the Institutions' liability under this Section 7.
CLAUSE 7.5.1 VGL (as principal obligor and not merely as surety) unconditionally
and irrevocably guarantees as a continuing obligation the proper and punctual
performance by the Purchaser of all its Covenants under or pursuant to this
Agreement.
CLAUSE 7.5.2 VGL's liability under Clause 7.5.1 shall not be discharged or
impaired by any amendment to or variation of this Agreement, any release of, or
granting of time or other indulgence to, the Purchaser or any third party, any
liquidation, administration, receivership or winding-up of the Purchaser or by
any other act or omission or any other events or circumstances whatsoever
(whether or not known to any party) which would or might (but for this Clause)
operate to impair or discharge VGL's liability under Clause 7.5.1.
SECTION 8 PRE-COMPLETION UNDERTAKINGS AND DELIVERIES
CLAUSE 8.1 Pending Completion, the Warrantors shall ensure that:
(a) each Group Company shall carry on its business in all material respects
in the ordinary and usual course consistent with past practices and
shall not make (or agree to make) any payment other than routine
payments in the ordinary and usual course of trading consistent with
past practices;
(b) each Group Company shall take all reasonable steps to preserve,
maintain and protect its assets;
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(c) the Purchaser's representatives shall be allowed, upon reasonable
notice and during normal business hours, access to the books and
records of each Group Company (including, without limitation, all
statutory books, minute books, leases, contracts, supplier lists and
customer lists), together with the right to take copies subject to
keeping all such matters strictly confidential and on the basis that if
Completion does not occur, all such copies shall be returned forthwith
to the relevant Group Company; and
(d) as soon as the same are available, the 1997 Accounts shall be delivered
to the Purchaser and as soon as available the Management Accounts for
each calendar month ending prior to the Completion Date shall be
delivered to the Purchaser.
CLAUSE 8.2 Pending Completion, the Warrantors shall ensure that the Company
consults fully with the Purchaser in relation to any matters which may have a
material effect upon the Group and that, without the prior written consent of
the Purchaser, no Group Company shall:
(a) enter into any contract, commitment, arrangement or transaction (or
make a bid or offer which may lead to a contract or commitment) out of
the ordinary course of business or which is of a duration of more than
one year or is of an unusual nature or which could involve an
obligation of a material nature or which may result in any material
change in the nature or scope of the operations of the Group;
(b) agree to any variation, amendment, modification or cancellation of any
existing contract to which that Group Company is a party and which,
individually or in the aggregate, may have a material effect upon the
business, condition (financial or otherwise), or results of operations
of the Group;
(c) acquire or dispose of, or agree to acquire or dispose of, or grant, or
agree to grant in one transaction or any series of related transactions
any charge, mortgage, lien, assignment, encumbrance or other security
interest over, any business or any material asset, other than sales of
inventory in the ordinary course of business and other than the sales
of accounts receivable pursuant to factoring arrangements in existence
on the date hereof;
(d) make any extension of credit or any loans to, guarantee the obligations
of, or make any additional investments in any other person, in each
case other than in the ordinary course of business;
(e) change the terms of employment, including pension fund commitments, of
any Group Company (other than those required by law);
(f) cancel or allow any of the existing insurance policies of the Company
or any of its Subsidiaries to lapse;
(g) write off as uncollectible any accounts receivable or cancel, waive, or
release any debts of or claims against any person, except in the
ordinary course of business and consistent with past practice;
(h) defer any planned capital expenditure intended to be made prior to
Completion until after Completion;
(i) fail to pay payables in a timely manner based on past practices,
accelerate the collection of receivables (in any manner outside of the
Group's customary practices) or fail to maintain
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adequate inventory, in any case in such manner that available book cash
of the Group on the Completion Date is increased;
(j) dispose of any interest in the Shares or any of them or grant any
option or right of pre-emption over, or mortgage, charge, security
interest or otherwise encumber the Shares or any of them;
(k) take any action which would result (or be likely to result) in a breach
of any of the Commercial Warranties or Title Warranties if the
Commercial Warranties and Title Warranties were repeated at Completion;
(l) fail to promptly disclose to the Purchaser all relevant information
which comes to the notice of the Warrantors or the Group in relation to
any fact or matter (whether existing on or before the date of this
Agreement or arising afterwards) which may constitute a breach of any
Commercial Warranty or Title Warranty if the Commercial Warranties and
Title Warranties were to be repeated on or at any time before
Completion; or
(m) take any action or permit any member of the Group to take any action
which is inconsistent with the provisions of this Agreement or the
consummation of the transactions contemplated by this Agreement.
CLAUSE 8.3 None of the Warrantors or the Institutions will before Completion
save as provided for in this Agreement or with the consent of the Purchaser:
(a) permit any Group Company to declare, pay or make any dividend or other
distribution;
(b) permit any Group Company to amend its constitutional documents
or pass any resolution in general meeting;
(c) permit any Group Company to issue, allot or agree to be issued or
allotted any share or loan capital, securities, options or warrants;
(d) permit a Group Company to enter into any transaction, contract or
agreement with any Seller or any Affiliate of a Seller or of any Group
Company; or
(e) liquidate, dissolve, or reorganize any Group Company in any manner.
CLAUSE 8.4 NONE OF THE LENDERS WILL BEFORE COMPLETION:
(a) sell, transfer or otherwise dispose of any interest in the Loans;
(b) modify, amend, terminate, discharge or otherwise change the terms of
the Loans or any documents related thereto; or
(c) take any action which would result (or be likely to result) in a
breaching of any Loan Warranty.
SECTION 9 TERMINATION, RESCISSION AND EXCLUSIVE REMEDY
CLAUSE 9.1 This Agreement may be terminated prior to Completion as follows:
(a) By the mutual consent of the parties; or
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(b) By the Sellers or the Purchaser if Completion shall not have occurred
by 31 March 1998.
Upon termination of this Agreement pursuant to this Clause 9.1, no party shall
have any liability or continuing obligation to another party arising out of this
Agreement, or out of the actions taken in connection with this Agreement, except
that Sections 13 to 24 (inclusive) shall survive termination of this Agreement.
Notwithstanding the foregoing, termination of this Agreement shall not relieve
any party from its liability for a wilful breach, prior to termination, of its
Title Warranties or Fundamental Covenants (subject, however, to the limitations
respecting such Covenants and Warranties set forth in Sections 5, 6 and 7)
CLAUSE 9.2 The Purchaser shall not be entitled to rescind, withdraw from or
otherwise terminate this Agreement at any time after Completion otherwise than
as a result of the fraudulent conduct of the Sellers.
CLAUSE 9.3 From and after the Completion Date, no party to this Agreement
shall be liable or responsible in any manner whatsoever to the other party for
the breach of any Warranties or Covenants, whether for indemnification or
otherwise, except as expressly provided in this Agreement, which provides the
exclusive remedy and cause of action of the parties hereto with respect to
breach of Warranties or Covenants (other than as a result of fraud) arising out
of, or in connection with, this Agreement or any Schedule hereto, or in any
document attached hereto or in any other part of this Agreement or any
certificate delivered in connection herewith.
CLAUSE 9.4 Without prejudice and subject to its rights under this Agreement,
the Purchaser hereby renounces to, and waives, and shall cause all Group
Companies to renounce to and waive, any and all claims, actions and/or
proceedings against Mr Bellazzini, Mr Silva, Mr Pacetti and all other directors
of Zincocelere in respect of the activities carried on by them solely in their
capacity as directors of any Group Company when acting solely within the scope
of their authority as a director (and without obtaining personal benefit) of the
relevant Group Company in favour of such Group Company.
SECTION 10 COMPLETION
CLAUSE 10.1 The sale and purchase of the Shares shall be completed (the
"COMPLETION date") at the offices of Gianni Origoni in Milan at Piazza
Belgioioso 2, 20121 Milano, Italy or such other place as the parties agree on
the fifth business day after satisfaction of the Competition Condition, provided
that the other elements of the Condition Precedent are satisfied or waived by
the Purchaser on or prior to such day, or such other date or place as the
parties may agree. The events referred to in the following provisions of this
Section 10 shall take place on the Completion Date.
CLAUSE 10.2 The Sellers shall severally procure the delivery or make available
to the Purchaser of:
(a) a duly executed endorsement of the Shares effecting the transfer into
the name of the Purchaser or such other person as the Purchaser may, in
accordance with 15.1, direct in respect of all of the Shares, which
endorsement shall have been notarised by an Italian notary public,
together with an extract from the Shareholders' Book of the Company
showing the registration of such transfer duly executed by a director
of the Company;
(b) the Certificates of Incorporation, Shareholder Book (with any unissued
share certificates) and all minute books and other statutory books
(which shall be written up to but not including Completion) of the
Company and of each Group Company;
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<PAGE> 26
(c) letters of resignation in the agreed form marked "B" duly executed as a
deed by such of the directors as the Purchaser shall designate in
writing at least five (5) days prior to Completion;
(d) an original copy of the Escrow Agreement duly executed by the Sellers;
(e) a legal opinion relating to ECSA in the agreed form marked "C" duly
executed by Bonn & Schmitt;
(f) a certified copy of the corporate resolution adopted by ECSA approving
the sale of the Company;
(g) an extract from the registry of Commerce and Companies and a
Certificate of non-bankruptcy in respect of ECSA; and
(i) a termination of the Shareholders Agreement dated 27 February 1996 and
relating to the Company.
CLAUSE 10.3 The Sellers shall procure that resolutions of the boards of
directors of the Company are passed by which business is transacted as follows:
(a) the resignation as a director of the Company of such
individuals as have been designated by the Purchaser is
accepted;
(b) the individuals designated by the Purchaser at least five (5)
days prior to Completion are appointed as directors of the
Company; and
(c) the registered office of the Company is changed to such place
as the Purchaser notifies prior to Completion.
CLAUSE 10.4 The Lenders and VGL shall execute such deed of transfer as may be
necessary to assign and transfer to VGL the Loans and all documents pertaining
thereto and the Lenders shall procure that the Company consents to such transfer
and assignment.
CLAUSE 10.5.1 The Purchaser shall:
(a) in satisfaction of its obligations under Clause 4.1, pay the Share
Purchase Price less the Escrow Sum by electronic funds transfer for
value on the Completion Date to such bank account(s) as shall be
notified by the Sellers to the Purchaser prior to Completion;
(b) pay the Escrow Sum to the Escrow Agent by electronic funds transfer to
the Escrow Agent's bank account";
(c) deliver to the Sellers a copy of the Escrow Agreement duly executed by
the Purchaser;
(d) deliver to the Sellers certified copy minutes of the VGL board meeting
approving the transaction contemplated by this Agreement;
(e) deliver to the Sellers a certified copy of the corporate resolution
adopted by the Purchaser approving the purchase of the Company; and
(f) deliver to the Sellers a certificate of status, compliance and good
standing of the Purchaser.
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<PAGE> 27
CLAUSE 10.5.2 VGL shall in satisfaction of its obligations under Clause 4.3,
pay the Loan Purchase Price to the Lenders by electronic funds transfer for
value on the Completion Date to such account as shall be notified to the
Purchaser by the Lenders prior to Completion.
CLAUSE 10.5.3 Any payment made in accordance with Clause 10.5.1(a), 10.5.1(b)
and 10.5.2 shall constitute a good discharge for the Purchaser of those of its
obligations under Clauses 4.1 and 4.2 required to be performed at Completion and
the Purchaser shall not be concerned to see that the funds are applied in
payment to the Sellers or Lenders.
CLAUSE 10.6 If either party fails or is unable to perform any material
obligation required to be performed pursuant to Clause 10 on the Completion
Date, the other party shall not be obliged to complete the sale and purchase of
the Shares.
SECTION 11 WARRANTORS TAX INDEMNITY
CLAUSE 11.1 For the purposes of this Section 11:
"COMPANIES" means the Company and the Subsidiaries and a "COMPANY" means any of
them;
"DEFERRED RELIEF" means any Relief (other than a right to a repayment of Tax)
which:
(a) is taken into account in computing any provision for deferred tax which
appears in the Last Accounts or in eliminating such provision; or
(b) is taken into account in the Last Accounts as an asset;
"PRE-COMPLETION RELIEF" means a Relief which arose to a Company in respect of a
period ended on or before the Last Accounts Date and is neither:
(a) a Deferred Relief; nor
(b) a repayment of Tax which is taken into account in the Last Accounts
as an asset;
"RELIEF" means loss, allowance, credit, relief, deduction or set-off or
any right to a repayment of Tax available for set-off;
"TAX CLAIM" means any notice, demand, assessment, letter or other document
issued by a Taxation Authority indicating that a Company may be required to make
an actual or suffer a deemed payment of Tax or to suffer the non-availability,
loss, cancellation or reduction of a right to a repayment of Tax which may give
rise to a claim against the Warrantors under this Section 11;
"TAXATION AUTHORITY" means any local, municipal, governmental, state, federal or
other fiscal or revenue authority, body or official competent to impose Tax;
"TRANSACTION" means any transaction, act, event or omission of whatever nature;
references to "PROFITS" include income, profits or gains (including capital
gains) of any description and from any source and references to "PROFITS EARNED"
include profits earned, accrued or received and profits deemed to have been
treated as earned, accrued or received for Tax purposes;
references to a "REPAYMENT OF TAX" include any repayment supplement or interest
in respect of it;
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<PAGE> 28
references to a "RESULT OF A TRANSACTION OCCURRING ON OR BEFORE COMPLETION"
include a result of a series of or combined result of two or more Transactions,
where (i) the first of which was a Transaction occurring on or before Completion
or which commenced on or before Completion other than in the ordinary course of
business of the Company and (ii) the Transaction or Transactions occurring after
Completion or which commenced after Completion were in the ordinary business of
the Company;
references to "TAX" include, in a case where Tax for which a Company is liable
is discharged by another person, the amount corresponding to that TAX for which
the Company is, after that discharge, liable to that person; and
references to any "TRANSACTION OCCURRING ON OR BEFORE COMPLETION" include the
entering into and performance of the Agreement.
11.2 For the purposes of this Section 11 a payment of Tax shall be deemed
to be made by a Company if a payment of Tax would have been due to be made by
that Company but for the utilisation of any Relief other than a Pre-Completion
Relief and the Purchaser would have been entitled to make a claim against the
Warrantors under this Section 11 in which case the amount of payment of Tax
deemed to be made shall be the amount of such claim, or where the relevant
Relief is a right to repayment, the amount of the repayment.
11.3 For the purposes of this Section 11, a payment of Tax deemed to be
made in accordance with Clause 11.2 shall be deemed to be due on the date on
which that Tax would have been due (assuming that an assessment or other
notification of that Tax had been made at the earliest permissible time and no
appeal had been made against the assessment or notification) but for the
availability of a Relief concerned.
11.4 The Warrantors shall, subject to the limitation set forth in Section
6 and the following provisions of this Section 11, pay to the Purchaser or to a
Company, as directed by the Purchaser, whether or not a Company is or may be
entitled to claim reimbursement of the payment from any person, an amount equal
to:
(a) any payment of Tax made or to be made by a Company (or, in the case of
T.D.S. Circuits PLC, a percentage of the payment of Tax equal to the
proportion of the Company's equity shareholding in T.D.S. Circuits PLC
in relation to the entire issued equity share capital at Completion) as
a result of any Transaction occurring on or before Completion or by
reference to any profits earned on or before Completion;
(b) any repayment of Tax to the extent that the repayment has been taken
into account in the Last Accounts but is not available or is lost,
reduced or cancelled;
(c) any payment of Tax to the extent that such payment would not have been
made but for a Deferred Relief not being available or being lost,
reduced or cancelled; and
(d) any reasonable costs or expenses properly incurred by the Purchaser or
a Company in connection with any payment of Tax or the
non-availability, loss, reduction or cancellation of a repayment of Tax
or of a Deferred Relief as is referred to in the preceding paragraphs
in respect of which the Purchaser is entitled to receive a payment
under this Section 11 or in connection with any reasonable action taken
in avoiding, resisting or settling any payment of Tax or the
non-availability, loss, reduction or cancellation of a repayment of Tax
or of a Deferred Relief.
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11.5.1 If the Purchaser or a Company incurs a liability to Tax which results
from, or is calculated by reference to, any sum paid to it under this
Section 11, the amount so payable shall be increased by such an amount
as will ensure that, after payment of the liability to Tax, the
Purchaser or the Company (as the case may be) is left with a net sum
equal to the sum which it would have received had no such liability to
Tax arisen.
11.5.2 Clause 11.5.1 above shall not apply to the extent that the liability to
Tax referred to in that Sub-Clause arises as a result of any sum
payable under this Section 11 being paid to a Company and which would
not have arisen had the payment been made to the Purchaser.
11.6 A payment to be made by the Warrantors under Clause 11.4 above (as
increased by Clause 11.5 above) shall be made on the following dates:
(a) as regards any payment of Tax within paragraphs (a) or (c) of Clause
11.4, the later of (i) two business days before the date on which the
payment of Tax is finally due and (ii) ten days after a demand in
writing is served on the Warrantors by the Purchaser or the relevant
Company;
(b) as regards any non-availability, loss, reduction or cancellation of a
repayment of Tax within paragraph (b) of Clause 11.4, the date on which
Tax would have been due in respect of the period to which the right of
repayment related or, if later or if there is no such date, seven days
after the service of notice on the Warrantors by the Purchaser or the
relevant Company that the auditors for the time being of the relevant
Company have certified, at the request and expense of the Purchaser or
the relevant Company, the extent of such non-availability, loss,
reduction or cancellation, such notice to be accompanied by a copy of
the certificate;
(c) as regards costs and expenses within paragraph (d) of Clause 11.4, the
date on which the payment under Clause 11.4 to which they relate is
made in accordance with this Clause 11.6.
11.7 No payment shall be treated as made by the Warrantors under Clause 11.4
until and to the extent that cleared funds are available in respect of it to a
Company or to the Purchaser.
11.8 If the Warrantors fail to pay any sum due from them under this Section
11 on the due date for payment in accordance with Clause 11.6 they shall pay
interest on that sum from the due date until actual payment at the rate of 2 per
cent. per annum above the base rate for the time being of Credito Italiano.
11.9 The procedure for the conduct of claims contained in Clause 6.4, the
limitations contained in Clauses 6.5 and 6.6 and the exclusions contained in
Clause 6.11 shall apply to this Section 11 mutatis mutandis.
11.10 (a) A Relevant Amount shall be defined for the purposes of this
Clause 11.10 as follows:
(i) if a provision for Tax in the Last Accounts or the Management
Accounts (excluding any provision for deferred Tax) is an
over-provision (except to the extent that such over-provision
results from the utilisation of a Relief other than a
Pre-Completion Relief), the amount of such over-provision
shall be a Relevant Amount;
(ii) if any payment of Tax, lost, reduced or cancelled repayment of
Tax or costs and expenses referred to in Clause 11.4 gives
rise to a Relief which reduces or
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eliminates an actual liability to Tax of the Company whenever
arising (other than one in respect of which the Purchaser is
entitled to a payment under this Section 11), the amount of
the actual liability to Tax which is eliminated or the amount
by which it is reduced shall be a Relevant Amount).
(b) If the auditors for the time being of the Company (at the expense and
request of the Warrantors) certify that a Relevant Amount exists for
the purposes of this Clause 11.10 (subject to sub-Clause 11.10 (c)):
(i) the Relevant Amount shall first be set off against any payment
then due from the Warrantors under this Section 11;
(ii) to the extent that there is an excess, a refund shall be made
to the Warrantors of any previous payment or payments made by
them under this Section 11 and not previously refunded under
this sub-Clause 11.10 (b) up to the amount of such excess; and
(iii) to the extent that the excess referred to in sub-Clause 11.10
(b) (ii) is not exhausted under that sub-Clause, the remainder
of that excess shall be carried forth and set off against any
future payments which become due from the Warrantors under
this Section 11.
(c) A Relevant Amount shall not be so treated in accordance with sub-Clause
11.10 (b) if the payment due from the Warrantors under this Section 11
relates to a loss of a Deferred Relief which is a credit in respect of
legge tremonti by a Company (apart from T.D.S Circuits PLC).
11.11 For the avoidance of doubt, the Warrantors shall remain liable in
accordance with the terms of this Section 11 notwithstanding that any Tax giving
rise to a liability to make a payment under Clause 11.4 of this Clause 11 is or
has been discharged or suffered by the relevant Company, whether before or after
the date of this Agreement and whether by payment or by the loss or utilisation
of any Relief or right to repayment of Tax.
SECTION 12 PROTECTIVE COVENANTS
CLAUSE 12.1 Each of the Warrantors severally agrees that he shall not (whether
alone or jointly with another and whether directly or indirectly) carry on or be
engaged or (except as the owner for investment of securities dealt in on a stock
exchange and not exceeding 5 per cent. in nominal value of the securities of
that class) interested in any Competing Business in Europe, Asia, Africa, North
or South America or Oceania during a period of three years after Completion. For
this purpose, "COMPETING BUSINESS" means any business which is engaged in the
type of business which is carried on by any Group Company at Completion or any
business which manufactures and markets printed circuit boards, hybrids or
backplanes. Provided that this clause shall cease to apply to any Warrantor on
his ceasing to be an employee of the Company or any subsidiary of the Company
following the termination by the relevant company of his employment with that
Company if such termination is made without "CAUSE" ("cause" for the purpose of
this Clause 12.1 means the conviction of a crime or a material breach of
employment duties or the breach of the provisions of Clauses 12.2 and 12.3 by
such employee).
CLAUSE 12.2 Each of the Warrantors severally agrees that he shall not within a
period of three years after Completion, directly or indirectly, solicit or
endeavour to entice away from any Group
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<PAGE> 31
Company, offer employment to or employ, or offer or conclude any contract for
services with, any person who was employed by any Group Company in skilled or
managerial work at any time during the 12 months prior to Completion. Provided
that this Clause shall not operate to prevent the Warrantors from employing any
person whose contract of employment with any member of the Group is terminated
otherwise than as result of the voluntary resignation of such person.
CLAUSE 12.3 Each of the Warrantors severally agrees that he shall not at any
time or except so far as may be required by law or regulation and then only
(other than in relation to any disclosure required to be made to the relevant
taxation authority) after prior consultation with the Purchaser, use to the
detriment of any Group Company or disclose to any person to the detriment of any
Group Company, any trade secret or other confidential information of a technical
character which it holds in relation to any Group Company or its affairs.
CLAUSE 12.4 Each of the Warrantors severally acknowledges and agrees, as far as
such clauses are applicable to them, that each of Clauses 12.1, 12.2 and 12.3
constitutes an entirely separate and independent restriction and that the
duration, extent and application of each restriction are no greater than is
reasonable and necessary for the protection of the interests of the Purchaser
but that, if any such restriction shall be adjudged by any court or authority of
competent jurisdiction to be void or unenforceable but would be valid if part of
the wording thereof were to be deleted and/or the period thereof were to be
reduced and/or the area dealt with thereby were to be reduced, the said
restriction shall apply within the jurisdiction of that court or competent
authority with the least amount of modifications as are necessary to make it
valid and effective.
SECTION 13 ENTIRE AGREEMENT
CLAUSE 13.1 This Agreement including the Schedules and the documents to be
executed under it, including the Escrow Agreement and the Disclosure Letter all
of which are incorporated herein and form an integral and substantive part of
this Agreement, together constitute the entire agreement and understanding
between the parties in connection with the sale and purchase of the Shares and
there are no other agreements between any of the parties in relation thereto.
This Agreement shall, with effect from Completion, supersede all prior
agreements between the parties, whether written or oral, in relation thereto. It
is agreed that:
(a) neither party has entered into this Agreement in reliance upon any
representation, warranty or undertaking which is not set out or
referred to in this Agreement.
(b) this Clause shall not exclude any liability for fraudulent
misrepresentation.
SECTION 14 VARIATION
CLAUSE 14.1 No variation of this Agreement (or of any of the documents referred
to herein) shall be valid unless it is in writing and signed by or on behalf of
each of the parties hereto. The expression "VARIATION" shall include any
variation, supplement, deletion or replacement however effected.
SECTION 15 ASSIGNMENT
CLAUSE 15.1.1 It is agreed and acknowledged by the Sellers, the Lenders and the
Institutions that this Agreement enures to the benefit of any successor of the
Purchaser (including the surviving entity following any merger of the Purchaser
and any Group Company) and that the Purchaser may at any time assign its rights
to acquire the Shares and/or the Loans hereunder to any Affiliate of Purchaser
or the Purchaser may at any time after Completion, sell all of the Shares and/or
the Loans
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to any person; provided however, that the benefit of the Commercial Warranties,
the Tax Indemnities and the Covenants shall terminate upon any direct sale or
transfer of the Shares after Completion to any person that is not either an
Affiliate of the Purchaser or an assignee pursuant to Clause 15.3; provided
further however, that the Title Warranties shall inure to the benefit of any
owner of the Loans or Shares, whether Affiliated with the Purchaser or
otherwise. The terms of any assignment permitted by this Clause 15.1 shall
stipulate that the assignee shall agree to be bound by the terms of this
Agreement as if it were the Purchaser under this Agreement (such that it will be
bound by the limitations set out in Section 6).
CLAUSE 15.1.2 No permitted assignment of its rights shall relieve the
Purchaser of any of its obligations or covenants hereunder. It is acknowledged
that the Sellers shall be entitled to exercise any rights (including, for the
avoidance of doubt, any rights of set-off) against any assignee which they would
have had against the Purchaser.
CLAUSE 15.2 Subject to Clauses 15.1, 15.3 and 15.4, no party shall be entitled
to assign the benefit of any provision of this Agreement without the prior
written approval of the other parties.
CLAUSE 15.3 Subject to the provisions of Clause 15.1.2 the Purchaser may (if
required) assign its rights under this Agreement by way of security to any
bank(s) and/or financial institution(s) lending money or making other banking
facilities available to the Purchaser or any other member of the Purchaser's
Group for the acquisition of the Shares and/or Loans, provided that the
liability of the Sellers shall not be any greater as a result of such transfer
or assignment.
CLAUSE 15.4 Notwithstanding any other provision of this Clause 15 and without
prejudice to the guarantee contained in Clause 7.1, the Institutional Seller
shall be entitled, at any time following Completion, to assign, transfer or
distribute as part of a liquidation process its rights and/or obligations under
this Agreement to one or more of the Institutions or any Affiliate of any
Institution.
SECTION 16 ANNOUNCEMENTS
CLAUSE 16.1 No announcement or circular in connection with the existence or the
subject matter of this Agreement shall be made or issued by or on behalf of the
Sellers, VGL or the Purchaser without the prior written approval of the others
(for the period after Completion only, such approval not to be unreasonably
withheld or delayed). This shall not affect any announcement or circular
required by law or regulation or the rules of any stock exchange.
SECTION 17 COSTS
CLAUSE 17.1 Each of the parties shall pay its own costs incurred in connection
with the negotiation, preparation and implementation of this Agreement. The
fissato bollato stamp duty payable in connection with the transfer of the Shares
from the Sellers to the Purchaser shall be exclusively met by the Purchaser. The
Warrantors and Institutions agree that any expenses, including any legal costs
and advisors' fees incurred by the Sellers or any Group Company in connection
with the sale of the Company and the execution and performance of this Agreement
("TRANSFER COSTS") shall be for the account of the Warrantors and Institutions
and accordingly jointly and severally agree to pay the Purchaser on demand an
amount equal to any Transfer Costs born by any such Group Company.
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SECTION 18 PARTIAL INVALIDITY
CLAUSE 18.1 If, at any time, any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
neither the legality, validity or enforceability of the remaining provisions
hereof nor the legality, validity or enforceability of such provision under the
law of any other jurisdiction shall in any way be affected or impaired thereby.
SECTION 19 REMEDIES AND WAIVERS
CLAUSE 19.1 No failure by any party to exercise, nor any delay by any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy prevent any further
or other exercise thereof or the exercise of any other right or remedy.
SECTION 20 FURTHER ASSURANCE
CLAUSE 20.1 Each party shall do, or procure to be done, all such further acts
and things, and execute or procure the execution of all such other documents, as
the other may from time to time reasonably require, and at the cost and expense
of the party requiring the same, whether on or after Completion, for the purpose
of giving to the other the full benefit of all of the provisions of this
Agreement.
SECTION 21 NOTICES
CLAUSE 21.1 COMMUNICATIONS IN WRITING Each communication to be made hereunder
shall be made in writing and, unless otherwise stated, shall be made by fax or
letter delivered by hand.
CLAUSE 21.2 DELIVERY Any communication or document to be made or delivered by
one person to another pursuant to this Agreement shall (unless that other person
has by 15 days' written notice to the other specified another address) be made
or delivered to that other person by facsimile or by hand at the address
identified below and shall be deemed to have been made or delivered (in the case
of any communication made by fax) when despatched (subject to confirmation of
receipt of all transmitted pages) or (in the case of any communication made by
letter delivered by hand) when left at the address specified.
CLAUSE 21.3 COMMUNICATION DETAILS The address of the parties for the purpose of
Clauses 21.1 and 21.2 are as follows:
<TABLE>
<CAPTION>
ECSA:
<S> <C>
Address: c/o Macfarlanes
10 Norwich Street
London EC4A 1BD
For the attention of: C.H. Meek
Fax: 0171 831 9607
</TABLE>
WARRANTORS
To the address shown on Schedule 1 for the attention of the relevant Warrantor
with a copy to the firm mentioned below which each of the Warrantors hereby
irrevocably appoints as their respective agent for service of process:
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<PAGE> 34
Morano & Associati
Corso di Porta Romana
Milan
Facsimile No: 00 392 864 51498
Attention: Federico Cavazza
PURCHASER:
c/o the person mentioned below whom the Purchaser hereby irrevocably
appoints as its agent for service of process.
c/o Viasystems Group Limited
7th Floor
3 Shortlands
Hammersmith
London W6
with copies to:
Viasystems Group, Inc.
101 South Hanley Road, Suite 400
St Louis
Missouri 63105
Facsimile No.: 001 314 746 2299
Attention: David M. Sindelar
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile No.: (214) 740-7313
Attention: Lawrence D. Stuart, Jr., Esq.
ANY OF THE CVC ENTITIES:
c/o CVC Capital Partners
8-10 Tavistock St.
London WC2E 7PP
Facsimile No.: 0171 420 4232
Attention: Hardy McLain
ANY OF THE NATWEST ENTITIES:
c/o NatWest Equity Partners Limited
Fenchurch Exchange
8 Fenchurch
London EC3M 4TE
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Facsimile No.: 0171 374 2580
Attention: Roderick Selkirk
SECTION 22 GOVERNING LAW
CLAUSE 22.1 This Agreement shall be governed by, and shall be construed in
accordance with, Italian law.
SECTION 23 ARBITRATION
CLAUSE 23.1 Unless settled by mutual agreement, any dispute or difference
whatsoever that might arise from the performance or as to the meaning of this
Agreement or as to any matter or items of whatsoever nature howsoever arising
out of or in connection with this Agreement, shall be submitted to arbitration
in accordance with and subject to the Rules of Arbitration and Conciliation of
the Chamber of Commerce of Milan and finally settled by three arbitrators
appointed in accordance with such rules then in force. For the purposes solely
of selecting arbitrators pursuant to this Clause 23.1, it is understood that the
Sellers and the Institutions shall be deemed to act as one party.
The panel of arbitrators will be appointed as follows: each party will appoint
an arbitrator; the two arbitrators appointed by the parties will appoint a third
arbitrator who shall act as chairman of the panel. In case the third arbitrator
is not appointed within 30 days from the appointment of the two arbitrators
appointed by the parties or one of the parties has not appointed its arbitrator
within 15 days from the notice of the appointment of the arbitrator by the other
party the third arbitrator and/or the arbitrator not appointed by the relevant
party will be appointed by the President of the Tribunal of Milan upon request
of any of each of the parties.
CLAUSE 23.2 Arbitration: Unless otherwise agreed in writing to by the Parties,
the arbitration will take place in Milan, Italy in the English language, and the
arbitrators shall be experienced in the arbitration of cross-border
transactions, qualified to arbitrate in respect of an agreement governed by
Italian law and fluent in the English language to the extent necessary to
consider and elucidate any issues arising under this Agreement.
CLAUSE 23.3 Costs of Arbitration: The cost of any arbitration will be assessed
against the unsuccessful party, with respect to any claim unsuccessfully
disputed by the relevant Party, and the arbitrators will be required to make
such cost part of any ruling issued by them.
CLAUSE 23.5 Italian Law: The arbitrators shall decide the dispute according to
Italian substantive law and pursuant to the rules of procedure applied by the
Rules of Arbitration and Conciliation of the Chamber of Commerce of Milan with
respect to international arbitration rules.
SECTION 24 COUNTERPARTS
CLAUSE 24.1 COUNTERPARTS This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
AS WITNESS this Agreement has been signed on behalf of the parties the day and
year first before written.
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SCHEDULE 1
THE SELLERS
<TABLE>
<CAPTION>
(1) (2) (3) (4)
NAME ADDRESS # OF SHARES %
<S> <C> <C> <C>
PART A
European Circuits SA 50 route D'Esch 7,686,875 87.85
PART B
Aldino Bellazzini Via Carlo Alberto Dalla Chiesa, 3 437,500 5.0
10010 Salerano Canavese (To)
Italy
Pietro Pacetti Via Roreto, 13 284,375 3.25
10010 Chiaverena D'Ivrea (To)
Italy
Claudio Pastoris Via Jurara, 4 113,750 1.3
13048 Santhia (Vc)
Italy
Giancarlo Silva Via Biella, 16 113,750 1.3
10012 Bollengo (To)
Italy
Carlo Alberto Caglieri Via P.Piffetti, 27 113,750 1.3
10143 Torino
Italy
</TABLE>
The above figures assume that all Management Options have been exercised in
full.
33
<PAGE> 37
SCHEDULE 2
THE COMPANY AND THE SUBSIDIARIES
PART A
DETAILS OF THE COMPANY
<TABLE>
<S> <C> <C>
1. NAME: Zincocelere S.p.A.
2. DATE OF INCORPORATION: 19 December 1995
3. PLACE OF INCORPORATION: Salerano Canavese (To)
4. CLASS OF COMPANY: S.p.A.
5. REGISTERED NUMBER: Registro Imprese di Torino N.
7011
6. REGISTERED OFFICE: C.C.I.A.A. TO N. 829521
7. DIRECTORS: Aldino Bellazzini
Luigi Lanari
Pietro Pacetti
Roderick Selkirk
Giancarlo Silva
8. SECRETARY: None
9. AUTHORISED CAPITAL: 8,750,000 issued and fully paid
ordinary shares, par value Lire
1,000 each
10. ISSUED CAPITAL: 8,750,000 issued and fully paid
ordinary shares, par value Lire
1,000 each
11. REGISTERED SHAREHOLDERS: European Circuits S.A., Aldino
Bellazzini, Pietro Pacetti,
Claudio Pastoris, Carlo Alberto
Caglieri, Giancarlo Silva.
12. ACCOUNTING REFERENCE DATE: 31 December
13. EXTERNAL AUDITORS: Arthur Andersen S.p.A.
14. TAX RESIDENCE: Italy
15. MORTGAGES AND CHARGES: Cash collateral of approximately
4.6 billion lire lodged with
Credito Italiano as security for
counter indemnity obligations of
the Company under a guarantee
granted by Credito Italiano to
IMI.
16. STATUTORY AUDITORS Carlo Ponte
Diego Sabolo
Maurizio Lenzi
</TABLE>
34
<PAGE> 38
PART B
DETAILS OF SUBSIDIARIES
<TABLE>
<S> <C> <C>
1. NAME: T.D.S. Circuits PLC - (formerly
known as T.D.S. Circuits
(Blackburn) P.L.C.)
2. DATE OF INCORPORATION: 29 May 1974
3. PLACE OF INCORPORATION: England
4. CLASS OF COMPANY: Public
5. REGISTERED NUMBER: 1171921
6. REGISTERED OFFICE: Whitebirk Estate
Blackburn
Lancashire BB1 5TD
7. DIRECTORS: John Michael Geoffrey Andrews
Aldino Bellazzini
Herbert Anthony Cann
Mauro Dallora
Pietro Pacetti
Graham Derek Partridge
Claudio Pastoris
Giancarlo Silva
8. SECRETARY: Graham Derek Partridge
9. AUTHORISED CAPITAL: 25,000,000 ordinary shares of 5p
and 3,790,000 cumulative
redeemable voting preferred
shares 1992/95 of (pound)1 each.
10. ISSUED CAPITAL: (pound)4,845,000 divided in
21,100,000 ordinary shares of 5p
each and 3,790,000 cumulative
redeemable voting preferred
shares 1992/95 of (pound)1 each.
11. ACCOUNTING REFERENCE DATE: 31 December
12. EXTERNAL AUDITORS: Arthur Andersen
13. TAX RESIDENCE: UK
14. SUBSIDIARIES: None
15. MORTGAGES AND CHARGES: 1. Debenture dated 12 August 1997
in favour of Banca Commerciale
Italiana.
</TABLE>
35
<PAGE> 39
<TABLE>
<S> <C> <C>
1. NAME: Nord Elettronica S.r.L.
2. DATE OF INCORPORATION: 4 October 1991
3. PLACE OF INCORPORATION: Savona
4. CLASS OF COMPANY: S.r.l.
5. REGISTERED NUMBER: Registro Impress Aosta N.
60872/1996
6. REGISTERED OFFICE: C.C.I.A.A Aosta N. 53761
7. DIRECTORS: Aldino Bellazzini
Carlo Alberto Caglieri
Claudio Pastoris
8. SECRETARY: None
9. AUTHORISED CAPITAL: 63,000,000 issued and fully paid,
par value Lire 1,000 each
10. ISSUED CAPITAL: 63,000,000 issued and fully
paid, par value Lire 1,000 each
11. REGISTERED SHAREHOLDER: Zincocelere
12. ACCOUNTING REFERENCE DATE: 31 December
13. EXTERNAL AUDITORS: Arthur Andersen S.p.A.
14. TAX RESIDENCE: Italy
15. SUBSIDIARIES: None
16. MORTGAGES AND CHARGES: None
</TABLE>
36
<PAGE> 40
SCHEDULE 3
THE COMMERCIAL WARRANTIES
PART A : GENERAL
CAPITAL EXPENDITURES
1.1 The Group has made all capital expenditures projected to be made in
1997 pursuant to the 1997 capital expenditure plan previously provided
to the Purchaser.
THE GROUP
THE COMPANY AND THE SHARES
2.1(a) All of the Shares are fully-paid or properly credited as fully-paid.
(b) The information in respect of the Company set out in Part A of Schedule
2 is true and accurate.
THE SUBSIDIARIES
2.2(a) The Company is (or a Subsidiary is) the sole legal and beneficial owner
of the whole of the issued share capital of each of the Subsidiaries
free from all security interests, options, equities, claims or other
third party rights (including, without limitation, rights of
pre-emption) of any nature whatsoever.
(b) The information in respect of each of the Subsidiaries set out in Part
B of Schedule 2 is true and accurate.
OTHER INTERESTS
2.3 No Group Company owns or has any interest of any nature whatsoever in
any shares, debentures or other securities issued by any undertaking
other than the Subsidiaries.
1 FINANCIAL MATTERS
ACCOUNTS
3.1(a) The Accounts (i) have been prepared in accordance with the Italian GAAP
on a consistent basis; (ii) are true and complete; (iii) fairly present
the financial position and results of each Group Company for the
relevant period(s) and as at the relevant date(s) and (iv) are in
accordance with the books and records of each Group Company as at the
date for the period stated.
3.1(b) The Management Accounts have been prepared on a basis consistent with
the books and records of the Company and prior management accounts. The
Management Accounts fairly present in all material respects the
financial position of the Group at the dates as indicated and the
results of operations and changes in all material respects in cash flow
for the periods indicated and except as set forth in the Disclosure
Letter do not present a materially
37
<PAGE> 41
different financial position of the Group and its results than that
which would be presented if the Management Accounts were prepared in
accordance with Italian GAAP.
3.1(c) The Company has no liabilities or obligations, either direct or
indirect, matured or unmatured or absolute, contingent or otherwise,
but in each case only of a kind which would be required to be reported
in accounts prepared in accordance with Italian GAAP (or the notes
thereto) except (i) those liabilities or obligations set forth in the
Accounts or the Management Accounts as of the Management Accounts Date
and not heretofore paid or discharged or (ii) those liabilities or
obligations incurred in the ordinary course of the business consistent
with past practice since the Management Accounts Date.
3.1(d) The accounts receivable which are reflected in the Management Accounts
have arisen out of transactions in the ordinary course of business
consistent with past practice and, except as provided in the Management
Accounts as of the Management Accounts Date, are not subject to valid
defences, set-offs or counterclaims other than those arising in the
ordinary course of business; and
3.1(e) All stock of the Company used in the conduct of its business, including
without limitation raw materials, work-in-progress and finished goods,
reflected in the Management Accounts as of the Management Accounts Date
or acquired since the date thereof (A) was acquired and has been
maintained in the ordinary course of business and (B) is valued at the
lower of cost or market value in accordance with Italian GAAP.
POSITION SINCE MANAGEMENT ACCOUNTS DATE
3.2(a) Since the Management Accounts Date, there has been no material adverse
change in the operations, liabilities, assets, Properties, financial
condition or results of operations of the Group (save to the extent
that the same affect to a similar extent generally all companies
carrying on similar businesses in Italy).
(b) Save as disclosed in the Disclosure Letter, since the Management
Accounts Date:
(i) the business of each Group Company has been carried on in the
ordinary and usual course, consistent with past practices;
(ii) no dividend or other distribution redemption of capital or
repayment has been declared, paid or made by any Group Company
(except for any dividends (A) provided for in the Management
Accounts of that Group Company or (B) paid to another Group
Company);
(iii) no share or loan capital, options, warrants or other
securities has been allotted or issued or agreed to be
allotted or issued by any Group Company (other than to another
Group Company);
(iv) there have been no transactions between any Group Company on
the one hand and any Seller or any officer or director of any
Group Company on the other hand;
(v) no Group Company has made commitments or agreements for
capital expenditures which are inconsistent with the Company's
written capital expenditure projections provided to Purchaser;
38
<PAGE> 42
(vi) no Group Company has other than in the ordinary and usual
course of business acquired or disposed of, or agreed to
acquire or dispose of, any business or any asset or Properties
(excluding disposition of inventory and capital expenditure in
each case in the ordinary course of business) having a value
in excess of 250,000,000 Lire;
(vii) no change has been made in terms of employment, including
pension fund commitments, by any Group Company (other than
those required by law) which could increase the total employee
or director costs of the Group by more than 500,000,000 Lire
per annum or the remuneration of any one director or employee
by more than 50,000,000 Lire per annum;
(viii) no Group Company has repaid any borrowing or indebtedness in
advance of its stated maturity; and
(ix) no resolution of the members of any Group Company has been
passed whether in general meeting or otherwise (other than
resolutions relating to the routine business of annual general
meetings).
ACCOUNTING AND OTHER RECORDS
3.3(a) The statutory books, books of account and other records of each Group
Company:
(i) have been maintained in accordance with applicable laws; and
(ii) are in its possession or under its control.
(b) All accounts, documents and returns required by law to be delivered or
made by any Group Company to the Registrar of Companies or any other
authority have been duly and correctly delivered or made.
TDS CIRCUITS PLC
3.4 The Company is currently entitled to redeem all the cumulative
redeemable voting preferred shares of (pound)1 each issued by TDS
Circuits PLC and has not agreed to waive or forebear its right to
redeem the same.
REGULATORY MATTERS
LICENCES
4.1(a) Each Group Company has obtained all material licences, permissions,
authorisations and consents required for carrying on its business in
the places and in the manner in which such business is now carried on.
(b) The licences, permissions, authorisations and consents referred to in
paragraph (a) are so far as the Warrantors are aware in full force and
effect and have been complied with in all material respects.
(c) To the best knowledge of the Warrantors, there are no circumstances
which indicate that any of the licences, permissions, authorisations or
consents referred to in paragraph (a), the revocation or non-renewal of
which would have a material adverse effect on any Group
39
<PAGE> 43
Company, will be revoked or not renewed, in whole or in part, in the
ordinary course of events (whether as a result of the acquisition of
the Shares by the Purchaser or otherwise).
COMPLIANCE WITH LAWS
4.2(a) Each Group Company has conducted its business and corporate affairs in
accordance with its constitutional documents and in all material
respects with all applicable laws and regulations (whether of the
United Kingdom, in respect of TDS Circuits PLC, Italy or so far as
Warrantors are aware, any other jurisdiction) including, without
prejudice to the generality of the foregoing, Law no. 675 of December
31, 1996.
(b) No Group Company has been served with written notice by any
governmental or regulatory authority of any breach of any order, decree
or judgment of any court or any governmental or regulatory authority.
COMPETITION AND FAIR TRADING LAWS
4.3(a) No Group Company has been advised or notified in writing that it is or
may be a party to (or is concerned in) any agreement, arrangement,
concerted practice or course of conduct which (i) in respect of TDS
Circuits PLC is registrable under the provisions of the Restrictive
Trade Practices Act 1976 (as amended), (ii) in respect of TDS Circuits
PLC contravenes the provisions of the Resale Prices Act 1976, (iii)
falls within Article 85 and/or Article 86 of the Treaty of Rome
Articles 2 and 3 of the Italian Antitrust Statute Law 287/1990 or (iv)
falls within Article 53 and/or Article 54 of the Agreement on the
European Economic Area.
(b) No Group Company has received any process, notice or other written
communication (formal or informal) by or on behalf of the Office of
Fair Trading (whether under the Fair Trading Act 1973, the Competition
Act 1980 or otherwise), the Monopolies and Mergers Commission, the
Secretary of State for Trade and Industry, the Commission of the
European Communities or the EFTA Surveillance Authority in competition
matters in relation to any aspect of the business of any Group Company
or any agreement, arrangement, concerted practice or course of conduct
to which any Group Company is, or is alleged to be, a party which in
any such case indicates that a Group Company is or is likely to be the
subject of prosecution or investigation.
(c) No Group Company is, insofar as the Warrantors are aware, subject to
any order or judgment given by any court or governmental or regulatory
authority or party to any undertaking or assurance given to any such
court or authority, in relation to competition matters which is still
in force.
US SALES AND ASSETS
4.4 The Group does not make any sales directly into the US in an amount
exceeding $25,000,000 per annum and does not have any assets or
properties in the US whose value exceeds $15,000,000.
40
<PAGE> 44
THE GROUP'S ASSETS
OWNERSHIP
5.1(a) For the purpose of this Schedule 3, "ASSETS" shall not include the
Properties, to which the provisions of Part B of this Schedule shall
apply.
(b) Each of the assets included in the Last Accounts of each Group Company
or acquired by it since the Last Accounts Date (other than assets sold
in the ordinary course of business) is legally and beneficially owned
by that Group Company. Those assets are not the subject of any security
interest or any assignment, equity, option, right of pre-emption, right
of first refusal, royalty, factoring arrangement, leasing or hiring
agreement, hire purchase agreement, conditional sale or credit sale
agreement, agreement for payment on deferred terms or any similar
agreement or arrangement (or any agreement or obligation, including a
conditional obligation, to create or enter into any of the foregoing)
except for:
(i) any hire or lease agreement in the ordinary course of business
involving an expenditure of less than 400,000,000 Lire in
aggregate per annum;
(ii) title retention provisions in respect of goods and materials
supplied to the Group in the ordinary course of business; and
(iii) the security interests, if any, reflected in the Management
Accounts as of the Management Accounts Date and liens arising
in the ordinary course of business by operation of law.
POSSESSION AND THIRD PARTY FACILITIES
5.2(a) All of the assets owned by each Group Company, or in respect of which
any Group Company has a right of use, are in the possession or under
the control of that Group Company.
(b) Where any facilities or services are provided to any Group Company by
any third party, there has not in so far as the Warrantors are aware
occurred any event of default or any other event or circumstance which
may entitle any third party to terminate any agreement or licence in
respect of the provision of such facilities or services and which would
have a material adverse effect on any Group Company.
ADEQUACY OF ASSETS
5.3(a) The assets of each Group Company and the facilities and services to
which each Group Company has a contractual right include all rights,
properties, assets, facilities and services currently used in the
business of that Group Company in the manner in which it is currently
carried on.
(b) No Group Company depends upon the use of assets owned by, or facilities
or services provided by, the Sellers or any entity (other than any
Group Company) controlled by the Sellers.
41
<PAGE> 45
CONDITION
5.4 All the plant, machinery, equipment and vehicles used by each Group
Company are in a good state of repair, ordinary wear and tear excepted.
PLANT REGISTERS
5.5 The plant registers of each Group Company comprise in all material
respects a complete and accurate record of all the plant, machinery and
equipment owned or possessed by that Group Company.
INSURANCES
5.6(a) There is set out in the Disclosure Letter a summary of the insurances
maintained by or covering members of the Group. Such insurances are in
full force.
4 INTELLECTUAL PROPERTY RIGHTS
REGISTERED RIGHTS
6.1(a) The Disclosure Letter contains true, complete and accurate lists of all
Intellectual Property Rights registered or sought by the relevant Group
Company to be registered in any jurisdiction which are held or
beneficially owned by each Group Company.
(b) In so far as the Warrantors are aware, no act has been done or omitted
to be done by any Group Company and no event has occurred which may
render any of such Intellectual Property Rights which are material
subject to revocation, compulsory licence, cancellation or amendment or
may prevent the grant or registration of a valid Intellectual Property
Right pursuant to a pending application.
INFRINGEMENT
6.2(a) So far as the Warrantors are aware, none of the operations of the Group
infringe any Intellectual Party Rights held by any third party or
involve the unauthorised use of confidential information disclosed to
any Group Company in circumstances which render such Group Company
liable to a third party claim.
(b) No claim has been made by any third party, notice of which has been
received by the relevant Group Company in writing, which alleges any
infringing act or process or which otherwise disputes the right of any
Group Company to use any Intellectual Property Rights relating to its
business and the Warrantors are not aware of any circumstances
(including any act or omission to act) reasonably likely to give rise
to such a claim.
(c) There exists no actual or, so far as the Warrantors are aware,
threatened infringement by any third party of any Intellectual Property
Rights held or used by a Group Company (including misuse of
confidential information) or any event reasonably likely to constitute
such an infringement where such infringement would reasonably be
expected to have a material adverse effect on such Group Company.
42
<PAGE> 46
EMPLOYEE CLAIMS
6.3 No claims have been made or, so far as the Warrantors are aware,
threatened by employees or ex-employees of a Group Company to be compensated in
respect of any Intellectual Property Rights used by any Group Company.
INTELLECTUAL PROPERTY LICENCES
6.4(a) Details of all licences granted to or by any Group Company in respect
of Intellectual Property Rights are set out in the Disclosure Letter
including details of any limit as to time or right of termination
affecting the use of the Intellectual Property Right.
(b) No Group Company is in material default under any licence, sub-licence
or assignment granted to it in respect of any Intellectual Property
Rights used by any Group Company.
CONFIDENTIAL INFORMATION
6.5 Where information of a confidential nature has been developed or
acquired by any Group Company for the purposes of its business in the two (2)
year period prior to the date of this Agreement, such information (except
insofar as not significant to the business of the Company or insofar as it has
fallen into the public domain through no fault of a Group Company) has been kept
strictly confidential and has not been disclosed otherwise than subject to an
obligation of confidentiality being imposed on the person to whom the
information was disclosed or as required by law.
RECORDS AND SOFTWARE
6.6 All the accounting records and systems (including but not limited to
computerised accounting systems) of the Group are recorded, stored, maintained
or operated or otherwise held by a Group Company and are not wholly or partly
dependent on any facilities or systems which are not under the exclusive
ownership or control of a Group Company.
CONTRACTUAL MATTERS
SIGNIFICANT CONTRACTS
7.1 Except as specified in the Disclosure Letter, there is not outstanding
any agreement or arrangement to which any Group Company is a party:
(a) under which the execution, delivery and performance of this Agreement
will:
(i) cause any Group Company to be in conflict, violation, or
default (with or without notice or lapse of time or both) of
any provision thereof where the same would be material to the
business of the Group; or
(ii) give rise to any right of termination, cancellation or
acceleration of any obligation or loss of benefit affecting
any Group Company;
(b) which will result in any Group Company becoming liable for any finder's
fee, brokerage or other commission in connection with the acquisition
of the Shares by the Purchaser;
43
<PAGE> 47
(c) which were entered into outside the ordinary course of business of the
Company and otherwise than by way of a bargain at arm's length;
(d) (without prejudice to sub-paragraph (c) above) which is a substantial
property transaction and/or a loan entered into between a Group Company
and any director of that Company;
(e) which requires (or confers any right to require) the allotment or issue
of any shares, debentures or other securities (including options or
warrants) of any Group Company now or at any time in the future;
(f) which establishes any guarantee, indemnity or suretyship given by any
Group Company in respect of the obligations or solvency of any third
party;
(g) pursuant to which any Group Company has sold or otherwise disposed of
any company, business or assets in circumstances such that it remains
subject to any liability (whether contingent or otherwise) which is not
fully provided for in its Management Accounts as of the Management
Accounts Date, excluding sales of inventory made by the Company in the
ordinary course of its business;
(h) which, upon completion by a Group Company of its work or the
performance of its other obligations under it, is so far as the
Warrantors are aware likely to result in a loss for that Group Company
which is not fully provided for in its Management Accounts as of the
Management Accounts Date;
(i) which establishes any joint venture, consortium, partnership or profit
(or loss) sharing agreement or arrangement to which any Group Company
is a party;
(j) which involves (i) expenditure by any Group Company in excess of
600,000,000 Lire individually or 3,000,000,000 Lire in the aggregate or
(ii) obligations or restrictions of any Group Company of an unusual or
exceptional nature or magnitude;
(k) which establishes any material agency, distributorship, marketing,
consulting, purchasing, sales, manufacturing or licensing agreement or
arrangement to which any Group Company is a party, for these purposes,
material means having a value in excess of 100,000,000 Lire;
(l) which restrains any Group Company from carrying on its business in any
part of the world;
(m) which is a currency and/or interest rate swap agreement, asset swap,
future rate or forward rate agreement, interest cap, collar and/or
floor agreement or other exchange or rate protection transaction or
combination thereof or any option with respect to any such transaction
or any other similar transaction to which any Group Company is a party;
(n) which is a recognition, procedural or other agreement between any Group
Company and any recognised independent trade union;
(o) which is entered into between any Group Company and any of the Sellers
or any Affiliate of any Group Company and the Seller;
(p) which is a note, debenture, bond, letter of credit agreement, loan
agreement or the agreement relating to the borrowing or lending of
money or any guarantee of the indebtedness of another;
44
<PAGE> 48
(q) which is an employment, consultancy, severance or similar agreement
with any present or former employee or director of any Group Company;
(r) which is a lease under which any Group Company is either lessee or
lessor relating to any asset or Property of a Group Company;
(s) under which any Group Company becomes bound to pay to a third party an
amount which, but for the completion of the sale of the shares to the
Purchaser, would not otherwise have been required to be paid by such
Group Company provided that this paragraph (s) shall not apply to any
amount merely required to be paid at an earlier date as a result of the
sale of the Shares; or
(t) which is a written bid, tender, proposal or offer which, if accepted,
would result in any Group Company becoming a party to any agreement or
arrangement of a kind described in sub-paragraphs (a) to (r) above.
DEFAULTS AND DISCLOSURE
7.2(a) No Group Company is in default under any significant agreement to which
it is a party (contracts falling within paragraph 7.1 are deemed to be
significant for this purpose) and which default is material to its
business and, to the best of the knowledge of the Warrantors, there are
no circumstances likely to give rise to any such default.
(b) To the best knowledge of the Warrantors, no party with whom any Group
Company has entered into any agreement or arrangement and which is
significant (contracts falling within paragraph 7.1 being deemed to be
significant for this purpose) to its business is in material default
under such agreement or arrangement and there are no circumstances
likely to give rise to any such default.
(c) The Warrantors have made available to the Purchaser true and correct
copies of all significant agreements of the Group required to be
disclosed in the Disclosure Letter pursuant to paragraph 7.1, along
with all amendments, modifications and supplements thereto.
TRADING RELATIONSHIPS
7.3 Except as disclosed in the Disclosure Letter during the twelve months
preceding the date of this Agreement no significant customer or group of
customers of or supplier or group of suppliers to any Group Company has ceased
to deal or has, so far as the Warrantors are aware, threatened that it will
cease to deal with that Group Company. For these purposes, a customer is
regarded as "significant" if sales to that customer in any year represent five
percent or more of the sales of that Group Company in any such year and a
supplier is regarded as "significant" if sales by that supplier in any year
represent five percent or more of purchases of that Group Company in any such
year.
PRINCIPAL SUPPLIERS AND CUSTOMERS
7.4 Except as disclosed in the Disclosure Letter, no supplier or customer
(including any person known by the Warrantors to be connected in any way with
any such supplier or customer), accounted either for more than five per cent. of
the aggregate value of all purchases or for more than five per cent. of the
aggregate value of all sales of any Group Company for the period beginning on
January 1, 1997 and ended on December 31, 1997.
45
<PAGE> 49
GRANTS
7.5 In relation to any investment or other grant or allowance paid or
payable to any Group Company ("GRANTS"), the relevant Group Company:
(a) has complied with its obligations to make expenditures under such
Grants as such obligations fall due;
(b) has achieved the performance targets set out in such Grants including
as to the employment of certain numbers of employees; and
(c) has not been notified that any repayment of any such Grant is required
and is not aware that any circumstances exist as a result of which in
the Warrantor's opinion it is likely that it will receive such
notification.
LITIGATION AND INVESTIGATIONS
LITIGATION
8.1(a) Save as disclosed in the Disclosure Letter, except as plaintiff in the
collection of debts arising in the ordinary course of business (which
do not exceed 200,000,000 Lire in aggregate), no Group Company is a
plaintiff or defendant in or, insofar as the Warrantors are aware,
otherwise a party to any litigation, arbitration or administrative
proceedings which are in progress and insofar as the Warrantors are
aware no such litigation is threatened or pending by or against or
concerning any Group Company or any of its assets.
(b) Insofar as the Warrantors are aware no governmental or official
investigation or inquiry concerning any Group Company is in progress or
pending.
DIRECTORS AND EMPLOYEES
EMPLOYEES
9.1 Each Group Company is in material compliance with all laws and
applicable labour collective agreements respecting employment and employment
practices, terms and conditions of employment, pay equity, wages and hours, and
laws and regulations concerning social security contributions (including,
without limitation, contributions to be made under integrative pension schemes)
and health and safety at work.
9.2 The Disclosure Letter sets out accurate details of the current basic
salary, length of notice and significant other financial benefits of those
employees of any Group Company earning a current basic salary in excess of
180,000,000 Lire per annum (or equivalent).
AGREEMENTS
9.3 Except as specified in the Disclosure Letter, no Group Company is
bound by any collective bargaining or similar agreement nor are any such
agreements currently being negotiated.
9.4 Any and all consulting agreements entered into between any of the Group
Company and any of its consultants, advisors, accountants, etc. comply with all
applicable laws.
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<PAGE> 50
9.5 Except as specified in the Disclosure Letter, there is not in
existence any written or unwritten contract of employment with a director or
an employee of any Group Company (or any contract for services with any person)
which cannot be terminated by twelve (12) months' notice or less without giving
rise to a claim for damages or compensation (other than a statutory redundancy
payment or statutory compensation for unfair dismissal).
DISPUTES
9.6 Insofar as the Warrantors are aware there are no present circumstances
which are likely to give rise to any such specific dispute between any Group
Company and a material number or category of its employees (or any trade union
or other body representing all or any of such employees) .
INCENTIVE SCHEMES
9.7 Except as specified in the Disclosure Letter, no Group Company has in
existence (or is proposing to introduce) any share incentive scheme, share
option scheme or profit sharing, bonus, commission or other incentive scheme for
all or any of its directors or employees.
PAYMENTS ON TERMINATION
9.8 Save as disclosed in the Disclosure Letter, except to the extent (if
any) to which provision or allowance has been made in the Management Accounts as
of the Management Accounts Date of each Group Company:
(a) no liability has been incurred by any Group Company which has not been
satisfied in full for breach of any contract of employment or for
services or redundancy payments, protective awards, compensation for
wrongful dismissal or unfair dismissal or for failure to comply with
any order for the reinstatement or re-engagement of any employee or for
any other liability accruing from the termination of any contract of
employment or for services; and
(b) no gratuitous payment of a material amount has been made or material
benefit given (or promised to be made or given) by any Group Company in
connection with the actual or proposed termination or suspension of
employment, or variation of any contract of employment, of any present
or former director or employee of any Group Company. For these
purposes, "material" means an amount or benefit in excess of 50,000,000
Lire.
REDUNDANCIES
9.9 No UK Group Company has within the period of one (1) year preceding
the date of this Agreement given notice of any redundancies to the relevant
Secretary of State or started consultations with any independent trade union
under the provisions of the Employment Act 1996 or failed to comply with any
such obligation under the said Part IV. No Italian Group Company has within the
period of one (1) year preceding the date of this Agreement given notice and/or
started consultations with any trade unions under the provisions of the Law no.
223 of July 23, 1991.
INSOLVENCY ETC.
10.1 No order has been made, or, so far as the Warrantors are aware,
petition presented or meeting convened for the purpose of considering a
resolution for the winding up of any Group Company or for the appointment of any
provisional liquidator. So far as the Warrantors are aware,
47
<PAGE> 51
no petition has been presented for an administration order to be made in
relation to any Group Company, and insofar as the Warrantors are aware no
receiver (including any administrative receiver) has been appointed in respect
of the whole or any part of any of the property, assets and/or undertaking of
any Group Company. So far as the Warrantors are aware, there are no
circumstances applying to a Group Company which would trigger the commencement
of any of the procedures governed by Decree no. 267 of March 16, 1942, or Law
no. 95 of April 3, 1979.
10.2 No scheme of arrangement or reorganisation (or analogous event) has
been proposed, sanctioned or approved in relation to any Group Company.
10.3 Within the period of one year preceding the date of this Agreement, no
distress, distraint, charging order, garnishee order, execution or other process
has been levied for in respect of the whole or any part of any of the property,
assets and/or undertaking of any Group Company.
10.4 No person who now is, or who at any time within the last three years
was, a director or officer of TDS is, or at any material time was, subject to
any disqualification order under any applicable laws.
48
<PAGE> 52
PART B: PROPERTY WARRANTIES
1. GENERAL
The Properties comprise all the land and buildings owned, occupied or used by
any Group Company or in which any Group Company has any rights or interest and
the information concerning the Properties set out in Schedule 4 is true,
complete and accurate.
2. POSSESSION
(a) Save as mentioned in the Disclosure Letter, there are no leases,
underleases, tenancies or licences granting rights of occupation
affecting any of the Properties nor is there any agreement to grant the
same.
(b) A Group Company is in possession of the whole of the Properties, none
of which is vacant.
3. TITLE
(a) The Group has a good and indefeasible title to each of the Properties
and all relevant deeds and documents are in its possession or under its
control (except for those Properties subject to the mortgages or
charges referred to in the Disclosure Letter, in which case they are
held by the first mortgagees or chargees therein mentioned).
(b) Where title to the UK Properties is registered at H. M. Land Registry,
it is registered with title absolute, free from any caution, inhibition
or notice and no unregistered title should have been registered.
4. ADVERSE INTERESTS
Except as specified in the Disclosure Letter, the Properties are so far as the
Warrantors are aware free from any:
(a) security interest, option or right of pre-emption;
(b) (in the case of the UK Properties only) over-riding interest (as
defined in Section 70 of the Land Registration Act 1925); or
(c) right of occupation or enjoyment by any third party or the public, nor
is any such right being acquired and there is no agreement to create
any of the foregoing.
5. EASEMENTS ETC.
The Properties have the benefit of all rights of way and for drainage and the
supply of services reasonably required for their present use.
6. OUTGOINGS
The Properties are not subject to the payment of any outgoings other than the
usual rates and taxes and, in the case of leaseholds, the rent and other
outgoings (if any) disclosed by the Disclosure Letter.
49
<PAGE> 53
7. DISPUTES
To the best knowledge of the Warrantors there are no current or anticipated
notices, actions, disputes or complaints, relating to or in respect of the
Properties or their use, nor, so far as the Warrantors are aware, are there any
circumstances rendering any of the foregoing reasonably likely.
8. PLANNING MATTERS
(a) Except to the extent that non-compliance would not have a material
adverse effect on the relevant Group Company, the current use of the
Properties, and developments already carried out on the Properties,
comply in all material respects with any relevant planning legislation,
any legislation which controls or regulates the use of land or
buildings or legislation which preserves or protects the national
heritage and any orders, regulations, consents or permissions made or
granted under any of the same as at the date hereof ("PLANNING
LEGISLATION").
(b) In respect of TDS Circuits PLC only, there is no agreement affecting
any of the UK Properties under Section 106 of the Town and Country
Planning Act 1990, Section 33 of the Local Government (Miscellaneous
Provisions) Act 1982 or any legislation of a similar nature.
9. COMPULSORY ACQUISITION
So far as the Warrantors are aware, there is no resolution or proposal for the
compulsory acquisition of the Properties or any means of access thereto or
egress therefrom.
10. BREACH OF COVENANT
No Group Company is in material subsisting breach of any covenant, restriction,
stipulation or other obligation affecting any of the Properties.
11.
[Intentionally blank]
12. STATE OF PROPERTIES
Except as disclosed in the Disclosure Letter, the buildings and other structures
on the Properties are in all material respects in repair, having regard to their
age, use and construction and so far as the Warrantors are aware, do not as at
the date hereof require exceptional expenditure to remedy any disrepair. For
these purposes, any defect requiring expenditure by way of repair of 200,000,000
Lire or more in aggregate shall be regarded as material.
13. LEASEHOLD PROPERTIES
In relation to such of the Properties as are leasehold:
(a) all material covenants, conditions and agreements contained in
the relevant leases, on the part of the landlord and the
tenant, have been complied with;
(b) there is no current complaint to the Company or Group Company
alleging any breach or any refusal to accept rent;
50
<PAGE> 54
(c) there are no current notices given by the landlord or the
tenant or proceedings pursuant to Law no. 392 of July 24, 1978
or the Landlord and Tenant Act 1954 or otherwise;
(d) in respect of TDS Circuits PLC only, the security of tenure
provisions of Part II of the Landlord and Tenant Act 1954 are
not excluded;
(e) none of the leases, other than leases at a full rack rent,
contains any provision for forfeiture on insolvency or
liquidation;
(f) none of the leases require the tenant to offer to surrender
the same before, or as a pre-condition of an assignment or
under-letting or contains requirements to be satisfied on, a
change of ownership of the share capital or control of the
tenant;
(g) so far as the Warrantors are aware, there are no matters in
the superior titles of any leasehold Property which have an
adverse effect on the use and enjoyment of the Properties for
their current use;
(h) no rent reviews are outstanding in relation to UK Properties.
51
<PAGE> 55
PART C: ENVIRONMENTAL WARRANTIES
1. INTERPRETATION
In this Part:
(a) ENVIRONMENTAL LAWS shall mean the following, each as in existence at
the Completion Date:
(i) all European Community, national or local statutes, codes, or
other laws or legislation concerning Environmental Matters
which are applicable in Italy, or so far as TDS Circuits PLC
is concerned, in England and which are applicable to any Group
Company Activity or to the Properties and all rules,
regulations, ordinances, orders, notices and directives made
thereunder; and
(ii) judicial and administrative interpretation of each of the
foregoing.
(b) ENVIRONMENTAL APPROVALS shall mean the permits, consents, licences and
other authorisations and approvals required under the Environmental
Laws to be obtained in connection with the use of the Properties or in
connection with any Group Company Activity.
(c) ENVIRONMENTAL MATTERS shall mean in relation to any Group Company
Activity and the Properties all matters related to pollution or
protection of the environment other than matters related to Town and
Country Planning but including noise, emissions, discharges and
releases of Hazardous Substances into air, water, sewage systems and
land and the manufacture, processing, distribution, use, treatment,
storage, disposal, transport and handling of Hazardous Substances.
(d) GROUP COMPANY ACTIVITY shall mean any business or other activity of any
nature whatsoever which so far as the Warrantors are aware is being
carried on by a Group Company at the Completion Date.
(e) HAZARDOUS SUBSTANCES shall mean and include pollutants, contaminants
and hazardous, flammable and toxic substances materials and waste
whether solid, liquid or gaseous which are referred to in or regulated
by any of the Environmental Laws.
2. EXISTENCE OF ENVIRONMENTAL APPROVALS
The Disclosure Letter includes a list of all the Environmental Approvals held by
each Group Company true and complete copies of which have been or, prior to the
Completion Date will be delivered to the Purchaser.
Except as set out in the Disclosure Letter:
(a) such Environmental Approvals constitute all the Environmental Approvals
currently required under the Environmental Laws to be obtained in
connection with the use of the Properties or any Group Company
Activity;
(b) each such Environmental Approval is in full force and effect;
(c) no proceeding or other action of whatever nature is pending, or is
threatened, seeking the suspension, revocation or variation or
limitation of any such Environmental Approval or seeking to impose any
penalty applicable under such Environmental Approval;
52
<PAGE> 56
(d) There are no facts or circumstances arising from any Group Company
Activity which will, or are reasonably likely to result in, any such
Environmental Approval being suspended, revoked, varied or limited
(other than variations or limitations in the ordinary course of
business) or which may prejudice their renewal; and
(e) no appeals are pending or being contemplated in respect of the refusal
of, or conditions contained in any Environmental Approval or any action
taken in respect of, any Environmental Approval.
3. COMPLIANCE WITH ENVIRONMENTAL APPROVALS AND ENVIRONMENTAL LAWS
(a) All environmental Approvals or Environmental Laws have been complied
with in all material respects and the use of the Properties in the
conduct of any Group Company Activity has been and is in all material
respects in accordance with the Environmental Approvals and
Environmental Laws.
(b) Neither the Warrantors nor any Group Company has received any notice,
order, judgment or demand letter requiring the taking of remedial or
other action in relation to Environmental Matters (excluding any where
such action has been taken).
(c) There have been and are, in relation to any Group Company Activity at
the Properties (and so far as the Warrantors are aware any activities
of any Group Company off-site of the Properties) no past or present
events, conditions, circumstances, activities, practices, incidents,
actions or plans which have arisen directly or indirectly from the acts
of any Group Company or are otherwise caused directly or indirectly by
a Group Company and which will give rise to legal liability or
otherwise form the basis of any Claim, action, suit, proceeding,
hearing or investigation related to Environmental Matters where the
same is reasonably likely to result in a material liability for a Group
Company. For these purposes, a material liability is a liability in
excess of 300,000,000 Lire in aggregate.
(d) There is not currently, and there has not been either on the Properties
or otherwise, arising from any Group Company Activity, any spill,
leakage, discharge, release or deposit (whether to water, land, sewage
systems or air or a combination of these) of any Hazardous Substance
which is reasonably likely to cause harm to humans, flora or fauna in a
manner which is reasonably likely to result in a material liability for
a Group Company. For these purposes, a material liability is a
liability in excess of 300,000,000 Lire in aggregate.
4. ENVIRONMENTAL AUDIT
Neither the Properties nor any Group Company Activity has been the subject of
any Environmental Audit, defined as any evaluation, assessment, study or test
other than such as has been carried out by the Purchaser.
5. There is attached to the Disclosure Letter copies of all environmental
studies carried out by or on behalf of each Group Company relating to the
business of such Group Company.
53
<PAGE> 57
PART D: TAX WARRANTIES
1.
1.1 All Tax returns (including those as withholding agent), reports or
other filings in respect of Tax that are required to be filed on or
before the date hereof, have been timely filed by each Group Company.
Such Tax returns, reports or other filings in respect of Tax adequately
reflect the Tax liabilities of each Group Company, at the time of the
filings, for the taxable period covered thereby.
1.2.1 All Taxes of each Group Company, that are payable on or before the date
hereof have been timely and duly paid.
1.2.2 All Taxes of each Group Company (apart from T.D.S. Circuits PLC) that
are attributable to any period ending on or before the Management
Accounts Date which are not yet due and payable as of the date hereof
are the subject of appropriate provision in the Last Accounts or the
Management Accounts.
1.2.3 All Taxes of T.D.S. Circuits PLC that are attributable to any
accounting period of the Company ending on or before the Last Accounts
Date which are not yet due and payable as of the date hereof are the
subject of appropriate provision in the Last Accounts.
1.3 No claim for assessment or collection of Taxes has been asserted in
writing against each Group Company (apart from T.D.S. Circuits PLC).
1.4 No Group Company has received any notice of a proposed Tax inspection
or any other administrative proceeding or court proceedings nor are any
of the foregoing pending or threatened in writing with regard to any
Taxes or Tax returns.
54
<PAGE> 58
SCHEDULE 4
PROPERTY DETAILS
1. Real property in Cavaglia (Biella), Via Abate Bertone no. 12, owned by
Zincocelere S.p.A.
2. Plant a Valle d'Aosta occupied by Nord Elettronica.
3. TDS Circuits Plc Properties:
<TABLE>
<CAPTION>
DESCRIPTION TITLE NUMBER INTEREST PROPRIETOR
<S> <C> <C> <C>
Land on the north west LA488020 Leasehold 125 years from TDS Circuits Plc
side of Cunliffe Road, 4 May 1983
Blackburn
Land on the south east LA401965 Freehold TDS Circuits Plc
side of Cunliffe Road,
Whitebirk
Land on the south east LA408118 Freehold TDS Circuits Plc
side of Cunliffe Road,
Whitebirk
Land on the north west LA419082 Freehold TDS (Circuits) Plc
side of Cunliffe Road, (Company Registration
Blackburn Number: 1171921)
Land and buildings on the LA402828 Freehold TDS Circuits Plc
south east side of
Cunliffe Road, Whitebirk
</TABLE>
55
<PAGE> 59
SCHEDULE 5
OWNERSHIP AND VALIDITY OF LOANS
1.1 The Loans are owed legally and beneficially by the Lenders, free and
clear from all security interests, rights or claims of any third parties.
1.2 This Agreement constitutes and imposes valid and legal obligations on
each Lender fully enforceable in accordance with its terms.
1.3 The Lenders severally warrant and confirm to the Purchaser as of the
date of this Agreement and as of the Completion date that the Lenders are
entities validly existing and in good standing in the jurisdiction of their
organization and have all necessary corporate power to enter into this
Agreement and to perform any and all of their respective obligations under this
Agreement and the persons who have executed this Agreement on behalf of the
Lenders respectively, are duly authorised officer or directors of the Lenders
respectively, vested with full power to bind the Lenders respectively, in
relation to any and all of such obligations.
1.4 As of the date of this Agreement, there are no pending or threatened
judicial or administrative proceedings which could have a material adverse
effect on the Lender's performance of its obligations arising under this
Agreement;
1.5 The execution of this Agreement and of the transactions contemplated
hereby will not result in the breach of any legal provision affecting the
Lenders which may affect the validity or enforceability of this Agreement as
against the Lenders.
56
<PAGE> 60
<TABLE>
<S> <C>
SIGNED by ALDINO BELLAZZINI ) ALDINO BELLAZZINI
in the presence of: )
Andrew Harting, Solicitor
One South Place, London EC2M 2WG
SIGNED by PIETRO PACETTI by his attorney ) ALDINO BELLAZZINI
Aldino Bellazzini in the presence of: )
Andrew Harting, Solicitor
One South Place, London EC2M 2WG
SIGNED by CLAUDIO PASTORIS by his attorney ) ALDINO BELLAZZINI
Aldino Bellazzini in the presence of: )
Andrew Harting, Solicitor
One South Place, London EC2M 2WG
SIGNED by GIANCARLO SILVA by his attorney ) ALDINO BELLAZZINI
Aldino Bellazzini in the presence of: )
Andrew Harting, Solicitor
One South Place, London EC2M 2WG
SIGNED by CARLO ALBERTO CAGLIERI by his ) ALDINO BELLAZZINI
attorney Aldino Bellazzini in the presence of: )
Andrew Harting, Solicitor
One South Place, London EC2M 2WG
SIGNED by RODERICK SELKIRK as a duly ) RODERICK SELKIRK
authorised attorney for and on behalf of )
NATWEST VENTURES NOMINEES LIMITED )
SIGNED by RODERICK SELKIRK as a duly ) RODERICK SELKIRK
authorised attorney for and on behalf of )
NATWEST VENTURES INVESTMENTS LIMITED )
SIGNED by HARDY MCLAIN as a duly ) HARDY MCLAIN
authorised attorney for and on behalf of )
CVC EUROPEAN EQUITY LIMITED acting )
as General Partner of CVC EUROPEAN )
EQUITY PARTNERS L.P. )
</TABLE>
57
<PAGE> 61
<TABLE>
<S> <C>
SIGNED by HARDY MCLAIN as a duly ) HARDY MCLAIN
authorised attorney for and on behalf of )
CVC EUROPEAN EQUITY LIMITED acting )
as General Partner of CVC EUROPEAN )
EQUITY PARTNERS (JERSEY) L.P. )
SIGNED by HARDY MCLAIN as a duly ) HARDY MCLAIN
authorised attorney for and on behalf of )
CITICORP INVESTORS EUROPE LIMITED )
SIGNED by RODERICK SELKIRK as duly ) RODERICK SELKIRK
authorised attorney for and on behalf of )
EUROPEAN CIRCUITS S.A. )
</TABLE>
58
<PAGE> 62
<TABLE>
<S> <C>
SIGNED by DAVID WEBSTER ) DAVID WEBSTER
duly authorised )
for and on behalf of )
VIASYSTEMS S.r.l. )
</TABLE>
59
<PAGE> 63
<TABLE>
<S> <C>
SIGNED by DAVID WEBSTER ) DAVID WEBSTER
duly authorised )
for and on behalf of )
VIASYSTEMS GROUP LIMITED )
</TABLE>
60
<PAGE> 1
EXHIBIT 4.7
EXECUTION COPY
============================================================
VIASYSTEMS, INC.
9 3/4% Series B Senior Subordinated Notes due 2007
=====================
INDENTURE
Dated as of February 17, 1998
====================
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>
ARTICLE I Page
<S> <C> <C>
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 . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
The Securities . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.4. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.9. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE III
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 34
----------
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IV
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 36
---------
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.2. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.3. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.4. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION> Page
<S> <C> <C>
SECTION 4.5. Limitation on Restrictions on Distributions from Restricted Subsidiaries . . . . . . . . . . . 41
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.7. Limitation on Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.8. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.9. Limitation on Capital Stock of Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.10. Maintenance of Office or Agency 47
SECTION 4.11. Money for Security Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.12. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.13. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.14. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.15. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.16. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE V
Successor Company . . . . . . . . . . . . . . . . . . . . . . . 49
-----------------
SECTION 5.1. When Company May Merge or Transfer Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VI
Defaults and Remedies . . . . . . . . . . . . . . . . . . . . . . 50
---------------------
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VII
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 55
-------
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
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SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VIII
Discharge of Indenture; Defeasance . . . . . . . . . . . . . . . . . . . 60
----------------------------------
SECTION 8.1. Discharge of Liability on Securities; Defeasance . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.2. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8.3. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.4. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.5. Indemnity for U.S. Government Obligations 62
SECTION 8.6. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 63
----------
SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.4. Revocation and Effect of Consents and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.6. Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE X
Subordination . . . . . . . . . . . . . . . . . . . . . . . . 65
-------------
SECTION 10.1. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.2. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.3. Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.4. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.5. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.7. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 10.8. Subordination May Not Be Impaired by Company . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.9. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.10. Distribution or Notice to Representative . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right To Accelerate . . . . . . . . . . 68
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . 69
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Indebtedness on
Subordination Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
</TABLE>
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<TABLE>
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ARTICLE XI
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 69
-------------
SECTION 11.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.3. Communication by Holders with other Holders . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.6. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.8. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.13. Variable Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.14. Qualification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11.15. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
EXHIBIT A Form of the Initial Note
EXHIBIT B Form of the Exchange Note
EXHIBIT C Form of Certificate to be Delivered in Connection With Transfers to Institutional
Accredited Investors
EXHIBIT D Form of Certificate to be Delivered in Connection With Transfers Pursuant to
Regulation S
</TABLE>
- iv -
<PAGE> 7
INDENTURE dated as of February 17, 1998, 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% Series B 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% Series B 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.
"1997 Indenture" means the Indenture, dated as of June 6,
1997, between the Company and The Bank of New York, as trustee, as the same may
be amended, supplemented or otherwise modified from time to time.
"1997 Security Issue Date" means June 6, 1997.
"1997 Securities" means the Company's 9 3/4% Senior
Subordinated Notes due 2007 issued pursuant to the 1997 Indenture.
"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
<PAGE> 8
2
(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 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.
<PAGE> 9
3
"Bank Indebtedness" means any and all amounts, whether
outstanding on the 1997 Security 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.
"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.
<PAGE> 10
4
"Chips" means Viasystems II Limited (formerly known as
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 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 Viasystems Canada, Inc. (formerly known as
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.
<PAGE> 11
5
"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 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
<PAGE> 12
6
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 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
<PAGE> 13
7
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 1997 Security 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 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
<PAGE> 14
8
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 1997 Security
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 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
<PAGE> 15
9
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.
"Financial Advisory Agreement" means the Financial Advisory
Agreement between Hicks Muse Partners and the Company as in effect on the 1997
Security 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 Viasystems Holdings Limited (formerly
known as 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 the 1997 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
<PAGE> 16
10
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 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
<PAGE> 17
11
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 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.
<PAGE> 18
12
"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 1997 Security 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 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.
<PAGE> 19
13
"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.
"Non-U.S. Person" means any Person that is not a U.S. Person,
as such term is defined in the Securities Act.
"Offering Memorandum" means the Offering Memorandum dated
February 9, 1998 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 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 and the 1997 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 1997 Security 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
<PAGE> 20
14
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 since the 1997 Security Issue Date, 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 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
<PAGE> 21
15
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 since the 1997 Security Issue Date; 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 since the 1997
Security Issue Date 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) since the 1997
Security Issue Date, exceed $50 million in the aggregate (plus, to the extent
not previously reinvested, any return of capital realized since the 1997
Security Issue Date 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 in effect on the
1997 Security 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.
<PAGE> 22
16
"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 1997 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 Securities and (B) the Stated Maturity of the Indebtedness
being
<PAGE> 23
17
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 February 17, 1998, among the Company,
Chase Securities Inc. and NatWest Capital Markets Limited.
"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 1997 Security 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 Period" with respect to any Security means the
two year period following the later of the Issue Date and the last date on
which the Company or any Affiliate of the Company is the owner of such Security
or any predecessor of such Security.
"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.
<PAGE> 24
18
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Senior Indebtedness" means whether outstanding on the 1997
Security 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, the
1997 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
<PAGE> 25
19
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 $250.0 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 2.1(b) 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
<PAGE> 26
20
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.
"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.
<PAGE> 27
21
"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.
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.
<PAGE> 28
22
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee"
means the Trustee.
"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.
<PAGE> 29
23
ARTICLE II
The Securities
SECTION 2.1. Form and Dating. (a) Initial Notes offered and
sold to the qualified institutional buyers (as defined in Rule 144A under the
Securities Act) in the United States of America ("Rule 144A Note") will be
issued on the Issue Date in the form of a permanent global note substantially
in the form set forth in Exhibit A hereto, which is hereby incorporated by
reference and made a part of this Indenture, deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided, with the applicable legends set forth in
Section 2.1(b) hereof (a "Rule 144A Global Note"). The Rule 144A Global Note
may be represented by more than one certificate, if so required by the
Depositary's rules regarding the maximum principal amount to be represented by
a single certificate. The aggregate principal amount of the Rule 144A Global
Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Initial Notes offered and sold outside the United States of
America ("Regulation S Note") in reliance on Regulation S shall be issued in
the form of a permanent global note substantially in the form set forth in
Exhibit A hereto, which is hereby incorporated by reference and made a part of
this Indenture, deposited with the Trustee, as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided, with the applicable legends set forth in Section 2.1(b) hereof (a
"Regulation S Global Note"). The Regulation S Global Note may be represented
by more than one certificate, if so required by the Depositary's rules
regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Regulation S Global Note
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee as
hereinafter provided.
Initial Notes resold to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) in
the United States of America ("Institutional Accredited Investor Note") will be
issued in the form of a permanent global note substantially in the form set
forth in Exhibit A hereto, which is hereby incorporated by reference and made a
part of this Indenture, deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided, with the applicable legends set forth in Section 2.1(b)
hereof (a "Institutional Accredited Investor Global Note"). The Institutional
Accredited Investor Global Note may be represented by more than one
certificate, if so required by the Depositary's rules regarding the maximum
principal amount to be represented by a single certificate. The aggregate
principal amount of the Institutional Accredited Investor Global Note may from
time to time be increased or decreased by adjustments made on the records of
the Trustee as custodian for the Depositary or its nominee as hereinafter
provided.
Exchange Notes exchanged for interests in the Rule 144A Note,
the Regulation S Note and the Institutional Accredited Investor Note will be
issued in the form of a permanent global note substantially in the form set
forth in Exhibit B hereto, which is hereby incorporated by reference and made a
part of this Indenture, deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter
<PAGE> 30
24
provided, with the applicable legend set forth in Section 2.1(b) hereof (the
"Exchange Global Note"). The Exchange Global Note may be represented by more
than one certificate, if so required by the Depositary's rules regarding the
maximum principal amount to be represented by a single certificate.
The Rule 144A Global Note, the Regulation S Global Note, the
Institutional Accredited Investor Global Note and the Exchange Global Note are
sometimes collectively herein referred to as the "Global Securities".
The Private Exchange Securities shall be in the Form of
Exhibit A. 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. 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) Restrictive Legends. Unless and until (i) an Initial
Note is sold under an effective registration statement or (ii) an Initial Note
is exchanged for an Exchange Note in connection with an effective registration
statement, in each case pursuant to the Registration Rights Agreement, the
Initial Notes shall bear the following legends (in the case of clauses (x) and
(y), a "Private Placement Legend"):
(x) The Rule 144A Global Note and the Institutional
Accredited Investor Global Note shall bear the following legend on the
base thereof:
"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 OR 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 COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS
<PAGE> 31
25
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), ONLY (A) TO THE COMPANY, (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 UNDER THE SECURITIES
ACT, 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 TRANSACTION INVOLVING A
MINIMUM PRINCIPAL AMOUNT OF $250,000 OF SUCH SECURITIES, 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 COMPANY'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) AND (E), 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."
(y) The Regulation S Global Note shall bear the following
legend on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
<PAGE> 32
26
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION, (2) 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 COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (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 UNDER THE SECURITIES
ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A 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
SECTION 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 TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF
$250,000 OF SUCH SECURITIES, 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 COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) ABOVE 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 CLAUSE (E), A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND
THE TRUSTEE. THIS LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE
DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON
WHICH THE SECURITIES ARE OFFERED TO PERSONS OTHER THAN
DISTRIBUTORS (AS DEFINED IN REGULATION S) AND (B) THE DATE
<PAGE> 33
27
OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT."
(z) The Global Securities, whether or not an Initial
Note, shall also bear the following legend on the face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF DTC AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE 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 CEDE & CO.
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 SECTIONS 2.1 AND 2.6 OF THE INDENTURE."
(c) Book-Entry Provisions. (i) This Section 2.1(c) shall
apply only to Global Securities deposited with the Trustee, as custodian for
the Depositary.
(ii) Each Global Security initially shall (i) be registered in the
name of the Depositary for such Global Security or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 2.1(b).
(iii) 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
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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.
(iv) Transfers of a Global Security shall be limited to transfers
of such Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and practices
of the Depositary and the provisions of Section 2.6.
(d) Certificated Securities. If required to do so
pursuant to any applicable law or regulation beneficial owners may obtain
Securities in definitive form ("Definitive Notes") in exchange for their
beneficial interests in a Global Security upon written request in accordance
with the Depositary's and the Registrar's procedures. In addition, Definitive
Notes shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Security if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such
Global Security or the Depositary ceases to be a clearing agency registered
under the Exchange Act, at a time when the Depositary is required to be so
registered in order to act as Depositary, and in each case a successor
depositary is not appointed by the Company within 90 days of such notice, or,
(ii) the Company executes and delivers to the Trustee and Registrar an
Officers' Certificate stating that such Global Security shall be so
exchangeable or (iii) an Event of Default has occurred and is continuing and
the Registrar has received a request from the Depositary. Definitive
Securities will bear the applicable Private Placement Legend set forth in
Section 2.1(b) hereof unless removed in accordance with such Section.
(e) 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, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Definitive Notes of like tenor and
amount.
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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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 $100 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 principal 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 $100 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 is due
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30
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) Special Transfer Restrictions. The following
provisions shall apply with respect to any proposed transfer of a Rule 144A
Note or an Institutional Accredited Investor Note prior to the expiration of
the Resale Restriction Termination Date (as defined in Section 2.1(b) hereof):
(i) a transfer of a Rule 144A Note or an
Institutional Accredited Investor Note or a beneficial interest
therein to a QIB shall be made upon the representation of the
transferee that it is purchasing the Security for its own account or
an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(ii) a transfer of a Rule 144A Note or an
Institutional Accredited Investor Note or a beneficial interest
therein to an institutional accredited investor shall be made upon
receipt by the Trustee or its agent of a certificate substantially in
the form set forth in Exhibit C hereto from the proposed transferee
and, if requested by the
<PAGE> 37
31
Company or the Trustee, the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them;
and
(iii) a transfer of a Rule 144A Note or an
Institutional Accredited Investor Note or a beneficial interest
therein to a Non-U.S. Person shall be made upon receipt by the Trustee
or its agent of a certificate substantially in the form set forth in
Exhibit D hereof from the proposed transferee and, if requested by the
Company or the Trustee, the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them.
(b) Transfers of a Regulations S Note. The following
provisions shall apply with respect to any proposed transfer of a Regulation S
Note prior to the expiration of the Restricted Period:
(i) a transfer of a Regulation S Note or a
beneficial interest therein to a QIB shall be made upon the
representation of the transferee that it is purchasing the Security
for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under
the Securities Act of 1933, as amended, and is aware that the sale to
it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(ii) a transfer of a Regulation S Note or a
beneficial interest therein to an institutional accredited investor
shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Exhibit C hereto
from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or
other information satisfactory to each of them; and
(iii) a transfer of a Regulation S Note or a
beneficial interest therein to a Non-U.S. Person shall be made upon,
if requested by the Company or the Trustee, receipt by the Trustee or
its agent of an opinion of counsel, certification and/or other
information satisfactory to each of them.
After the expiration of the Restricted Period, interests in
the Regulation S Note may be transferred without requiring certification set
forth in Exhibit C or any additional certification.
(c) Restricted Securities Legend. (i) Upon the transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Note Registrar shall
<PAGE> 38
32
deliver Securities that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Securities bearing the Private Placement
Legend, the Note Registrar shall deliver only Securities that bear the Private
Placement Legend unless there is delivered to the Note Registrar an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
(ii) By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
(d) 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
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same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
(e) 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
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34
cease to be outstanding because the Company or an Affiliate of the Company
holds the Security.
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
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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 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. (a) 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
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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.
(b) The Company will not be permitted to redeem the 1997
Securities unless, substantially concurrently with such redemption, the Company
redeems an aggregate principal amount of Securities (rounded to the nearest
integral multiple of $1,000) equal to the product of: (i) a fraction, the
numerator of which is the aggregate principal amount of 1997 Securities to be
so redeemed and the denominator of which is the aggregate principal amount of
1997 Securities outstanding immediately prior to such proposed redemption, and
(ii) the aggregate principal amount of Securities outstanding immediately prior
to such proposed redemption.
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.
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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 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.
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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 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) from the date of the 1997 Indenture 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) from the date of the 1997 Indenture 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
<PAGE> 45
39
with the principal amount of all other Indebtedness Incurred pursuant to this
Section 4.3(b)(iv) from the date of the 1997 Indenture 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.
(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 1997 Security 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
<PAGE> 46
40
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 Section 4.3(a); or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments declared or made subsequent to the
1997 Security 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 1997 Security 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 1997
Security 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 1997 Security 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
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41
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 1997 Security 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 since the 1997 Security Issue Date (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 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 1997 Security 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 since the 1997
Security Issue Date.
(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
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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
since the 1997 Security Issue Date; (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 since the 1997 Security
Issue Date; (viii) payments, not to exceed $200,000 in the aggregate since the
1997 Security Issue Date, 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 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 1997 Security 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
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43
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 1997 Security 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
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 1997
Security 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
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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, 1997 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 or the 1997 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 since
the 1997 Security Issue Date 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 or 1997 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
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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) and/or the 1997
Securities pursuant to the 1997 Indenture, the Company will be required to
purchase Securities and/or the 1997 Securities tendered pursuant to an offer by
the Company for the Securities and/or the 1997 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) and the 1997 Indenture. If the aggregate purchase
price of the Securities and/or the 1997 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 and the 1997 Indenture. Upon the
consummation of the purchase of Securities and/or 1997 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 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
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46
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 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.
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(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 1997
Security 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) the issuance of
Capital Stock of the Company (other than Disqualified Stock), (ix) any
obligations of the Company pursuant to the Monitoring and Oversight Agreement
and the Financial Advisory Agreement, and (x) 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 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.
<PAGE> 54
48
(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 designation of a Restricted Subsidiary as an
Unrestricted Subsidiary in compliance with this Indenture.
SECTION 4.10. Maintenance of Office or Agency. The Company
will maintain in The City of New York, an office or agency where the Securities
may be presented or surrendered for payment, where, if applicable, the
Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The corporate trust office of the Trustee,
which initially shall be located at c/o The Bank of New York, 101 Barclay
Street, Floor 21 West, New York, New York, Attention: Corporate Trust
Administration (the "Corporate Trust Office") shall be such office or agency of
the Company, unless the Company shall designate and maintain some other office
or agency for one or more of such purposes. The Company will give prompt
written notice to the Trustee of any change in the location of any such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust
<PAGE> 55
49
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Securities may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New York for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of any such other
office or agency.
SECTION 4.11. Money for Security Payments to Be Held in
Trust. If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (or premium, if any) or interest
on any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal of (or premium,
if any) or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee of its action or failure to so act.
Whenever the Company shall have one or more Paying Agents for
the Securities, it will, on or before each due date of the principal of (or
premium, if any) or interest on any Securities, deposit with a Paying Agent a
sum in same day funds (or New York Clearing House funds if such deposit is made
prior to the date on which such deposit is required to be made) that shall be
available to the Trustee by 11:00 a.m. New York City time on such due date
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such action or any
failure to so act.
The Company will cause each Paying Agent (other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities in trust
for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities) in the making of any
payment of principal (and premium, if any) or interest; and
<PAGE> 56
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(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such sums.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (or
premium, if any) or interest on any Security and remaining unclaimed for two
years after such principal, premium or interest has become due and payable
shall be paid to the Company at its direction, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment to the Company,
may at the expense of the Company cause to be published once, in a leading
daily newspaper (if practicable, The Wall Street Journal (Eastern Edition))
printed in the English language and of general circulation in New York City,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 4.12. Corporate Existence. Subject to Article V, the
Company will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and that of each Restricted
Subsidiary and the corporate rights (charter and statutory) licenses and
franchises of the Company and each Restricted Subsidiary; provided, however,
that the Company shall not be required to preserve any such existence (except
the Company) right, license or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and each of its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not, and will not
be, disadvantageous in any material respect to the Holders.
SECTION 4.13. Payment of Taxes and Other Claims. The Company
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all material taxes, assessments and governmental charges
levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (ii) all lawful claims
for labor, materials and supplies, which, if unpaid, might by law become a
material liability or lien upon the property of the Company or any Restricted
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be
<PAGE> 57
51
paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which appropriate reserves, if necessary (in the good faith
judgment of management of the Company) are being maintained in accordance with
GAAP.
SECTION 4.14. Compliance with Laws. The Company shall
comply, and shall cause each of its Restricted Subsidiaries to comply, with all
applicable statutes, rules, regulations, orders and restrictions of the United
States of America, all states and municipalities thereof, and of any
governmental regulatory authority, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
for such noncompliances as would not in the aggregate have a material adverse
effect on the financial condition or results of operations of the Company and
its Restricted Subsidiaries, taken as a whole.
SECTION 4.15. 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 4.16. 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;
<PAGE> 58
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(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
(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;
<PAGE> 59
53
(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 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;
<PAGE> 60
54
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.
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.
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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.
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;
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(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 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
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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 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.
<PAGE> 64
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(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.
(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.
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(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 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.
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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 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;
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(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.
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.
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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
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
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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;
(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
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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.
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
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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;
(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
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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;
(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.
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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 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
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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
(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
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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.
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.
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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.
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).
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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 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
<PAGE> 78
72
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
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
<PAGE> 79
73
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:
(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;
<PAGE> 80
74
(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.
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.
<PAGE> 81
75
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> 82
76
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
VIASYSTEMS, INC.
By:
------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------
Name: Mary LaGumina
Title:
<PAGE> 83
EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
[Applicable Restrictive Legend]
[Depository Legend, if applicable]
No. [___]
Principal Amount $[______________]
CUSIP NO. ____________
9 3/4% Series B 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
<PAGE> 84
2
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> 85
[FORM OF REVERSE SIDE OF INITIAL NOTE]
9 3/4% Series B 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 February 17, 1998. 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.
<PAGE> 86
2
4. Indenture
The Company issued the Securities under an Indenture dated as
of February 17, 1998 (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 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 $100 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):
<PAGE> 87
3
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 $35
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 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 $50 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
<PAGE> 88
4
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.
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.
<PAGE> 89
5
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 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.
<PAGE> 90
6
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.
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.
<PAGE> 91
7
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> 92
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> 93
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> 94
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>
<CAPTION>
<S> <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> 95
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> 96
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES]
In connection with any transfer of this Security occurring
prior to the date that is the earlier of the date of an effective Registration
Statement (as defined in the Registration Rights Agreement dated as of February
17, 1998) or _______________, 199_, the undersigned confirms that without
utilizing any general solicitation or general advertising that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933,
as amended, provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished that comply
with the conditions of transfer set forth in this Security and
the Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Security in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.6 of the Indenture
shall have been satisfied.
Date:
---------------------
- ------------------------------------------------------
NOTICE: The signature must correspond
with the name as written upon
the face of the
within-mentioned instrument
in every particular, without
alteration or any change
whatsoever.
Signature Guarantee:
--------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying
<PAGE> 97
2
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:
----------------------------
-----------------------------
NOTICE: To be executed by
an executive officer.
<PAGE> 98
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
No. [_____] Principal Amount $[____________]
CUSIP NO. _____________
9 3/4% Series B 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> 99
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
9 3/4% Series B 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 February 17, 1998. 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 February 17, 1998 (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 Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the
<PAGE> 100
2
"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 $100 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 $35
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 are contributed to the common or
non-redeemable preferred equity capital of the Company) so long as there is a
<PAGE> 101
3
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 $50 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> 102
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
<PAGE> 103
5
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 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
<PAGE> 104
6
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.
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> 105
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> 106
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> 107
EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS]
[date]
Viasystems, Inc.
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $______
principal amount of the 9 3/4% Series B 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 Rules 501(a)(1), (2), (3) and (7) under the Securities Act of 1933,
as amended (the "Securities Act")), purchasing for our own account or for the
account of 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 risks 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.
<PAGE> 108
2
(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 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> 109
3
Upon transfer the Notes would be registered in the name of the new beneficial
owner as follows:
Taxpayer ID
Name Address Number:
- ---- ------- ------
Very truly yours,
[Name of Transferor]
By:
------------------------------ ------------------------------
Name: Signature Medallion Guaranteed
Title:
<PAGE> 110
EXHIBIT D
[FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S]
[date]
Viasystems, Inc.
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: VIASYSTEMS, INC. (the "Company")
9 3/4% Series B Senior Subordinated
Notes due 2007 (the "Notes")
-----------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(a) the offer of the Notes was not made to a person in the
United States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States or (ii) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(c) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or
<PAGE> 111
2
legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By:
---------------------------- ----------------------------
Authorized Signature Signature Medallion Guaranteed
<PAGE> 1
EXHIBIT 4.10
FIRST AMENDMENT
FIRST AMENDMENT, dated as of August 29, 1997 (this
"Amendment"), to the Second Amended and Restated Credit Agreement, dated as of
June 5, 1997 (as the same may be further amended, supplemented or otherwise
modified 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"), 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" and together with the Canadian Borrower, English
Bidco, the English Borrower and Chips Limited, the "Foreign Subsidiary
Borrowers"), the several banks and other financial institutions from time to
time parties to 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
thereunder 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, Holdings, the US Borrower and the Foreign Subsidiary
Borrowers have requested that the Lenders, and the Lenders have agreed to,
amend certain provisions of the Credit Agreement, upon the terms and subject to
the conditions set forth below to allow the repurchase or redemption of
outstanding Chips Loan Notes;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto hereby agree as follows:
SECTION 1. Defined Terms. Terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement. Unless otherwise indicated, all Section and subsection references
are to the Credit Agreement.
SECTION 2. Defined Terms. Subsection 1.1 of the Credit
Agreement is hereby amended by inserting the following new definition in the
proper alphabetical order:
<PAGE> 2
2
"'Paying Agent': Chase, as party to the Paying Agency
Agreement, dated as of April 21, 1997, among Chips Holdings, the
holders (together with any subsequent registered holder of the Chips
Loan Notes) and Chase, as Paying Agent."
SECTION 3. Amendment to Subsection 8.7. Subsection 8.7 of
the Credit Agreement is hereby amended by deleting the word "and" at the end of
clause (c) thereof, by replacing the period at the end of clause (d) thereof
with a semi-colon and the word "and" and by inserting immediately after such
clause (d) the following:
"(e) Restricted Payments by Bisto to Holdings."
SECTION 4. Amendment to Subsection 8.9. Subsection 8.9 of
the Credit Agreement is hereby amended by deleting the word "and" at the end of
clause (m) thereof, by replacing the period at the end of clause (n) thereof
with a semi-colon and the word "and" and by inserting immediately after such
clause (n) the following:
"(o) so long as after giving effect thereto no Default or
Event of Default shall have occurred and be continuing, purchases by
Holdings of the Chips Loan Notes; provided that (i) the acquisition
price of the Chips Loan Notes does not exceed the principal of and
accrued and unpaid interest on such Chips Loan Notes on the date of
the acquisition and (ii) any such Chips Loan Notes are promptly
delivered to the Paying Agent for cancellation."
SECTION 5. Amendment to Subsection 11.6. Subsection 11.6 of
the Credit Agreement is hereby amended by inserting the following at the end of
such subsection:
"provided this clause (v) shall not prevent investments in the
Chips Loan Notes by Holdings in accordance with subsection 8.9(o), or
redemption of the Chips Loan Notes by Holdings as long as the redemption price
of the Chips Loan Notes does not exceed the principal of and accrued and unpaid
interest on such Chips Loan Notes on the date of the redemption."
SECTION 6. Representations and Warranties. After giving
affect to this Amendment, Holdings and the US Borrower (and each Foreign
Subsidiary Borrower, only as to itself, and its Subsidiaries) hereby confirm,
reaffirm and restate the representations and warranties set forth in Section 5
of the Credit Agreement as if made on and as of the date hereof.
SECTION 7. Condition to Effectiveness. This Amendment shall
become effective as of August __, 1997 upon receipt by the Administrative Agent
of (a) counterparts of this Amendment, duly executed and delivered by Holdings,
the US Borrower, the Foreign Subsidiary Borrowers and the Required Lenders and
(b) an acknowledgement and consent in the form of Exhibit A executed by the
Credit Parties.
<PAGE> 3
3
SECTION 8. Continuing Effect of Credit Agreement. Except as
expressly amended herein, the Credit Agreement shall continue to be, and shall
remain, in full force and effect in accordance with its terms.
SECTION 9. Governing Law; Counterparts. THIS AMENDMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. This Amendment may be executed by the parties hereto in any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
VIASYSTEMS GROUP, INC.,
as Guarantor
By:
--------------------------------
Name:
Title:
BORROWERS
VIASYSTEMS, INC.,
as US Borrower
By:
--------------------------------
Name:
Title:
CIRCO CRAFT CO. INC.,
as Canadian Borrower
By:
--------------------------------
Name:
Title:
PCB INVESTMENTS PLC,
as English Bidco
By:
--------------------------------
Name:
Title:
FORWARD GROUP PLC,
as English Borrower
By:
--------------------------------
Name:
Title:
<PAGE> 5
5
CHIPS ACQUISITION LIMITED,
as a Foreign Subsidiary Borrower
By:
--------------------------------
Name:
Title:
INTERCONNECTION SYSTEMS (HOLDINGS)
LIMITED,
as a Foreign Subsidiary Borrower
By:
--------------------------------
Name:
Title:
AGENTS
THE CHASE MANHATTAN BANK,
as Administrative Agent and Collateral
Agent, and as a Lender
By:
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK OF CANADA,
as Canadian Agent, and as a Canadian
Lender
By:
-------------------------------
Name:
Title:
CHASE MANHATTAN INTERNATIONAL LIMITED,
as English Agent
By:
-------------------------------
Name:
Title:
<PAGE> 6
6
CHASE MANHATTAN BANK DELAWARE,
as a US Issuing Lender
By:
--------------------------------
Name:
Title:
US LENDERS
CIBC INC.
By:
--------------------------------
Name:
Title:
BANK OF MONTREAL
By:
--------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
CITIBANK, N.A.
By:
--------------------------------
Name:
Title:
<PAGE> 7
7
THE FUJI BANK LIMITED, NEW YORK BRANCH
By:
--------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
--------------------------------
Name:
Title:
BANKERS TRUST
By:
--------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK Plc
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
<PAGE> 8
8
ABN AMRO BANK N.V.
By:
--------------------------------
Its:
--------------------------------
By:
--------------------------------
Its:
--------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
Title:
THE SAKURA BANK, LIMITED
By:
--------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By:
--------------------------------
Name:
Title:
<PAGE> 9
9
NATIONAL BANK OF CANADA
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, NEW YORK
BRANCH
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
ARAB BANKING CORPORATION (B.S.C.)
By:
--------------------------------
Name:
Title:
DLJ CAPITAL FUNDING, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 10
10
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
BANKBOSTON, N.A.
By:
--------------------------------
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
<PAGE> 11
11
ALLSTATE LIFE INSURANCE COMPANY
By:
--------------------------------
Name:
Title:
ALLSTATE INSURANCE COMPANY
By:
--------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:
--------------------------------
Name:
Title:
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO, FORMERLY CHL HIGH YIELD
LOAN PORTFOLIO
(a unit of THE CHASE MANHATTAN BANK)
By:
--------------------------------
Name:
Title:
PRIME INCOME TRUST
By:
--------------------------------
Name:
Title:
<PAGE> 12
12
ORIX USA CORPORATION
By:
--------------------------------
Name:
Title:
PROTECTIVE LIFE INSURANCE COMPANY
By:
--------------------------------
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
--------------------------------
Name:
Title:
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By:
---------------------------
Name:
Title:
KZH-SOLEIL CORPORATION (formerly
known as KZH Holding Corporation)
By:
--------------------------------
Name:
Title:
<PAGE> 13
13
AMARA-1 FINANCE LTD.
By:
--------------------------------
Name:
Title:
AMARA-2 FINANCE LTD.
By:
--------------------------------
Name:
Title:
PILGRIM AMERICA PRIME RATE TRUST
By:
--------------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Eaton Vance Management
as Investment Advisor
By:
-------------------------
Name:
Title:
APPALOOSA MANAGEMENT, L.P.
By:
--------------------------------
Name:
Title:
SHENKMAN CAPITAL
By:
--------------------------------
Name:
Title:
<PAGE> 14
14
INDOSUEZ CAPITAL
By:
--------------------------------
Name:
Title:
<PAGE> 15
15
CANADIAN LENDERS
BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By:
--------------------------------
Name:
Title:
BANK OF MONTREAL
By:
--------------------------------
Name:
Title:
FUJI BANK CANADA
By:
--------------------------------
Name:
Title:
ROYAL BANK OF CANADA
By:
--------------------------------
Name:
Title:
CITIBANK CANADA
By:
--------------------------------
Name:
Title:
<PAGE> 16
16
BANK OF TOKYO-MITSUBISHI (CANADA)
By:
--------------------------------
Name:
Title:
THE SAKURA BANK (CANADA)
By:
--------------------------------
Name:
Title:
THE SUMITOMO BANK (CANADA)
By:
--------------------------------
Name:
Title:
BT BANK OF CANADA
By:
--------------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
--------------------------------
Name:
Title:
<PAGE> 17
17
BANQUE NATIONALE DE PARIS (CANADA)
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
ABN AMRO BANK CANADA
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
FIRST CHICAGO NBD BANK, CANADA
By:
--------------------------------
Name:
Title:
<PAGE> 18
18
ENGLISH LENDERS
THE CHASE MANHATTAN BANK
By:
--------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Name:
Title:
BANK OF MONTREAL
By:
--------------------------------
Name:
Title:
ROYAL BANK OF CANADA
By:
--------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK Plc
By:
--------------------------------
Name:
Title:
<PAGE> 19
19
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, LONDON
BRANCH
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:
--------------------------------
Name:
Title:
CITIBANK, N.A.
By:
--------------------------------
Name:
Title:
<PAGE> 20
20
BHF BANK AKTIENGESELLSCHAFT
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
SAKURA BANK LIMITED LONDON BRANCH
By:
--------------------------------
Name:
Title:
BANK OF NEW YORK
By:
--------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
--------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
--------------------------------
Name:
Title:
<PAGE> 21
21
THE MITSUBISHI TRUST & BANKING
CORPORATION
By:
--------------------------------
Name:
Title:
CAISSE NATIONAL DE CREDIT AGRICOLE
By:
--------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI
By:
--------------------------------
Name:
Title:
CIBC WOOD GUNDY PLC
By:
--------------------------------
Name:
Title:
<PAGE> 22
22
FIRST CHICAGO NBD BANK
By:
--------------------------------
Name:
Title:
THE SUMITOMO BANK (CANADA)
By:
--------------------------------
Name:
Title:
APPALOOSA MANAGEMENT, L.P.
By:
--------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.11
SECOND AMENDMENT
SECOND AMENDMENT, dated as of February 3, 1998 (this
"Amendment"), to the Second Amended and Restated Credit Agreement, dated as of
June 5, 1997 (as the same may be further amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Viasystems Group, Inc., a Delaware corporation ("Holdings"), Viasystems,
Inc., a Delaware corporation (the "US Borrower"), Viasystems Canada, Inc.
(f/k/a 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"), Viasystems Holdings Limited (f/k/a 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"), Viasystems II Limited
(f/k/a Interconnection Systems (Holdings) Limited), a private limited company
organized under the laws of England and Wales ("ISL" and together with the
Canadian Borrower, English Bidco, the English Borrower, Chips Limited and any
Future Foreign Subsidiary Borrower, the "Foreign Subsidiary Borrowers"), the
several banks and other financial institutions from time to time parties to
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 thereunder 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, Holdings, the US Borrower and the Foreign Subsidiary
Borrowers have requested that the Lenders, and the Lenders have agreed to,
amend certain provisions of the Credit Agreement, upon the terms and subject to
the conditions set forth below to allow (i) the incurrence of up to
$125,000,000 of additional Senior Subordinated Indebtedness of the US Borrower
to finance Permitted Acquisitions, (ii) the consummation of certain Permitted
Acquisitions, (iii) an increase in the unused Permitted Acquisition limit
(after giving effect to the contemplated acquisitions) to approximately
$150,000,000, (iv) an increase in the US Revolving Credit Commitments of
$25,000,000, (v) a portion of the Chips Revolving Credit Commitments to be
available to certain Foreign Subsidiary Borrowers on a multicurrency basis as
agreed by the lenders providing the same, (vi) to provide a new $70,000,000
Additional US Term Loan, and (vii) certain other amendments set forth herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto hereby agree as follows:
<PAGE> 2
2
SECTION 1. Defined Terms. Terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement. Unless otherwise indicated, all Section and subsection references
are to the Credit Agreement.
SECTION 2. Defined Terms. Subsection 1.1 of the Credit
Agreement is hereby amended by (a) deleting the definitions of "Available
Revolving Credit Commitment", "Borrowing Date", "Chips Revolving Credit
Commitment", "Consolidated Total Debt", "Future Acquisition Documents", "US
Lenders" and "US Term Loan Lenders" appearing therein in its entirety and
substituting in lieu thereof the following new definitions:
"'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,
(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 and
(iv) if such Specified Revolving Credit Lender is a Multicurrency
Lender and such Specified Borrower is ISL, its aggregate Multicurrency
Exposures in respect of all Multicurrency Borrowers, collectively, as
to all the Specified Revolving Credit Lenders, the "Available
Revolving Credit Commitments."
"'Borrowing Date': any Business Day specified in a notice
pursuant to subsection 2.2, 2.5(e), 2.5(f), 2.6(f) or 2.15 as a date
on which the Specified Borrower requests the Specified Lenders to make
Specified Loans hereunder."
"'Chips Revolving Credit Commitment': as to any English
Revolving Credit 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 Equivalent Amount (together
with, if such Lender is also a Multicurrency Lender, its Specified
Multicurrency Exposure) not to exceed at any one time outstanding the
amount set forth opposite such English Revolving Credit 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 Revolving Credit Lenders, the
"Chips Revolving Credit Commitments'."
"'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
<PAGE> 3
3
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; and
provided further, that any cash collateral securing Domestic
Obligations of the US Borrower as required by subsection 8.2(q) shall
be subtracted from the calculation of Consolidated Total Debt only as
it applies to the calculation of Consolidated Total Debt to
Consolidated EBITDA under subsection 8.1(c)."
"'Future Acquisition Documents': any documents evidencing a
Permitted Acquisition that are required to be furnished to the
Administration Agent pursuant to subsection 8.9(k) or any other
acquisition permitted in any amendment hereto."
"'US Lenders': Lenders holding US Term Loans or US Revolving
Credit Commitments.
"'US Term Loan Lenders': the collective reference to the
Tranche A Term Loan Lenders, the Tranche B Term Loan Lenders, the
Tranche C Term Loan Lenders and the Additional US Term Loan Lenders."
(b) Deleting the first table appearing in the definition of
"Applicable Margin" and substituting therefor the following new table:
Base Rate Loans
<TABLE>
<CAPTION>
Type Applicable Margin
---- -----------------
<S> <C>
Tranche A Term Loans 1.50%
Additional US Term Loans 1.75%
Tranche B Term Loans 2.00%
Tranche C Term Loans 2.50%
Revolving Credit Loans
(including Swing Line Loans) 1.50%
</TABLE>
Eurocurrency Loans and B/As
<TABLE>
<CAPTION>
Type Applicable Margin
---- -----------------
<S> <C>
Tranche A Term Loans 2.50%
Additional US Term Loans 2.75%
Tranche B Term Loans 3.00%
Tranche C Term Loans 3.50%
Revolving Credit Loans
(including Letters of Credit and
Accommodations) 2.50%
</TABLE>
<PAGE> 4
4
<TABLE>
<CAPTION>
Facility Fee; Commitment Fee Applicable Margin
---------------------------- -----------------
<S> <C>
0.50%
</TABLE>
(c) Inserting the following new sentence to the end of the
definition of "Joinder Agreement':
"Any Joinder Agreement which provides solely for a Multicurrency
Borrower in the form of Exhibit C to the Additional US Term Loan
Amendment need not be executed by the Required Lenders or any existing
Specified Agent other than the Administrative Agent."
(d) Inserting the following new definitions in the proper
alphabetical order:
"'Additional US Term Loan': as to any Additional US Term Loan
Lender, its term loan to the US Borrower described in subsection
2.5(f), which shall be a US Term Loan for all purposes of this
Agreement and the other Loan Documents."
"'Additional US Term Loan Amendment': the Second Amendment,
dated as of February 3, 1998, to this Agreement.
"'Additional US Term Loan Commitment': as to any Additional
US Term Loan Lender, its obligation to make Additional US Term Loans
pursuant to subsection 2.5(f) in an aggregate amount not to exceed the
amount opposite such Additional US Term Loan Lender's name in Schedule
I to the Additional US Term Loan Amendment under the heading
'Additional US Term Loan Commitment'; collectively, as to all
Additional US Term Loan Lenders, the 'Additional US Term Loan
Commitments.'"
"'Additional US Term Loan Lenders': the Lenders listed in
Schedule I to the Additional US Term Loan Amendment which shall be US
Term Loan Lenders for all purposes of this Agreement and the other
Loan Documents."
"'Multicurrency Borrower': any Future Foreign Subsidiary
Borrower which is party to a Joinder Agreement, substantially in the
form of Exhibit C to the Additional US Term Loan Amendment expressly
providing that such Future Foreign Subsidiary Borrower shall be a
Multicurrency Borrower."
"'Multicurrency Exposure': as to any Multicurrency Lender with
respect to any Multicurrency Borrower, the sum of (i) the aggregate
unpaid principal Equivalent Amount at such time of all Specified
Revolving Credit Loans made by such Multicurrency Lender (or its
Affiliate or branch) to such Multicurrency Borrower, (ii) an amount
equal to the Equivalent Amount of such Multicurrency Lender's (or its
Affiliate or branch's) Specified Revolving Credit Commitment
Percentage of the aggregate unpaid principal amount at such time of
all Specified Swing Line Loans of such Multicurrency Borrower and
(iii) an amount equal to the Equivalent Amount of
<PAGE> 5
5
such Specified Multicurrency Lender's (or its Affiliate or branch's)
Specified Revolving Credit Commitment Percentage of the Specified
Accommodation Outstandings of such Multicurrency Lender in respect of
such Multicurrency Borrower at such time;"
"'Multicurrency Lender': as to any Multicurrency Borrower,
any English Revolving Credit Lender having a Chips Revolving Credit
Commitment and which has (or has an Affiliate or branch which has) a
Specified Future Foreign Subsidiary Revolving Credit Commitment."
"'Multicurrency Percentage': as to any English Revolving
Credit Lender with respect to any borrowing of Chips Revolving Credit
Loans, a percentage equal to the percentage which such English
Revolving Credit Lender's Specified Available Revolving Credit
Commitment constitutes of the aggregate Available Revolving Credit
Commitments under the Chips Revolving Credit Commitments after giving
effect to the application of the proceeds of such Chips Revolving
Credit Loans."
SECTION 3. Amendment of Subsection 2.1(d). Subsection 2.1(d)
is hereby amended by deleting the first sentence thereof in its entirety and
substituting therefore the following new sentence:
"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 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 (i) such Specified Lender's
Specified Revolving Credit Commitment Percentage of all Specified
Accommodation Outstandings and outstanding Specified Swing Line Loans,
(ii) if such Specified Revolving Credit Lender is a Multicurrency
Lender, its aggregate Multicurrency Exposure and (iii) 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."
SECTION 4. Amendment of Subsection 2.2. Subsection 2.2 is
hereby amended by adding to the end thereof the following:
"Notwithstanding anything herein to the contrary, each English
Revolving Credit Lender's pro rata share of any Chips Revolving Credit
Loan shall be equal to such English Revolving Credit Lender's
Multicurrency Percentage."
SECTION 5. Amendment of Subsection 2.3(a). Subsection 2.3(a)
is hereby amended by adding to the end thereof the following:
"Notwithstanding the foregoing, no commitment fee shall be payable in
respect of any Revolving Credit Commitment to any Multicurrency
Borrower"
<PAGE> 6
6
SECTION 6. Amendment of Subsection 2.5. Subsection 2.5 of
the Credit Agreement is hereby amended by adding thereto the following new
clause (f):
"(f) Additional US Term Loan Lenders' Commitments. (i)
Subject to (x) the terms and conditions hereof and (y) receipt by the
US Borrower subsequent to the effective date of the Additional US Term
Loan Amendment of gross cash proceeds of at least $100,000,000 from
the issuance of additional Senior Subordinated Indebtedness and net
cash proceeds of at least $50,000,000 from the issuance of its common
equity to Holdings to finance Permitted Acquisitions, each Additional
US Term Loan Lender severally agrees to make Additional US Term Loans
on a Business Day subsequent to the effective date of the Additional
US Term Loan Amendment and prior to May 1, 1998, in an amount not to
exceed the amount set forth opposite such Additional US Term Loan
Lender's name on Schedule I to the Additional US Term Loan Amendment.
(ii) Amortization of Additional US Term Loans. The
aggregate Additional US Term Loans of all the Additional US Term Loan
Lenders shall be payable in thirteen (13) consecutive semi-annual
installments on the dates and in a principal amount equal to the
amounts set forth in subsection 2.5(f) (ii) below (together with all
accrued interest thereon) opposite the applicable installment date
(or, if less, the aggregate amount of all the Additional US Term Loans
then outstanding).
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
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 $15,000,000
December 31, 2003 $15,000,000
March 31, 2004 $37,500,000
</TABLE>
(iii) Procedure for Additional US Term Loan Borrowings. The
US Borrower shall give the Administrative Agent irrevocable notice by
12:00 Noon New York City time one Business Day proceeding the
requested Borrowing Date requesting that the
<PAGE> 7
7
Additional US Term Loan Lenders make the Additional US Term Loans on a
Business Day subsequent to the effective date of the Additional US
Term Loan Amendment and prior to May 1, 1998. Upon receipt of any
such notice from the US Borrower, the Administrative Agent shall
promptly notify each Additional US Term Loan Lender thereof. Each
Additional US Term Loan Lender will make the amount of its pro rata
share of such 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 at its account with the Administrative Agent
maintained at such office. The Additional US Term Loan shall
initially be made as Base Rate Loans.
(iv) Commitment Fee. The US Borrower agrees to pay to the
Administrative Agent for the account of each Additional US Term Loan
Lender a commitment fee for the period from and including the
effective date of the Additional US Term Loan Amendment to the earlier
of the drawdown of the Additional US Term Loans and May 1, 1998,
computed at a rate per annum equal to the Applicable Margin for
Commitment Fees on the Additional US Term Loan Commitment of such
Additional US Term Loan Lender, payable in arrears on the earlier of
the drawdown of the Additional US Term Loans and May 1, 1998."
SECTION 7. Amendment of Section 2.8(a). Subsection 2.8(a) of
the Credit Agreement is hereby amended by (a) deleting the word "and"
immediately prior to clause (vii), (b) deleting "and (ix)" and (c) inserting
the following in lieu thereof:
", (ix) each Additional US Term Loan Lender, such Specified Lender's
Ratable Portion of the amounts specified in subsection 2.5(f)(ii) (or,
if less, the aggregate amount of the Additional US Term Loans of such
Specified Lender then outstanding), on the dates specified in
subsection 2.5(f)(ii) (or such earlier date on which the Additional US
Term Loans become due and payable pursuant to Section 9) and (x)".
SECTION 8. Amendment of Subsection 2.9. Subsection 2.9(ii)
of the Credit Agreement is hereby amended by (a) deleting "or (7)" and (b)
inserting the following in lieu thereof:
"(7) Additional US Term Loans, or (8)".
SECTION 9. Amendment to Subsection 5.20(a). Subsection
5.20(a) of the Agreement is hereby amended by inserting immediately after the
words "any other Person" the following:
"other than Liens permitted hereby".
<PAGE> 8
8
SECTION 10. Amendment to Subsection 5.20(c). Subsection
5.20(c) of the Agreement is hereby amended by deleting the first word thereof
and inserting the following in lieu thereof:
"As of the Chips Closing Date, the".
SECTION 11. Amendment of Subsection 7.10. Subsection 7.10 of
the Credit Agreement is hereby amended by deleting such subsection in its
entirety and substituting therefor the following:
"7.10 Pledge of After Acquired Property. If at any time
following the Chips Closing Date the US Borrower or any of its
Subsidiaries (other than any Foreign 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 US Borrower and any such Subsidiary
shall grant to the Collateral Agent for the ratable benefit of the
Secured Parties a first priority or first ranking Lien on and security
interest in such property as collateral security for the Obligations
pursuant to documentation reasonably satisfactory to the Collateral
Agent and take such actions as the Collateral 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) with
respect to real or immovable property, only fee owned real estate or
immovable property in excess of $1,000,000 need be mortgaged, and
(iii) property subject to a Lien permitted by subsection 8.3(h) or
falling within 8.14(a)(ii) need not be so pledged.
SECTION 12. Amendment to Subsection 7.12. Subsection 7.12 of
the Credit Agreement is hereby amended by deleting such subsection in its
entirety and substituting therefor the following:
"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 and the absence of adverse tax consequences (i) if
such Subsidiary is a Domestic Subsidiary of Holdings, cause such new
Subsidiary to guarantee the Domestic Obligations, (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 and (iii) if such
Subsidiary is a Future Foreign Subsidiary Borrower cause 100% of the
Capital Stock of such Future Foreign Subsidiary Borrower to be pledged
to the Specified Agent to secure the Obligations of such Future
Foreign Subsidiary Borrower; provided, that (x) except as provided in
clause (iii) 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 (y) no voting Capital Stock of any indirect Foreign
Subsidiary of
<PAGE> 9
9
International Holdings need be so pledged unless such Foreign
Subsidiary is also a direct 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.
SECTION 13. Amendment of Subsection 7.15. Subsection 7.15 is
hereby amended by (a) deleting "$50,000,000" appearing in clause (i) and
substituting therefor "$75,000,000" and (b) adding to the end thereof the
following new sentence:
"Use the proceeds of the Additional US Term Loans solely to finance
Permitted Acquisitions, provided that up to $20,000,000 of such
proceeds may be used to repay outstanding English Revolving Credit
Loans and/or Chips Revolving Credit Loans."
SECTION 14. Amendment to Subsection 8.1. Subsection 8.1 is
hereby amended by deleting such subsection in its entirety and substituting
therefor the following:
"(a) Interest Coverage. Permit the Interest Coverage Ratio
of US Borrower 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>
1997 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 2.00 to 1.00
1999 1st 2.05 to 1.00
2nd 2.10 to 1.00
3rd 2.15 to 1.00
4th 2.20 to 1.00
2000 1st 2.25 to 1.00
2nd 2.30 to 1.00
3rd 2.40 to 1.00
4th 2.50 to 1.00
2001 1st 2.55 to 1.00
2nd 2.60 to 1.00
</TABLE>
<PAGE> 10
10
<TABLE>
<CAPTION>
Calendar Quarter Interest Coverage Ratio
---------------- -----------------------
<S> <C> <C> <C>
3rd 2.65 to 1.00
4th 2.75 to 1.00
2002 1st 2.80 to 1.00
2nd 2.85 to 1.00
3rd 2.90 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 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 4th $124,000,000
1998 1st 150,000,000
2nd 162,000,000
3rd 179,000,000
4th 191,000,000
1999 1st 200,000,000
2nd 210,000,000
3rd 220,000,000
4th 230,000,000
2000 1st 235,000,000
2nd 240,000,000
3rd 250,000,000
4th 260,000,000
2001 1st 265,000,000
2nd 270,000,000
</TABLE>
<PAGE> 11
11
<TABLE>
<CAPTION>
Calendar Quarter Amount
---------------- ------
<S> <C> <C>
3rd 280,000,000
4th 285,000,000
2002 1st 290,000,000
2nd 295,000,000
3rd 300,000,000
4th 300,000,000
2003 1st 300,000,000
2nd 300,000,000
3rd 300,000,000
4th 300,000,000
2004 1st 300,000,000
2nd 300,000,000
3rd 300,000,000
4th 300,000,000
</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 (i) the
period of four consecutive calendar quarters ending at December 31,
1997, Consolidated EBITDA of Holdings and its Subsidiaries for the
first and second calendar quarter of 1997 shall be deemed to be
$51,800,000 and (ii) for any period of four consecutive calendar
quarters ending at March 31, June 30, September 30 or December 31,
1998, Consolidated EBITDA of Holdings and its Subsidiaries for each
calendar quarter ending prior to or on March 31, 1998 shall be deemed
to be the sum of the actual Consolidated EBITDA of Holdings and its
subsidiaries plus $9,000,000, which represents an approximation of the
EBITDA of the Permitted Acquisitions contemplated to be made in
connection with the Additional US Term Loan Amendment:
<TABLE>
<CAPTION>
Fiscal Year Ratio
----------- -----
<S> <C> <C> <C>
1997 4th 5.50 to 1.00
1998 1st 5.80 to 1.00
2nd 5.80 to 1.00
3rd 5.80 to 1.00
</TABLE>
<PAGE> 12
12
<TABLE>
<CAPTION>
Fiscal Year Ratio
----------- -----
<S> <C> <C> <C>
4th 5.60 to 1.00
1999 1st 5.60 to 1.00
2nd 5.60 to 1.00
3rd 5.55 to 1.00
4th 5.50 to 1.00
2000 1st 5.35 to 1.00
2nd 5.15 to 1.00
3rd 4.90 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>
SECTION 15. Amendment to Subsection 8.2(b). Subsection
8.2(b) of the Credit Agreement is hereby amended by (a) deleting "$15,000,000"
and (b) inserting "$20,000,000".
SECTION 16. Amendment to Subsection 8.2(c). Subsection
8.2(c) of the Credit Agreement is hereby amended by deleting the words
"outstanding on the Chips Closing Date and".
<PAGE> 13
13
SECTION 17. Amendment to Subsection 8.2(e). Subsection
8.2(e) of the Credit Agreement is hereby amended by (a) deleting "$25,000,000"
and (b) inserting "$30,000,000".
SECTION 18. Amendment to Subsection 8.2(k). Subsection
8.2(k) of the Credit Agreement is hereby amended by (a) deleting "$35,000,000"
and (b) inserting "$42,500,000".
SECTION 19. Amendment to Subsection 8.2(o). Subsection
8.2(o) of the Credit Agreement is hereby amended by (a) deleting "$10,000,000"
and (b) inserting "$12,500,000".
SECTION 20. Amendment to Subsection 8.2(q). Subsection 8.2
of the Credit Agreement is hereby amended by deleting clause (q) therefrom in
its entirety and substituting in lieu thereof the following:
"(q) unsecured Senior Subordinated Indebtedness of the US
Borrower not to exceed $525,000,000 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; provided that (x) any
portion of such Indebtedness in excess of $400,000,000 shall only be
used to finance Permitted Acquisitions (or to reimburse Revolving
Loans utilized to finance Permitted Acquisitions) and pending such
Permitted Acquisitions the Net Cash Proceeds thereof shall be held in
a cash collateral account securing the Domestic Obligations of the US
Borrower in the sole dominion and control of the Administrative Agent
pursuant to documents as are customary and reasonably acceptable to
the Administrative Agent and the US Borrower and (ii) any amount in
such cash collateral account on May 1, 1998 which has not been applied
to finance a Permitted Acquisition is applied irrevocably and
permanently to the outstanding Term Loans in accordance to subsection
2.10(d); ".
SECTION 21. Amendment to Subsection 8.2(t). Subsection
8.2(t) of the Credit Agreement is hereby amended by deleting clause (t)
therefrom in its entirety and substituting in lieu thereof the following:
"(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 91 days from June 30, 2005 and (ii) in the
aggregate does not exceed $50,000,000 or the Equivalent Amount; and".
SECTION 22. Amendment to Subsection 8.3(g). Subsection
8.3(g) of the Credit Agreement is hereby amended by deleting the words "in
existence on the Chips Closing Date".
<PAGE> 14
14
SECTION 23. Amendment to Subsection 8.3(q). Subsection 8.3
of the Credit Agreement is hereby amended by deleting clause (q) therefrom in
its entirety and substituting in lieu thereof the following:
"(q) Liens on property financed thereby securing grants and
Indebtedness permitted under subsection 8.2(t)."
SECTION 24. Amendment to Subsection 8.4(b). Subsection
8.4(b) of the Credit Agreement is hereby amended by deleting the words "in
existence on the Chips Closing Date".
SECTION 25. Amendment to Subsection 8.4. Subsection 8.4 of
the Credit Agreement is hereby amended by (a) deleting the word "and" in
subsection 8.4(h) and (b) inserting the following new words and punctuation
immediately after the words "subsection 8.2(s)" in subsection 8.2(i):
"; and (j) Guarantee Obligations of Holdings or its
Subsidiaries in respect of the incurrence of grants and Indebtedness
permitted under subsection 8.2(t)".
SECTION 26. Amendment to Subsection 8.8. Subsection 8.8 of
the Credit Agreement is hereby amended by deleting the table appearing therein
and substituting therefor the following:
<TABLE>
<CAPTION>
"Fiscal Year Amount
----------- ------
<S> <C>
1997 $115,000,000
1998 $145,000,000
1999 $125,000,000
2000 and thereafter $125,000,000".
</TABLE>
SECTION 27. Amendment to Subsection 8.9(e). Subsection
8.9(e) of the Credit Agreement is hereby amended by deleting the words "in
existence on the Chips Closing Date and".
SECTION 28. Amendment to Subsection 8.9(k). Subsection 8.9
of the Credit Agreement is hereby amended by deleting clause (k) therefrom in
its entirety and substituting in lieu thereof the following:
"(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
additionally include Indebtedness permitted by subsections 8.2(m) and
8.2(q)(x)) not to exceed the sum of (A) the amount of $315,000,000
(provided that the amount in excess of $100,000,000 shall only be
available from and after the date of receipt by the US Borrower
subsequent to the effective date of the Additional US Term
<PAGE> 15
15
Loan Amendment of gross cash proceeds of at least $100,000,000 from
the issuance of additional Senior Subordinated Indebtedness and net
cash proceeds of at least $50,000,000 from the issuance of its common
equity to Holdings to finance Permitted Acquisitions); 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, at least fifteen (15)
days prior to such Permitted Acquisition, (I) such opinions (including
with respect to environmental matters), certificates and copies of
related agreements and 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;"
SECTION 29. Amendment to Subsection 11.6(D). Subsection
11.6(D) is hereby amended by deleting the words "and (D)" and substituting in
lieu thereof the following:
"(D) as permitted by subsections 8.3(b), (e), (i), (k) and (m),
8.4(e), (f), (g) and (j) and 8.9(c), (d) and (f) and Schedules 8.2,
8.3, 8.4 and 8.9 and (E)".
SECTION 30. Amendment of Schedule 1.1. The US Revolving
Credit Commitments of the US Revolving Credit Lenders are hereby amended as set
forth in Schedule II attached hereto. In connection with such amendment, on
the effective date of this Amendment, the Administrative Agent shall adjust the
outstanding US Revolving Credit Loans and Specified Participating Interests of
the US Revolving Credit Lenders so that each US Revolving Credit Lender's
percentage of the outstanding US Revolving Credit Loans and Specified
Participating Interests shall equal its Specified Revolving Credit Commitment
Percentage. To facilitate such adjustment, each US Revolving Credit Lender
whose US Revolving Credit Commitment is being increased will make such payments
to the Administrative Agent, for the account of the other US Revolving Credit
Lenders, as the Administrative Agent determines is necessary to effect such
adjustment.
<PAGE> 16
16
SECTION 31. Amendments of Schedules 8.2, 8.3, 8.4 and 8.9 and
the Administrative Schedule. (a) Schedules 8.2, 8.3, 8.4 and 8.9 are hereby
amended to read in their respective entireties as set forth in Schedules III,
IV, V and VI attached hereto, respectively.
(b) Section IV of the Administrative Schedule is hereby
amended by deleting "$15,000,000" appearing in the first sentence thereof
relating to the US Borrower and substituting therefor "$40,000,000".
SECTION 32. Representations and Warranties. After giving
affect to this Amendment, Holdings and the US Borrower (and each Foreign
Subsidiary Borrower, only as to itself, and its Subsidiaries) hereby confirm,
reaffirm and restate the representations and warranties set forth in Section 5
of the Credit Agreement as if made on and as of the date hereof except for any
representation or warranty made as of the earlier date, which representation or
warranty shall have been true and correct in all material respects as of such
earlier date.
SECTION 33. Conditions to Effectiveness. This Amendment
shall become effective upon receipt by the Administrative Agent by no later
than February 12, 1998 of:
(a) Amendment. Counterparts of this Amendment, duly executed
and delivered by Holdings, the US Borrower, the Foreign Subsidiary Borrowers,
the majority of the English Revolving Credit Lenders who hold the Chips
Revolving Credit Commitments, the Additional US Term Loan Lenders, the Lenders
whose US Revolving Credit Commitments will be increased and the Required
Lenders.
(b) Acknowledgement. An acknowledgement and consent in the
form of Exhibit A executed by the Credit Parties; and
(c) Legal Opinion. An executed legal opinion of Weil,
Gotshal & Manges LLP satisfactory in form and substance to the Administrative
Agent.
(d) Fees. Such fees as shall have been agreed to by
Holdings, the US Borrower, Chase and CSI.
SECTION 34. Continuing Effect of Credit Agreement. Except as
expressly amended herein, the Credit Agreement shall continue to be, and shall
remain, in full force and effect in accordance with its terms.
SECTION 35. Governing Law; Counterparts. THIS AMENDMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. This Amendment may be executed by the parties hereto in any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
<PAGE> 17
17
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
VIASYSTEMS GROUP, INC.,
as Guarantor
By:
-----------------------------
Name:
Title:
BORROWERS
VIASYSTEMS, INC.,
as US Borrower
By:
-----------------------------
Name:
Title:
VIASYSTEMS CANADA, INC.,
as Canadian Borrower
By:
-----------------------------
Name:
Title:
PCB INVESTMENTS PLC,
as English Bidco
By:
-----------------------------
Name:
Title:
VIASYSTEMS HOLDING LIMITED,
as English Borrower
By:
-----------------------------
Name:
Title:
<PAGE> 18
18
CHIPS ACQUISITION LIMITED,
as a Foreign Subsidiary Borrower
By:
-----------------------------
Name:
Title:
VIASYSTEMS II LIMITED,
as a Foreign Subsidiary Borrower
By:
-----------------------------
Name:
Title:
AGENTS
THE CHASE MANHATTAN BANK,
as Administrative Agent and
Collateral Agent, and as a Lender
By:
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK OF CANADA,
as Canadian Agent, and as
a Canadian Lender
By:
-----------------------------
Name:
Title:
<PAGE> 19
19
CHASE MANHATTAN INTERNATIONAL LIMITED,
as English Agent
By:
-----------------------------
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
as a US Issuing Lender
By:
-----------------------------
Name:
Title:
US LENDERS
CIBC INC.
By:
-----------------------------
Name:
Title:
BANK OF MONTREAL
By:
-----------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Name:
Title:
<PAGE> 20
20
CITIBANK, N.A.
By:
-----------------------------
Name:
Title:
THE FUJI BANK LIMITED, NEW YORK BRANCH
By:
-----------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
-----------------------------
Name:
Title:
BANKERS TRUST
By:
-----------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK Plc
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
<PAGE> 21
21
ABN AMRO BANK N.V.
By:
-----------------------------
Its:
----------------------------
By:
-----------------------------
Its:
----------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By:
-----------------------------
Name:
Title:
THE SAKURA BANK, LIMITED
By:
-----------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By:
-----------------------------
Name:
Title:
<PAGE> 22
22
NATIONAL BANK OF CANADA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
NEW YORK BRANCH
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
ARAB BANKING CORPORATION (B.S.C.)
By:
-----------------------------
Name:
Title:
DLJ CAPITAL FUNDING, INC.
By:
-----------------------------
Name:
Title:
<PAGE> 23
23
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
-----------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
BANKBOSTON, N.A.
By:
-----------------------------
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
<PAGE> 24
24
ALLSTATE LIFE INSURANCE COMPANY
By:
-----------------------------
Name:
Title:
ALLSTATE INSURANCE COMPANY
By:
-----------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:
-----------------------------
Name:
Title:
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO, FORMERLY CHL HIGH YIELD
LOAN PORTFOLIO (a unit of THE CHASE
MANHATTAN BANK)
By:
-----------------------------
Name:
Title:
PRIME INCOME TRUST
By:
-----------------------------
Name:
Title:
<PAGE> 25
25
ORIX USA CORPORATION
By:
-----------------------------
Name:
Title:
PAMCO CAYMAN LTD.
By: Protective Asset Management
Company, as Collateral Manager
By:
-----------------------------
Name:
Title:
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By:
-----------------------------
Name:
Title:
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By:
-----------------------------
Name:
Title:
<PAGE> 26
26
DEBT STRATEGIES FUND, INC.
By: Merrill Lynch Asset Management,
L.P., as Investment Advisor
By:
-----------------------------
Name:
Title:
KZH-SOLEIL CORPORATION (formerly known
as KZH Holding Corporation)
By:
-----------------------------
Name:
Title:
AMARA-1 FINANCE LTD.
By:
-----------------------------
Name:
Title:
AMARA-2 FINANCE LTD.
By:
-----------------------------
Name:
Title:
PILGRIM AMERICA PRIME RATE TRUST
By:
-----------------------------
Name:
Title:
<PAGE> 27
27
SENIOR DEBT PORTFOLIO
By: Eaton Vance Management
as Investment Advisor
By:
-----------------------------
Name:
Title:
APPALOOSA MANAGEMENT, L.P.
By:
-----------------------------
Name:
Title:
SHENKMAN CAPITAL
By:
-----------------------------
Name:
Title:
INDOSUEZ CAPITAL
By:
-----------------------------
Name:
Title:
CANADIAN LENDERS
BANK OF NOVA SCOTIA
By:
-----------------------------
Name:
Title:
<PAGE> 28
28
CANADIAN IMPERIAL BANK OF COMMERCE
By:
-----------------------------
Name:
Title:
BANK OF MONTREAL
By:
-----------------------------
Name:
Title:
FUJI BANK CANADA
By:
-----------------------------
Name:
Title:
ROYAL BANK OF CANADA
By:
-----------------------------
Name:
Title:
CITIBANK CANADA
By:
-----------------------------
Name:
Title:
<PAGE> 29
29
BANK OF TOKYO-MITSUBISHI (CANADA)
By:
-----------------------------
Name:
Title:
THE SAKURA BANK (CANADA)
By:
-----------------------------
Name:
Title:
THE SUMITOMO BANK (CANADA)
By:
-----------------------------
Name:
Title:
BT BANK OF CANADA
By:
-----------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
-----------------------------
Name:
Title:
<PAGE> 30
30
BANQUE NATIONALE DE PARIS (CANADA)
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
ABN AMRO BANK CANADA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
FIRST CHICAGO NBD BANK, CANADA
By:
-----------------------------
Name:
Title:
ENGLISH LENDERS
THE CHASE MANHATTAN BANK
By:
-----------------------------
Name:
Title:
<PAGE> 31
31
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Name:
Title:
BANK OF MONTREAL
By:
-----------------------------
Name:
Title:
ROYAL BANK OF CANADA
By:
-----------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK Plc
By:
-----------------------------
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
<PAGE> 32
32
BANQUE NATIONALE DE PARIS, LONDON
BRANCH
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:
-----------------------------
Name:
Title:
CITIBANK, N.A.
By:
-----------------------------
Name:
Title:
BHF BANK AKTIENGESELLSCHAFT
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
SAKURA BANK LIMITED LONDON BRANCH
By:
-----------------------------
Name:
Title:
<PAGE> 33
33
BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
-----------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
-----------------------------
Name:
Title:
THE MITSUBISHI TRUST & BANKING
CORPORATION
By:
-----------------------------
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By:
-----------------------------
Name:
Title:
<PAGE> 34
34
ABN AMRO BANK N.V.
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI
By:
-----------------------------
Name:
Title:
CIBC WOOD GUNDY PLC
By:
-----------------------------
Name:
Title:
FIRST CHICAGO NBD BANK
By:
-----------------------------
Name:
Title:
THE SUMITOMO BANK (CANADA)
By:
-----------------------------
Name:
Title:
<PAGE> 35
35
APPALOOSA MANAGEMENT, L.P.
By:
-----------------------------
Name:
Title:
FLOATING RATE PORTFOLIO
By:
-----------------------------
Name:
Title:
<PAGE> 36
36
BALANCED HIGH-YIELD FUND I LIMITED
BY: BHF BANK AKTIENGESELLSCHAFT,
acting through its New York branch as
attorney-in-fact
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
<PAGE> 37
SCHEDULE I
<TABLE>
<CAPTION>
Additional US Additional US
Term Loan Lender Term Loan Commitment
- ------------------- --------------------
<S> <C>
THE CHASE MANHATTAN BANK $46,000,000
MERRILL LYNCH SENIOR $6,000,000
FLOATING RATE FUND
ALLSTATE INSURANCE COMPANY $4,000,000
PRIME INCOME TRUST $3,000,000
OCTAGON CREDIT INVESTORS $3,000,000
LOAN PORTFOLIO
ORIX USA CORPORATION $3,000,000
HIGH YIELD FUND $3,000,000
BANK OF NOVA SCOTIA $2,000,000
Total $70,000,000
</TABLE>
<PAGE> 38
SCHEDULE II
<TABLE>
<CAPTION>
US Revolving Credit Lender US Revolving Credit Commitment
- -------------------------- ------------------------------
<S> <C>
THE CHASE MANHATTAN BANK $35,109,971.25
CIBC INC. $15,073,493.72
BANK OF MONTREAL $ 7,158,385.09
THE BANK OF NOVA SCOTIA $15,000,000.00
CITIBANK $11,121,552.36
FUJI BANK LIMITED, NEW YORK BRANCH $ 9,540,186.00
BANK OF TOKYO-MITSUBISHI $ 6,487,326.42
TRUST COMPANY
BANKERS TRUST $ 6,487,326.42
ABN AMRO BANK N.V. $ 8,500,000.00
THE FIRST NATIONAL BANK OF CHICAGO $ 6,487,326.42
SAKURA BANK $ 6,487,326.42
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH $ 1,795,031.06
NATIONAL BANK OF CANADA $ 6,487,326.42
BANQUE NATIONALE DE PARIS,
NEW YORK BRANCH $ 2,863,354.04
ARAB BANKING CORPORATION (B.S.C) $ 4,130,434.78
DLJ CAPITAL FUNDING, INC. $ 2,173,913.04
LONG TERM CREDIT BANK OF JAPAN,
LIMITED $ 9,130,434.78
THE BANK OF NEW YORK $ 4,130,434.78
</TABLE>
<PAGE> 39
39
<TABLE>
<S> <C>
FIRST NATIONAL BANK OF BOSTON $ 4,130,434.78
BANQUE FRANCAISE DU $ 5,000,000.00
COMMERCE EXTERIEUR
VAN KAMPEN AMERICAN $ 2,639,751.55
NATIONAL WESTMINSTER $14,056,990.67
Total $ 175,000,000
</TABLE>
<PAGE> 40
EXHIBIT A
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned corporations hereby:
1) acknowledges and consents to the execution, delivery and
performance of (i) the Second Amendment (the "Second Amendment"), dated as of
February __, 1998, to the Second Amended and Restated Credit Agreement dated as
of June 5, 1997 (as the same may be amended, amended and restated) supplemented
or otherwise modified from time to time, the "Credit Agreement"), among
Viasystems Group, Inc., a Delaware corporation ("Holdings"), Viasystems, Inc.,
a Delaware corporation (the "US Borrower"), Viasystems Canada, Inc. (f/k/a
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"), Viasystems Holdings Limited (f/k/a 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"), Viasystems II Limited
(f/k/a Interconnection Systems (Holdings) Limited), a private limited company
organized under the laws of England and Wales ("ISL" and together with the
Canadian Borrower, English Bidco, the English Borrower and Chips Limited, the
"Foreign Subsidiary Borrowers"), the several banks and other financial
institutions from time to time parties to 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 thereunder and The Chase Manhattan Bank ("Chase"), as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), and (ii) all of the documents and transactions contemplated by the
Second Amendment;
2) agrees that such execution, delivery and performance shall not in
any way affect such corporation's obligations under any Loan Document (as
defined in the Credit Agreement) to which such corporation is a party, which
obligations on the date hereof remain absolute and unconditional and are not
subject to any defense, set-off or counterclaim;
Dated: February __, 1998
VIASYSTEMS GROUP, INC.
By:
-----------------------------
Name:
Title:
<PAGE> 41
2
VIASYSTEMS, INC.
By:
-----------------------------
Name:
Title:
VIASYSTEMS TECHNOLOGIES CORP.
By:
-----------------------------
Name:
Title:
VIASYSTEMS INTERNATIONAL, INC.
By:
-----------------------------
Name:
Title:
VIASYSTEMS CANADA, INC.
By:
-----------------------------
Name:
Title:
PCB INVESTMENTS PLC
By:
-----------------------------
Name:
Title:
VIASYSTEMS HOLDINGS LIMITED
By:
-----------------------------
Name:
Title:
<PAGE> 42
3
CHIPS ACQUISITION LIMITED
By:
-----------------------------
Name:
Title:
VIASYSTEMS II LIMITED
By:
-----------------------------
Name:
Title:
<PAGE> 43
SCHEDULES III, IV, V AND VI
[ATTACHED]
<PAGE> 44
LEGAL OPINION OF WEIL GOTSHAL & MANGES
<PAGE> 1
EXHIBIT 10.26
VIASYSTEMS, INC.
$100,000,000
9 3/4% Series B Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
February 9, 1998
CHASE SECURITIES INC.
NATWEST CAPITAL MARKETS LIMITED
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 $100,000,000 aggregate principal amount of its 9
3/4% Series B Senior Subordinated Notes due 2007 (the "Securities"). The
Securities will be issued pursuant to an Indenture to be dated as of February
17, 1998 (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"), and NatWest Capital Markets Limited (together with
CSI, the "Initial Purchasers") concerning the purchase of the Securities from
the Company by the 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 an offering memorandum dated the date hereof (the
"Offering Memorandum") setting forth information concerning the Company and the
Securities. Copies of the Offering Memorandum will be delivered by the Company
to the Initial Purchasers pursuant to the terms of this Agreement. Any
references herein to the 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 Offering 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
<PAGE> 2
"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").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to, and agrees with, the Initial
Purchasers that:
(a) The Offering Memorandum as of the date hereof and as of
the Closing Date (as defined in Section 3) does 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 Offering Memorandum in reliance upon and in conformity with
written information furnished to the Company 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 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
- 2 -
<PAGE> 3
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 Second Amended and Restated Credit Agreement dated as
of June 5, 1997 (the "Senior Credit Facilities"), the Indenture or
applicable law).
(e) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement, the Securities and any other agreement
or instrument entered into or to be entered into in connection
therewith (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
- 3 -
<PAGE> 4
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).
(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 Transaction Document that is described in the
Offering Memorandum conforms in all material respects to the
description thereof contained in the Offering Memorandum.
(l) 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 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
- 4 -
<PAGE> 5
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, 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.
(m) (a)(i) Coopers & Lybrand L.L.P. are independent
accountants with respect to the Company and its subsidiaries,
Viasystems Group, Inc. ("Viasystems Group") and its subsidiaries,
Circo Craft Co. Inc. (name subsequently changed to Viasystems Canada,
Inc.) and its subsidiaries ("Circo Craft") and the net assets sold of
Viasystems Technologies Corp. ("Viasystems Technologies") (formerly
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 PLC (name
subsequently changed to Viasystems Holdings Limited) and its
subsidiaries (the "Forward Group") and (iv) Ernst & Young are
independent accountants with respect to Interconnection Systems
(Holding) Limited (name subsequently changed to Viasystems II Limited)
and its subsidiaries ("Chips"), 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
- 5 -
<PAGE> 6
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 purported to be shown thereby. The pro forma financial
information and statistical data contained in the Offering Memorandum
has been prepared on a basis consistent with the historical financial
statements contained in the 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 Offering Memorandum, and utilizes assumptions made on
a reasonable basis to give effect to the historical and proposed
transactions described in the Offering Memorandum.
(n) 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.
(o) 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 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.
(p) 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
- 6 -
<PAGE> 7
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.
(q) 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 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 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.
(r) 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.
(s) 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.
(t) 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.
(u) 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.
- 7 -
<PAGE> 8
(v) 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 than (i) liens and encumbrances 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.
(w) 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.
(x) 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.
(y) 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
- 8 -
<PAGE> 9
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
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.
(z) 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.
(aa) On the Closing Date, the Company and its subsidiaries,
taken as a whole, (after giving effect to the issuance of the
Securities) 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.
(bb) 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.
(cc) 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> 10
(dd) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the
Company believes to be reliable and accurate.
(ee) 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.
(ff) 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.
(gg) 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.
(hh) 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.
(ii) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Offering Memorandum has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
(jj) Since the date as of which information is given in the
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
would, singly or in the aggregate, have a Material Adverse Effect,
(iii) neither the Company nor any of its subsidiaries has entered into
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<PAGE> 11
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.
(kk) 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 2 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 101.75% 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 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 (A) 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, or (B) outside the United
States of America in reliance on Regulation S under the Securities Act as such
regulation may be amended from time to time ("Regulation S"). 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
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, such Initial Purchaser
acknowledges and agrees that the Company and, for purposes of the opinions to
be delivered to the
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<PAGE> 12
Initial Purchasers pursuant to Sections 5(d) 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 February 17, 1998 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 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
Offering Memorandum untrue or which requires the making of any
additions to or changes in the 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 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 Offering Memorandum or suspending any such
qualification and, if any such suspension is issued, to obtain the
lifting thereof at the earliest possible time;
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<PAGE> 13
(b) to furnish to the Initial Purchasers, without charge, as
many copies of the Offering Memorandum (and any amendments or
supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the
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 Offering Memorandum in order that the 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 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 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 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
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<PAGE> 14
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 Offering
Memorandum;
(k) for a period of 90 days from the date of the 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, 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;
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<PAGE> 15
(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 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 Offering Memorandum under the
heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the 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 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
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 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 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.
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<PAGE> 16
(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, 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(m) 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 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 Company and not as an individual stating that (A) such officers
have carefully examined the Offering Memorandum, (B) in their opinion,
the 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 Offering Memorandum, no event has occurred which
should have been set forth in a supplement or amendment to the
Offering Memorandum so that the Offering Memorandum (as so amended or
supplemented) would not include any
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<PAGE> 17
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 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 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 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 or Regulation S 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 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) 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.
(p) Other than as contemplated by the Offering Memorandum,
since the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or
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<PAGE> 18
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 Offering
Memorandum.
(q) 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.
(r) 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 upgrading), its
rating of the Securities or any of the Company's other debt securities
or preferred stock.
(s) 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 Offering Memorandum (exclusive of any
amendment or supplement thereto).
(t) On or prior to the Closing Date, Viasystems Group shall
have entered into a binding securities purchase agreement with Hicks,
Muse, Tate & Furst, Incorporated ("Hicks
- 18 -
<PAGE> 19
Muse"), or any affiliate of Hicks Muse, for the issuance and sale of
$50 million of common equity interests of Viasystems Group and such
securities purchase agreement shall provide that such issuance and
sale must occur on or prior to April 15, 1998.
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 Purchaser may make
arrangements for the purchase of the Securities, which such defaulting Initial
Purchaser agreed but failed to purchase, by other persons satisfactory to the
Company and the non-defaulting Initial Purchaser, 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 Purchaser 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.
(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 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
- 19 -
<PAGE> 20
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 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.
(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 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.
- 20 -
<PAGE> 21
(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 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.
- 21 -
<PAGE> 22
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 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 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.
- 22 -
<PAGE> 23
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, 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
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:
- 23 -
<PAGE> 24
(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);
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]
- 24 -
<PAGE> 25
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
Initial Purchaser in accordance with its terms.
Very truly yours,
VIASYSTEMS, INC.
By
-----------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
-----------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
270 Park Avenue
New York, New York 10017
Attention: Legal Department
NATWEST CAPITAL MARKETS LIMITED
By
-----------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
135 Bishopsgate
London EC2M 3UR
Attention: Legal Department
- 25 -
<PAGE> 26
SCHEDULE 1
<TABLE>
<CAPTION>
Principal
Amount
Initial Purchasers of Securities
- ------------------ -------------
<S> <C>
Chase Securities Inc. $50,000,000
NatWest Capital Markets Limited $50,000,000
-------------
Total $100,000,000
=============
</TABLE>
<PAGE> 27
SCHEDULE 2
Viasystems Canada, Inc.
Viasystems Selkirk Limited
Viasystems II Limited
Viasystems Technologies Corp.
<PAGE> 28
ANNEX A
Viasystems, Inc.
$100,000,000
9 3/4% Series B Senior Subordinated Notes due 2007
FORM OF EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
February __, 1998
CHASE SECURITIES INC.
NATWEST CAPITAL MARKETS LIMITED
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"), and NatWest
Capital Markets Limited (together with CSI, the "Initial Purchasers"), upon the
terms and subject to the conditions set forth in a purchase agreement dated
February 9, 1998 (the "Purchase Agreement"), $100,000,000 aggregate principal
amount of its 9 3/4% Series B 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:
(i) 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
<PAGE> 29
to become effective under the Securities Act no later than 160 days after the
Issue Date and the Registered Exchange Offer to be consummated no later than 25
business days after the effective date of the Exchange Offer Registration
Statement and (iii) keep the Exchange Offer Registration Statement effective
for not less than 20 business 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)
is not 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
-2-
<PAGE> 30
respect of any Exchange Securities as to which clause (v) of the first
paragraph of Section 2 hereof applies) pursuant to Section 2 hereof.
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
-3-
<PAGE> 31
(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 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
-4-
<PAGE> 32
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 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.
(ii) 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 25 business days after the
effective date of the Exchange Offer Registration Statement, 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
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<PAGE> 33
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 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.
(iii) 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 within 25 business days after
the effective date of the Exchange Offer Registration Statement, or (iv) the
Shelf Registration Statement is filed and declared effective within 160 days
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<PAGE> 34
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
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
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<PAGE> 35
declared effective and the Registered Exchange Offer to be consummated, in each
case to the extent required by this Agreement.
(iv) Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(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
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<PAGE> 36
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.
(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
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<PAGE> 37
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.
(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
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<PAGE> 38
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.
(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
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<PAGE> 39
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, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing Standards No.
72.
(v) 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.
(vi) 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
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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
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
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<PAGE> 41
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 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.
(vii) 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..
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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 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.
(viii) 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.
-15-
<PAGE> 43
(ix) 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 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.
(x) 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. and
NatWest Capital Markets Limited;
(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.
-16-
<PAGE> 44
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.
(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.
-17-
<PAGE> 45
(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) 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.
Please confirm that the foregoing correctly sets forth the
agreement among the Company and the Initial Purchasers.
Very truly yours,
VIASYSTEMS, INC.
By
-----------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
-----------------------------------
Authorized Signatory
NATWEST CAPITAL MARKETS LIMITED
By
-----------------------------------
Authorized Signatory
-18-
<PAGE> 46
EXHIBIT 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."
<PAGE> 47
EXHIBIT 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."
<PAGE> 48
EXHIBIT 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 or 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.
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.
<PAGE> 49
EXHIBIT 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, the undersigned represents
that it 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.
<PAGE> 50
ANNEX B
[Form of Opinion of Counsel for the Company]
<PAGE> 51
ANNEX C
[Form of Opinion of Counsel for Subsidiaries]
<PAGE> 52
ANNEX D
[Form of Opinion of W. Thomas McGhee]
<PAGE> 1
EXHIBIT 10.27
Viasystems, Inc.
$100,000,000
9 3/4% Series B Senior Subordinated Notes due 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
February 17, 1998
CHASE SECURITIES INC.
NATWEST CAPITAL MARKETS LIMITED
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"), and NatWest
Capital Markets Limited (together with CSI, the "Initial Purchasers"), upon the
terms and subject to the conditions set forth in a purchase agreement dated
February 9, 1998 (the "Purchase Agreement"), $100,000,000 aggregate principal
amount of its 9 3/4% Series B 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 25 business days after the effective date of the Exchange Offer
Registration Statement and (iii) keep the Exchange Offer Registration Statement
effective for not less than 20 business 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) is not 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
<PAGE> 3
3
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.
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;
<PAGE> 4
4
(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 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
<PAGE> 5
5
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 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 25 business days after the
effective date of the Exchange Offer Registration Statement, 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
<PAGE> 6
6
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 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
<PAGE> 7
7
staff, if later, within 45 days after publication of the change in law or
interpretation), (iii) the Registered Exchange Offer is not consummated within
25 business days after the effective date of the Exchange Offer Registration
Statement, 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 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.
<PAGE> 8
8
(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:
(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
<PAGE> 9
9
(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.
(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.
<PAGE> 10
10
(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.
(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
<PAGE> 11
11
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.
(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
<PAGE> 12
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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, 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
<PAGE> 13
13
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 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.
<PAGE> 14
14
(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 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)
<PAGE> 15
15
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 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
<PAGE> 16
16
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 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.
<PAGE> 17
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(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. and
NatWest Capital Markets Limited;
(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.
(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.
<PAGE> 18
18
(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) 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
------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
-------------------------------
Authorized Signatory
NATWEST CAPITAL MARKETS LIMITED
By
-------------------------------
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."
<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."
<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 or 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.
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.
<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, the undersigned represents
that it 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.
<PAGE> 1
EXHIBIT 16.1
[Deloitte & Touche letterhead]
March 30, 1998
Securities and Exchange Commission
450-5th Street, N.W.
Washington, D.C. 20549
U.S.A.
Gentlemen:
We have read the statements made by Viasystems, Inc., which we understand will
be filed with the Commission pursuant to Item 304 of Regulation S-K, as part of
the company's Form 10-K for the month of March 1998. We agree with the
statements concerning our Firm relative to our association with Circo Craft as
described under the heading "Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure" in such Form 10-K.
Very truly yours,
Chartered Accountants
<PAGE> 1
EXHIBIT 16.2
[KPMG letterhead]
Securities and Exchange Commission
450 5th Street NW
Washington, DC 20549
United States of America
30 March 1998
Dear Sirs:
We have read the statements made by Viasystems, Inc., which we understand will
be filed with the Securities and Exchange Commission pursuant to Item 304 of
Regulation S-K, as part of that company's Form 10-K for the month of March
1998. We agree with the statements concerning our Firm in such Form 10-K.
Yours faithfully
KPMG Audit Plc
<PAGE> 1
EXHIBIT 16.3
[Ernst & Young letterhead]
Securities and Exchange Commission
450 5th Street NW
Washington, DC 20549 March 30, 1998
Dear Sirs:
We have read the statements pertaining to our firm made by Viasystems Inc., in
its form 10-K (No. 333-29727) under the caption "Changes in and disagreements
with accountants on auditing and financial disclosure" and are in agreement
therewith.
Yours faithfully
Ernst & Young
<PAGE> 1
EXHIBIT 21.1
<TABLE>
<CAPTION>
NAME JURISDICTION
- ---- ------------
<S> <C>
Viasystems Technologies Corp. Delaware, U.S.A.
Viasystems Canada Inc. Quebec, Canada
Viasystems International, Inc. Delaware, U.S.A.
Viasystems Group Limited England and Wales, U.K.
Chips Acquisition Limited England and Wales, U.K.
Viasystems II Limited England and Wales, U.K.
Viasystems Tyneside Limited England and Wales, U.K.
PCB Investments plc England and Wales, U.K.
Viasystems Holdings Limited England and Wales, U.K.
Viasystems Selkirk Limited Scotland, U.K.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 27,538
<SECURITIES> 0
<RECEIVABLES> 115,842
<ALLOWANCES> 2,573
<INVENTORY> 84,631
<CURRENT-ASSETS> 251,678
<PP&E> 499,980
<DEPRECIATION> 51,852
<TOTAL-ASSETS> 1,068,912
<CURRENT-LIABILITIES> 235,019
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (92,193)
<TOTAL-LIABILITY-AND-EQUITY> 1,068,912
<SALES> 795,289
<TOTAL-REVENUES> 795,289
<CGS> 554,097
<TOTAL-COSTS> 554,097
<OTHER-EXPENSES> 480,187<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,241
<INCOME-PRETAX> (311,260)
<INCOME-TAX> 8,432
<INCOME-CONTINUING> (319,692)
<DISCONTINUED> 0
<EXTRAORDINARY> 7,796
<CHANGES> 0
<NET-INCOME> (327,488)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES CHARGES OF $294,500 RELATING TO THE WRITE-OFF OF ACQUIRED IN-PROCESS
RESEARCH AND DEVELOPMENT COSTS ASSOCIATED WITH THE ACQUISITIONS OF FORWARD GROUP
AND ISL. THE WRITE-OFF RELATES TO ACQUIRED RESEARCH AND DEVELOPMENT PROJECTS
THAT DO NOT HAVE A FUTURE ALTERNATIVE USE.
</FN>
</TABLE>
