<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 20, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CAMBRIDGE INDUSTRIES, INC.
CE AUTOMOTIVE TRIM SYSTEMS, INC.
(EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
----------------
CAMBRIDGE--DELAWARE 3083 CAMBRIDGE--38-3188000
CE--MICHIGAN (PRIMARY STANDARD CE--38-3173408
INDUSTRIAL CLASSIFICATION (I.R.S. EMPLOYER
(STATE OR OTHER CODE NUMBER) IDENTIFICATION NO.)
JURISDICTION OF
INCORPORATION OR
ORGANIZATION)
555 HORACE BROWN DRIVE
MADISON HEIGHTS, MICHIGAN 48071
(248) 616-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
----------------
COPY TO:
RICHARD S. CRAWFORD PETER SUGAR
CHAIRMAN AND CHIEF EXECUTIVE JAFFE, RAITT, HEUER & WEISS,
OFFICER PROFESSIONAL CORPORATION
CAMBRIDGE INDUSTRIES, INC. ONE WOODWARD AVENUE, SUITE 2400
555 HORACE BROWN DRIVE DETROIT, MICHIGAN 48226
MADISON HEIGHTS, MICHIGAN 48071 (313) 961-8380
(248) 616-0500
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE(1)
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<S> <C> <C> <C> <C>
10 1/4% Senior
Subordinated Notes due
2007, Series B....... $100,000,000 100% $100,000,000 $30,303.03
</TABLE>
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(1) Calculated in accordance with Rule 457(f).
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 20, 1997
PROSPECTUS
, 1997
$100,000,000
LOGO
CAMBRIDGE INDUSTRIES, INC.
OFFER TO EXCHANGE ITS SERIES B 10 1/4% SENIOR SUBORDINATED NOTES DUE 2007 FOR
ANY AND ALL OF ITS OUTSTANDING 10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1997, UNLESS EXTENDED.
Cambridge Industries, Inc., a Delaware corporation (the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its Series B
10 1/4% Senior Subordinated Notes due 2007, (the "New Notes"), issued in a
transaction registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this
Prospectus is a part, for each $1,000 principal amount of its outstanding 10
1/4% Senior Subordinated Notes due 2007 (the "Old Notes"), of which
$100,000,000 principal amount is outstanding. The form and terms of the New
Notes are the same as the form and terms of the Old Notes (which they replace),
except that the New Notes will bear a Series B designation and will have been
issued in a transaction that has been registered under Securities Act and
therefore, will not bear legends restricting their transfer. The New Notes will
evidence the same debt as the Old Notes (which they replace) and will be issued
under and be entitled to the benefits of an Indenture, dated as of July 10,
1997 (the "Indenture"), among the Company and State Street Bank and Trust
Company, as Trustee, governing the Old Notes and the New Notes. The Old Notes
and the New Notes are sometimes referred to herein collectively as the "Notes."
See "The Exchange Offer" and "Description of Notes."
The Notes bear interest at a rate of 10 1/4% per annum, payable semi-annually
on each January 15 and July 15, commencing January 15, 1998. The Notes will
mature on July 15, 2007. On or after July 15, 2002, the Company may redeem the
Notes, in whole or in part, at the redemption prices set forth herein, plus
accrued and unpaid interest to the date of redemption. Notwithstanding the
foregoing, at any time or from time to time, on or prior to July 15, 2000, the
Company may, at its option, use the net cash proceeds of one or more Equity
Offerings (as defined) to redeem (the "Equity Proceeds Offer") up to 35% of the
original aggregate principal amount of Notes at a redemption price of 110.25%
of the principal amount thereof, plus accrued and unpaid interest to the date
of the redemption; provided that at least $65.0 million in aggregate principal
amount of Notes remains outstanding immediately after any such redemption. Upon
a Change of Control (as defined), the Company will be required to make an offer
to repurchase the Notes pursuant to the offer described below, at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase. See "Description of Notes--Change
of Control."
The New Notes will be, as the Old Notes (which they replace) are, general
unsecured obligations of the Company, subordinated in right of payment to all
Senior Debt (as defined) of the Company, including borrowings under the Credit
Agreement (as defined). The New Notes will be guaranteed on a senior
subordinated basis by the Company's only existing U.S. subsidiary and all of
the Company's future U.S. subsidiaries (the "Guarantors"). The Guarantees (as
defined) will be general unsecured obligations of the Guarantors and will be
subordinated in right of payment to all existing and future Senior Debt of the
Guarantors. As of June 30, 1997, after giving pro forma effect to the Initial
Offering (as defined) and the Credit Agreement and the application of the net
proceeds therefrom, the Outstanding Senior Debt of the Company, including the
Notes, would have been approximately $205.1 million. See "Capitalization" and
"Description of Notes." The Indenture permits the Company to incur additional
indebtedness, subject to certain limitations.
(Cover continued on following page)
-----------
SEE "RISK FACTORS," BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE
OFFER.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
(Cover page continued)
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time on , 1997, unless
extended by the Company in its sole discretion (the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the
Expiration Date. The Exchange Offer is subject to certain customary
conditions. The Old Notes were sold by the Company on July 10, 1997 to the
Initial Purchaser (as defined) in a transaction not registered under the
Securities Act in reliance upon an exemption under the Securities Act (the
"Initial Offering"). The Initial Purchaser subsequently resold the Old Notes
to qualified institutional buyers in reliance upon Rule 144A under the
Securities Act and to a limited number of institutional "accredited investors"
(as defined in Rule 501(a) (1), (2), (3) or (7) under the Securities Act).
Accordingly, the Old Notes may not be reoffered, resold or otherwise
transferred in the United States unless registered under the Securities Act or
unless an applicable exemption from the registration requirements of the
Securities Act is available. The New Notes are being offered hereunder in
order to satisfy the obligations of the Company under the Registration Rights
Agreement (as defined) entered into by the Company and the Initial Purchaser
in connection with the Initial Offering. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the New Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business and such
holder has no arrangement or understanding with any person to participate in
the distribution of such New Notes. See "The Exchange Offer--Resale of the New
Notes." Each broker-dealer (a "Participating Broker-Dealer") that receives New
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a Participating 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
Participating Broker-Dealer in connection with resales of New Notes received
in exchange for Old Notes where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market making activities or other
trading activities. See "Plan of Distribution."
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act. The Company
will pay all the expenses incurred by it incident to the Exchange Offer. See
"The Exchange Offer."
There has not previously been any public market for the Old Notes or the New
Notes. The Company does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. The Old Notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
However, there can be no assurance that an active market for the New Notes
will develop. See "Risk Factors--Absence of a Public Market Could Adversely
Affect the Value of Notes." Moreover, to the extent that Old Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Old Notes could be adversely affected.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass
all amendments, exhibits, annexes and schedules thereto) pursuant to the
Securities Act, and the rules and regulations promulgated thereunder, covering
the issuance of the New Notes being offered hereby. This Prospectus does not
contain all the information set forth in the Exchange Offer Registration
Statement. For further information with respect to the Company and the
Exchange Offer, reference is made to the Exchange Offer Registration
Statement. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Exchange Offer Registration Statement, reference is
made to the exhibit for a more complete description of the document or matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference. The Exchange Offer Registration Statement, including the
exhibits thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the Regional Offices of the Commission at 7 World
Trade Center, 13th Floor, New York, New York 10048 and at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.gov.
As a result of the Exchange Offer Registration Statement being declared
effective by the Commission, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith will be required to file
periodic reports and other information with the Commission. The obligation of
the Company to file periodic reports and other information with the Commission
will be suspended if the New Notes are held of record by fewer than 300
holders as of the beginning of any fiscal year of the Company other than the
fiscal year in which the Exchange Offer Registration Statement is declared
effective. The Company has agreed, pursuant to the Indenture to deliver to the
Trustee within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents
and other reports, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants, if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company will also provide the Trustee and
Holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. In addition,
whether or not required by the rules and regulations of the Commission, at any
time after the Company files the Exchange Offer Registration Statement with
the Commission, the Company will file a copy of all such information with the
Commission for public availability (unless the Commission will not accept such
a filing) and make such information available to investors who request it in
writing. The Company will also comply with the other provisions of TIA (S)
314(a).
i
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial data, including
the "Unaudited Pro Forma Financial Data," "Selected Historical Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements (as defined) included elsewhere in
this Prospectus. Unless otherwise stated in this Prospectus or unless the
context otherwise requires, references to the "Company" or "Cambridge" include
the Company and its subsidiaries (without regard to the Eagle-Picher
Acquisition or the Goodyear-Jackson Acquisition), and references to "pro forma
basis" mean the application of the pro forma adjustments (including adjustments
relating to the Eagle-Picher Acquisition and the Goodyear-Jackson Acquisition)
described under "Unaudited Pro Forma Financial Data."
THE COMPANY
Cambridge is a leading Tier 1 supplier of plastic components and systems for
GM, Ford, Chrysler, Toyota, Honda, Mazda, Nissan, BMW, Volkswagen,
Freightliner, Kenworth, Mack Truck and Volvo Heavy Truck. As a Tier 1 supplier,
the Company is increasingly responsible for the design, engineering,
manufacturing and quality control testing of parts and pre-assembled components
for original equipment manufacturers ("OEMs"). Within the automotive OEM market
for plastic products there are three distinct segments, all of which the
Company services: exterior, structural/functional and interior. The Company
manufactures components, modules and systems for the exterior and
structural/functional segments and components and modules for the interior
segment. In addition to products supplied to its automotive OEM customers, the
Company also manufactures a number of products for non-automotive customers.
The Company's production utilizes a wide range of processes, including
compression, injection, extrusion and blow molding, and with the Eagle-Picher
Acquisition, top coat painting capabilities at Automotive Class A standards.
Plastic usage in the automobile and light truck industry has grown from
approximately $7.5 billion in 1991 to approximately $12.3 billion in 1996, a
compound annual growth rate ("CAGR") of 10.4%. Of this amount, approximately
$7.3 billion is non-captive and outsourced by the OEMs to suppliers such as the
Company. This non-captive market has grown at a CAGR of 13.4% since 1991. In
addition, the average plastic content per passenger vehicle has increased by
14% from approximately 209 pounds in 1991 to approximately 238 pounds in 1996
and is projected to grow another 22% to approximately 291 pounds per vehicle by
2006. This growth is driven by the lighter weight, greater design flexibility
and lower tooling costs of plastic versus steel, which traditionally has been
used for many parts. In addition, innovations in molding, painting and
materials technologies have improved the performance and appearance of plastic
components.
Within the $7.3 billion non-captive plastics market, Cambridge has a
particular expertise in the $900 million sheet molded compound ("SMC") market.
The use of SMC (which is a type of fiber reinforced plastic) in the automotive
industry has grown from approximately 147 million pounds in 1992 to
approximately 240 million pounds in 1996, a CAGR of approximately 13%. SMC is
particularly well-suited for exterior and structural/functional parts because
of its superior design flexibility, corrosion resistance, dent resistance and
dimensional and structural stability. Management believes that the Company is
the leading manufacturer of SMC automotive products in North America.
Cambridge has experienced rapid growth since 1991 due to increased plastic
usage by OEMs, five major acquisitions and significant new product
introductions. Sales have grown from $9.9 million in 1991 to $509.7 million in
1996, respectively, on a pro forma basis. Additionally, the Company's average
content per vehicle (automobile, light truck and heavy truck) produced in North
America has increased from approximately $0.86 in 1991 to approximately $33.03
in 1996, on a pro forma basis.
1
<PAGE>
Cambridge's broad range of material and manufacturing processes allows it to
select the most cost effective combination of plastic materials and
manufacturing methods for its customers, providing the Company with an
advantage over many of its competitors that have narrower ranges of
capabilities. The diversity in the Company's processes and materials
capabilities enhances its role as a cost-effective, full-service supplier.
Management believes that the Company is among the lowest cost, highest quality
suppliers of plastic components in North America because of its strict cost
controls and continuous improvement programs. The Company has received numerous
awards from its customers attesting to its competency, including Ford's Q1, GM
Supplier of the Year (1995 and 1996), Chrysler's QE designation, Honda's
Quality, Plant & Delivery Award and Mazda's Total Quality Excellence award.
Cambridge has an internal engineering and research and development staff that
develops new products, materials and processing technologies and works directly
with OEM designers and engineers to create innovative solutions to simplify
vehicle assembly and reduce OEM production costs. For example, the Company
designed, engineered and introduced a structural instrument panel mounting beam
(the "Cross Car Beam") for the Ford Ranger/Explorer which replaced
approximately 20 separate metal and plastic parts and reduced vibration and
noise by approximately 33% compared to the metal components it replaced. In
addition, in 1996, the Company supplemented its design capabilities by opening
an engineering and technical center in association with MSX International,
Inc., a subsidiary of MascoTech, Inc., which further strengthened its existing
full service design capabilities to the automotive and commercial truck
industries.
2
<PAGE>
The following chart illustrates the Company's principal products, customers
and manufacturing processes in its product segments:
<TABLE>
<CAPTION>
STRUCTURAL
EXTERIOR AND FUNCTIONAL INTERIOR NON-AUTOMOTIVE
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
1996 Pro Forma Sales: $278 Million* $130 Million* $80 Million* $22 Million*
% Total Sales........... 55% 25% 16% 4%
Products: Hoods and hood Headlamp carriers Steering column Blow molded bottles
assemblies Engine shields/covers bezels Forklift body panels**
Liftgates and doors Structural beams Glove box door and Swimming poolfilters/
Roof and roof Bumper beams assemblies heater covers
moldings Structural component Instrument panel trim Residential door
Fenders carriers components systems**
Bodyside Load floors Liftgate trim panels Personal watercraft
moldings/rubstrips Fuel tank shields Door trim panels decks & covers**
Windshield surrounds Seat pans/backs Rear Shelf panels Military vehicle
Deck lids Knee bolsters Consoles hoods, engine covers
Hatches Fluid systems linkages Seat backs/bases & seats**
Storage doors Rocker arm covers Shift knobs Tractor hoods,
Spoilers Fan shrouds Garnish molding shields/pans, consoles
Fairings Radiator support systems and seats**
Grill opening beams Handles Combine
retainers*** Bearing cages Rear shelves components**
Grill opening Steering yokes Electrical carriers Lift truck hoods**
panels*** Battery trays Cargo doors Outboard engine
Gears Handles Combine
Fuel valves Rear shelves components**
Plenums (firewalls) Electrical carriers Lift truck hoods**
Windshield cowls Cargo doors Outboard engine
Air spring pistons*** Sunshades cowls**
Customers: GM, Ford, Chrysler, GM, Ford, GM, Ford, Chrysler Hyster,
Volkswagen, Chrysler, Honda, Honda, Mazda, Misc Kodak,
Mazda, Freightliner, Mazda, Nissan, GM, Ford, Chrysler, Purex, Menasha,
Kenworth, Mack Freightliner, Volvo, Honda, Mazda, Misc Xerox,
Truck, CAMI, Collins & Tier 2 companies, Caradon**, Pease**,
Volvo Heavy Truck, Aikman, Inalfa, Freightliner, Rockwell Premedoor**,
Subaru**, Subaru, Saturn Polaris**,
Isuzu, Mitsubishi** Kawasaki**,
AM General**,
John Deere**, Ford
New Holland**,
U.S. Military**,
Mercury Marine
Primary Processes: Compression molding, Compression Injection molding, Blow molding
Extrusion, Prime & top molding, Blow molding Compression
coat painting Injection molding molding
</TABLE>
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* These amounts include revenues attributable to (a) Eagle-Picher as follows:
Exterior-$46.8 million; Structural/Functional-$10.1 million; Interior-$2.6
million; and Non-Automotive-$19.9 million, and (b) Goodyear as follows:
Exterior-$51.2 million; and Non-Automotive-$2.7 million.
** Attributable solely to Eagle-Picher.
*** Attributable solely to Goodyear-Jackson.
3
<PAGE>
MAJOR INDUSTRY TRENDS
The Company attributes its success, in part, to the significant growth in the
use of plastic by OEMs. In addition, the Company has capitalized on several
other industry trends which have resulted from the competitive pressures on
OEMs to reduce costs, increase vehicle quality and durability and improve
styling.
Increased Outsourcing by Domestic OEMs: In an effort to reduce costs, speed
product design and simplify manufacturing, domestic OEMs have increasingly
turned to independent manufacturers which have lower overall costs and can
achieve economies of scale through product specialization. As a part of this
outsourcing trend, domestic OEMs have increasingly required suppliers to accept
greater responsibility for assembly and supplier management. This trend favors
suppliers with full design and engineering capabilities, such as the Company,
that can develop ready-to-install modules and systems that reduce domestic OEM
production times.
Consolidation of Supplier Base by OEMs: To reduce their procurement-related
costs and accelerate new platform development, OEMs have forged stronger links
to selected suppliers and have decreased their overall number of suppliers.
From 1987 to 1997, Ford and Chrysler reduced their supplier bases by an average
of 79% and have announced plans to further reduce their supplier bases by an
average of 60% between 1997 and 2002. Management expects this trend to
continue, especially in the relatively fragmented exterior and
structural/functional segments. This has benefited large suppliers, such as the
Company, that have the ability to supply complex components and systems and
effectively manage their own supplier base.
Increased Levels of Manufacturing in North America by Transplants: Due to the
relative cost advantage of producing vehicles in North America and to political
pressures, foreign automotive manufacturers have built and continue to build
manufacturing facilities in North America ("Transplants") and have increased
the domestic parts content of their vehicles. Transplants' share of passenger
vehicles (automobiles and light trucks) manufactured in North America has
increased from approximately 3% in 1985 to approximately 21% in 1996. This has
benefited suppliers, such as the Company, by providing increased revenue
opportunities from platforms that previously had been manufactured overseas.
Increased Plastic Usage by the Heavy Truck Industry: The significant weight
advantage and lower up-front tooling costs of plastic over steel make plastic
more attractive to heavy truck manufacturers, where fuel economy and low volume
production are critical considerations. Heavy truck manufacturers continue to
outsource most of their component parts, benefiting suppliers such as the
Company.
BUSINESS STRATEGY
The Company has responded to these industry trends by developing and
acquiring the full-service design, engineering, manufacturing and finishing
capabilities required by OEMs. To enhance its position as a Tier 1 supplier and
to continue its profitable growth, the Company intends to pursue the following
business strategies:
Capitalize on Increased Plastic Usage for Exterior and Structural/Functional
Components: Plastic content per vehicle is expected to continue to increase due
to its lower overall costs, lighter weight (which improves fuel economy) and
increased design flexibility and durability. To foster and capitalize on this
trend, the Company continues to seek opportunities to increase plastic content
per vehicle through the design, development and manufacture of plastic
components and systems which historically have been fabricated in metal. For
example, the Company has successfully introduced a plastic rocker arm cover,
which weighs 48% less than the metal part it replaced, and the Cross Car Beam,
which replaced approximately 20 separate metal and plastic parts.
4
<PAGE>
Acquire Complementary Manufacturers: As evidenced most recently by the Eagle-
Picher Acquisition, the Goodyear-Jackson Acquisition and the APX Acquisition
(as defined), the Company intends to selectively pursue attractive
opportunities to acquire complementary manufacturers. The Company has acquired
non-strategic operations of larger entities and has systematically restructured
their operations to significantly reduce costs and position them to achieve
growth. Acquisition opportunities are available because: (i) these product
segments historically have been fragmented; (ii) OEMs are focusing their
supplier consolidation efforts on manufacturers of these components; and (iii)
many plastic suppliers are non-strategic operations of significantly larger
entities. Such acquisitions have broadened the Company's product lines and
manufacturing capabilities, diversified its customer base, improved its
absorption of corporate overhead and enhanced its attractiveness as a Tier 1
supplier to the OEMs.
Penetrate New Markets and Access New Technologies through Joint Ventures and
Licensing Arrangements: The Company seeks to exploit joint ventures and
licensing arrangements to enter new geographic markets and develop new
products, materials and process technologies that provide opportunities for
growth while limiting its investment risk. The Company currently has joint
ventures with E.I. duPont de Nemours and Company, Siebe Fluid Systems and
Menzolit Fibron and a licensing agreement with Empe Ernst Pelz GmbH & Co. KG
and Empe Ernst Pelz Vetrebs GmbH.
SIGNIFICANT TRANSACTIONS
The Eagle-Picher Acquisition: On July 10, 1997, the Company completed the
acquisition of the plastics division of Eagle-Picher Industries, Inc. ("Eagle-
Picher") for a total purchase price of $32.2 million, subject to post-closing
adjustments (the "Eagle-Picher Acquisition"). Eagle-Picher is a manufacturer of
compression molded, assembled and painted components using SMC. The Eagle-
Picher Acquisition has broadened and strengthen the Company's position in its
core business by: (i) adding top coat painting capabilities which meet
automotive OEM Class A standards; (ii) adding substantial non-automotive market
presence with a salesforce and manufacturing facility dedicated to products
including watercraft components and tractor panels; (iii) enhancing strong Tier
1 relationships with Transplants, such as Mitsubishi; (iv) adding 48 additional
compression molding presses; and (v) increasing capacity to produce SMC, which
will provide consolidating opportunities for the Company. The Company has
identified and intends to pursue profit enhancement opportunities, including
plant consolidations, purchasing rationalization and manufacturing material
flow redesign. See "Business--The Eagle-Picher Acquisition."
The Goodyear-Jackson Acquisition: On July 10, 1997, the Company completed the
acquisition of the engineered composites business ("Goodyear-Jackson") of The
Goodyear Tire and Rubber Company ("Goodyear"), located in Jackson, Ohio, for a
total purchase price of $37.6 million, subject to post-closing adjustments (the
"Goodyear-Jackson Acquisition"). Goodyear-Jackson manufactures plastic
components and modules for sale to OEMs of automobiles and light, medium and
heavy trucks. The majority of Goodyear-Jackson's sales are of parts
manufactured with SMC in a compression molding process. The Goodyear-Jackson
Acquisition is expected to benefit the Company by: (i) strengthening its
position as the leading SMC supplier to medium and heavy truck OEMs; (ii)
enhancing its relationship with Ford and Freightliner; (iii) further broadening
its array of products and manufacturing processes; (iv) adding 16 compression
molding presses, including 9 equal to or greater than 1,000 tons, and 10
injection molding presses, including 9 equal to or greater than 1,000 tons; and
(v) increasing its capacity to produce SMC. The Company has identified and
intends to pursue profit-improvement opportunities in the areas of raw
materials purchasing, plant overhead costs and selling, general and
administrative costs. See "Business--The Goodyear-Jackson Acquisition."
The APX Acquisition: In February 1997, the Company acquired the Production
Molded Composites Division ("APX") of APX International, for a total purchase
price of approximately $2.4 million (the "APX Acquisition"). APX is a
manufacturer focused on supplying body panels to Chrysler for the Viper
Roadster and
5
<PAGE>
Coupe using the resin transfer molding ("RTM") manufacturing process. As a
result of the APX Acquisition, the Company improved its position as a Tier 1
supplier to Chrysler by becoming the sole supplier of a majority of Viper
exterior components. In addition, the Company strengthened its RTM
manufacturing capabilities which allows the Company to offer a broader variety
of products and processes to its customers. See "Business--Background and
Acquisition History."
The GenCorp Acquisition: In March 1996, the Company acquired the reinforced
plastics division ("GenCorp RPD") of GenCorp Inc. for a total purchase price of
approximately $32 million (the "GenCorp Acquisition"). As a result of the
GenCorp Acquisition, the Company enhanced its status as a Tier 1 supplier to
OEMs and added Volvo Heavy Truck and Kenworth to its customer base, thereby
solidifying its leadership in the heavy truck industry. In addition, GenCorp
RPD further expanded the Company's wide range of molding and finishing
capabilities.
The 1995 Transaction: In November 1995, Holdings was recapitalized in a
transaction (the "1995 Transaction") which included: (i) the purchase of
Holdings' common stock for approximately $18 million by the Bain Funds (as
defined); (ii) the repurchase by Holdings of its common stock for approximately
$70 million from certain of its stockholders; and (iii) the exchange of
Holdings' common stock for newly issued Holdings' capital stock by an affiliate
of Richard S. Crawford, Chairman of the Board and a principal stockholder of
the Company. See "Certain Transactions--The 1995 Transaction" and "--
Subordinated Notes and Warrant Agreements."
THE INITIAL OFFERING
Notes....................... The Old Notes were sold by the Company on July
10, 1997 to BT Securities Corporation (the "Ini-
tial Purchaser") pursuant to a Purchase Agreement
dated July 2, 1997 (the "Purchase Agreement").
The Initial Purchaser subsequently resold the Old
Notes to qualified institutional buyers pursuant
to Rule 144A under the Securities Act and to a
limited number of institutional "accredited in-
vestors" (as defined in Rule 501(a)(1),(2),(3) or
(7) under the Securities Act).
Registration Rights Pursuant to the Purchase Agreement, the Company
Agreement.................. and the Initial Purchaser entered into a Regis-
tration Rights Agreement, dated as of July 10,
1997 (the "Registration Agreement"), which grants
to the holders of the Old Notes certain exchange
and registration rights. The Exchange Offer is
intended to satisfy such exchange rights which
terminate upon the consummation of the Exchange
Offer.
THE EXCHANGE OFFER
Securities Offered.......... $100,000,000 aggregate principal amount of Series
B 10 1/4% Senior Subordinated Notes due 2007 of
the Company.
The Exchange Offer.......... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, $100,000,000 aggregate prin-
cipal amount of Old Notes are outstanding. The
Company will issue the New Notes to holders on or
promptly after the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that New
Notes issued pursuant to the Exchange Offer in
exchange for
6
<PAGE>
Old Notes may be offered for resale, resold and
otherwise transferred by any holder thereof
(other than any such holder which is an "affili-
ate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that
such New Notes are acquired in the ordinary
course of such holder's business and that such
holder does not intend to participate and has no
arrangement or understanding with any person to
participate in the distribution of such New
Notes. Each holder accepting the Exchange Offer
is required to represent to the Company in the
Letter of Transmittal that, among other things,
the New Notes will be acquired by the holder in
the ordinary course of business and the holder
does not intend to participate and has no ar-
rangement or understanding with any person to
participate in the distribution of such New
Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of market-
making activities or other trading activities may
be a statutory underwriter. Each Participating
Broker-Dealer that receives New Notes for its own
account pursuant to the Exchange Offer must ac-
knowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowl-
edging and by delivering a prospectus, a Partici-
pating 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 Participating Broker-Dealer as a result
of market-making activities or other trading ac-
tivities. The Company and the Guarantors have
agreed for a period of 180 days after consumma-
tion of the Exchange Offer to make available a
prospectus meeting requirements of the Securities
Act to Participating Broker-Dealers and other
persons, if any, with similar prospectus delivery
requirements for use in connection with any re-
sale of such Exchange Notes. See "Plan of Distri-
bution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose
of participating, in a distribution of the New
Notes could not rely on the position of the staff
of the Commission enunciated in no-action letters
and, in the absence of an exemption therefrom,
must comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. Failure
to comply with such requirements in such instance
may result in such holder incurring liability un-
der the Securities Act for which the holder is
not indemnified by the Company.
Expiration Date............. 5:00 p.m., New York City time, on , 1997 unless
the Exchange Offer is extended, in which case the
term "Expiration Date" means the latest date and
time to which the Exchange Offer is extended.
Accrued Interest on the New
Notes and the Old Notes....
Interest on the New Notes will accrue from the
last interest payment date on which interest was
paid on the Notes surrendered in exchange there-
for or, if no interest has been paid on the Old
Notes, from the Issue Date. Such interest will be
paid with the first interest
7
<PAGE>
payment on the New Notes to the persons who are
registered holders of the New Notes. Interest on
the Old Notes accepted for exchange will cease to
accrue upon issuance of the New Notes.
Conditions to the Exchange The Exchange Offer is subject to certain custom-
Offer...................... ary conditions, which may be waived by the Compa-
ny. See "The Exchange Offer--Conditions."
Procedures for Tendering Each holder of Old Notes wishing to accept the
Old Notes.................. Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsim-
ile thereof or transmit an Agent's Message (as
defined) in connection with a book-entry trans-
fer, in accordance with the instructions con-
tained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such fac-
simile, or such Agent's Message, together with
the Old Notes and any other required documenta-
tion to the Exchange Agent (as defined herein) at
the address set forth herein. By executing the
Letter of Transmittal or Agent's Message, each
holder will represent to the Company that, among
other things, the New Notes acquired pursuant to
the Exchange Offer are being obtained in the or-
dinary course of business of the person receiving
such New Notes, whether or not such person is the
holder, that neither the holder nor any such
other person (i) has any arrangement or under-
standing with any person to participate in the
distribution of such New Notes, (ii) is engaging
or intends to engage in the distribution of such
New Notes, or (iii) is an "affiliate," as defined
under rule 405 of the Securities Act, of the Com-
pany. See "The Exchange Offer--Purpose and Effect
of the Exchange Offer" and "--Procedures for
Tendering."
Untendered Old Notes........ Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate but
who do not tender their Old Notes will not have
any further exchange rights and such Old Notes
will continue to be subject to certain restric-
tions on transfer. Accordingly, the liquidity of
the market for such Old Notes could be adversely
affected.
Consequences of Failure to The Old Notes that are not exchanged pursuant to
Exchange................... the Exchange Offer will remain restricted securi-
ties. Accordingly, such Old Notes may be resold
only (i) to the Company, (ii) pursuant to Rule
144A or Rule 144 under the Securities Act or pur-
suant to some other exemption under the Securi-
ties Act, (iii) outside the United States to a
foreign person pursuant to the requirements of
rule 904 under the Securities Act, or (iv) pursu-
ant to an effective registration statement under
the Securities act. See "The Exchange Offer--Con-
sequences of Failure to Exchange."
Shelf Registration If any holder of the Old Notes (other than any
Statement.................. such holder which is an "affiliate" of the Com-
pany within the meaning of Rule 405 under the Se-
curities Act) is not eligible under applicable
securities laws to participate in the Exchange
Offer, and such holder has provided information
regarding such holder and the distribution of
such
8
<PAGE>
holder's Old Notes to the Company for use there-
in, the Company has agreed to register the Old
Notes on a shelf registration statement (the
"Shelf Registration Statement") and use its best
efforts to cause it to be declared effective by
the Commission as promptly as practical on or af-
ter the consummation of the Exchange Offer. The
Company has agreed to maintain the effectiveness
of the Shelf Registration Statement for, under
certain circumstances, a maximum of two years, to
cover resales of the Old Notes held by any such
holders.
Special Procedures for
Beneficial Owners..........
Any beneficial owner whose Old Notes are regis-
tered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who
wishes to tender should contact such registered
holder promptly and instruct such registered
holder to tender on such beneficial owner's be-
half. Such beneficial owner must, prior to com-
pleting and executing the Letter of Transmittal
and delivering its Old Notes, either make appro-
priate arrangements to register ownership of the
Old Notes in such beneficial owner's name or ob-
tain a properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time. The Company
will keep the Exchange Offer open for not less
than twenty business days in order to provide for
the transfer of registered ownership.
Guaranteed Delivery Holders of Old Notes who wish to tender their Old
Procedures................. Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the letter of Transmittal to the Ex-
change Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date
must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights........... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date.
Acceptance of Old Notes and
Delivery of New Notes......
The Company will accept for exchange any and all
Old Notes which are properly tendered in the Ex-
change Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes is-
sued pursuant to the Exchange Offer will be de-
livered promptly following the Expiration Date.
See "The Exchange Offer--Terms of the Exchange
Offer."
Use of Proceeds............. There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange Offer.
Exchange Agent.............. State Street Bank & Trust Company.
THE NEW NOTES
General..................... The form and terms of the New Notes are the same
as the form and terms of the Old Notes (which
they replace) except that (i) the new
9
<PAGE>
Notes bear a Series B designation, (ii) the New
Notes will be issued in a transaction that has
been registered under the Securities Act and,
therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of New
Notes will not be entitled to certain rights un-
der the Registration Rights Agreement, including
the provisions providing for liquidated damages
in certain circumstances relating to the timing
of the Exchange Offer, which rights will termi-
nate when the Exchange Offer is consummated. See
"The Exchange Offer--Purpose and Effect of the
Exchange Offer." The New Notes will evidence the
same debt as the Old Notes and will be entitled
to the benefits of the Indenture. See "Descrip-
tion of Notes." The Old Notes and the New Notes
are referred to herein collectively as the
"Notes."
Maturity Date............... July 15, 2007
Interest and Payment January 15 and July 15 of each year, commencing
Dates...................... January 15, 1998.
Optional Redemption......... The New Notes are redeemable, in whole or in
part, at the option of the Company on or after
July 15, 2002, at the redemption prices set forth
herein plus accrued and unpaid interest to the
date of redemption. In addition, at any time on
or prior to July 15, 2000, the Company may redeem
up to 35% of the aggregate principal amount of
the Notes issued with the net cash proceeds of
one or more Equity Offerings (as defined), at a
redemption price equal to 110.25% of principal
amount to be redeemed plus accrued interest to
the redemption date; provided that at least $65.0
million of the aggregate principal amount of
Notes remains outstanding immediately after any
such redemption.
Change of Control........... Upon a Change of Control, the Company will be ob-
ligated to make an offer to repurchase all of the
outstanding New Notes at a price equal to 101% of
the principal amount thereof plus accrued and un-
paid interest, if any, to the date of repurchase.
See "Description of Notes--Change of Control."
Ranking..................... The New Notes will be, as the Old Notes (which
they replace) are, general unsecured obligations
of the Company, subordinated in right of payment
to all Senior Debt (as defined) of the Company,
including borrowings under the Credit Agreement.
On a pro forma basis after giving effect to the
Initial Offering and the Credit Agreement and the
application of the net proceeds thereof, as if
they occurred on June 30, 1997, the Company would
have had approximately $205.1 million of Senior
Debt outstanding. The Indenture permits the Com-
pany to incur additional indebtedness, including
Senior Debt, subject to certain limitations.
Guarantees.................. The New Notes will be, as the Old Notes (which
they replace) are, guaranteed on a senior subor-
dinated basis by the Guarantors. The Guarantees
will be general unsecured obligations of the
Guarantors and will be subordinated in right of
payment to all existing and future Senior Debt of
such Guarantors, which will include any guar-
10
<PAGE>
antee by such Guarantors of the Company's indebt-
edness under the Credit Agreement.
Certain Covenants........... The Indenture contains certain covenants that
limit the ability of the Company and its subsidi-
aries to, among other things, incur additional
indebtedness and issue preferred stock, pay divi-
dends or make certain other Restricted Payments
(as defined), enter into certain transactions
with affiliates, create liens, merge or consoli-
date with any other person or sell, assign,
transfer, lease, convey or otherwise dispose of
all or substantially all of the assets of the
Company, issue or sell capital stock or wholly-
owned subsidiaries and engage in other lines of
business.
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating the investment in the Notes.
11
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA DATA
The summary consolidated results of operations and balance sheet data set
forth below for the years ended December 31, 1996, 1995 and 1994 are derived
from the Company's consolidated financial statements included elsewhere in this
Prospectus; such data as of June 30, 1997 and for the six months ended June 30,
1997 and 1996 are derived from the Company's unaudited interim financial
statements included elsewhere in this Prospectus. The summary unaudited pro
forma data for the year ended December 31, 1996 and for the six month period
ended June 30, 1997, are derived from the Unaudited Pro Forma Financial Data
included elsewhere in the Prospectus. The Unaudited Pro Forma Financial Data do
not purport to represent what the Company's results of operations actually
would have been if the transactions referred therein had been consummated on
the date or for the periods indicated, or what such results will be for any
future date or for any future period. The Unaudited Pro Forma Financial Data
should be read in conjunction with the "Selected Historical Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements of the Company, of GenCorp RPD, of
Rockwell Plastics (as defined) and of Goodyear-Jackson and the related notes
thereto (collectively, the "Financial Statements") included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
TWELVE
MONTHS
ENDED
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30, JUNE 30,
------------------------------------- ---------------------------- ---------
PRO FORMA PRO FORMA
1994(1) 1995 1996(2) 1996(4) 1996(2) 1997(3) 1997(4) 1997(5)
-------- -------- -------- --------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
DATA:
Sales................... $190,944 $297,746 $346,026 $509,702 $185,968 $186,631 $253,464 $477,148
Gross profit............ 31,489 43,853 51,284 66,700 29,330 27,005 33,344 60,042
Selling, general and
administrative
expenses............... 15,312 17,678 26,240 30,866 10,592 12,793 13,738 30,882
Income from operations.. 16,177 26,175 25,044 35,834 18,738 14,212 19,606 29,160
Interest expense........ 6,161 12,388 23,190 29,791 11,053 11,781 14,896 30,496
Other income (expense).. 657 746 (180) (76) (135) 24 24 83
Income (loss) before
income taxes........... 10,673 14,533 1,674 5,967 7,550 2,455 4,734 (1,253)
Net income (loss)(6).... 12,123 4,697 1,109 3,740 4,989 1,535 2,890 (796)
OTHER DATA:
Depreciation and
amortization........... $ 8,952 $ 16,715 $ 21,319 $ 32,401 $ 10,160 $ 10,956 $ 16,042 $ 33,106
Capital expenditures.... 3,972 10,646 9,630 22,275 4,213 8,642 10,453 22,052
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital......... $ 24,887 $ 25,544 $ 37,529 $ 33,117 $ 26,183 $ 55,290 $ 55,290
Total assets............ 189,317 175,115 262,230 244,694 255,399 357,279 357,279
Long-term debt, less
current portion........ 124,500 177,133 224,112 215,804 209,762 301,420 301,420
</TABLE>
(Footnotes on following page)
12
<PAGE>
- - --------
(1) In August 1994, the Company acquired substantially all the assets of the
Plastics Products Business ("Rockwell Plastics") of Rockwell International
Corporation ("Rockwell"), and such transaction was accounted for as a
purchase. The operating results of Rockwell Plastics are included in the
consolidated operating results from August 1, 1994. Also, effective August
1, 1994, the stockholders of Wolf Engineering Corporation ("Wolf"), Voplex
Corporation ("Voplex") and Voplex of Canada, Inc. ("Voplex Canada") formed
the Company, and contributed the shares of such businesses or merged such
businesses, as the case may be, into the Company. This transaction
constituted a combining of interests under common control, and was
accounted for in a manner similar to a pooling of interests.
(2) In March 1996, the Company acquired GenCorp RPD for a purchase price of
approximately $32 million. The operating results of GenCorp RPD are
included in the consolidated operating results from March 1, 1996.
(3) In February 1997, the Company acquired APX for a purchase price of $2.4
million. The operating results of APX are included in the consolidating
operating results from February 1, 1997.
(4) The Summary Unaudited Pro Forma Data are derived from the Unaudited Pro
Forma Financial Data included elsewhere in this Prospectus. The pro forma
results of operations data for 1996 give effect to: (i) the GenCorp
Acquisition; (ii) the APX Acquisition; (iii) the Eagle-Picher Acquisition;
(iv) the Goodyear-Jackson Acquisition; and (v) the completion of the
Initial Offering and the Credit Agreement and application of the net
proceeds therefrom, as if each had occurred on January 1, 1996. The pro
forma results of operations data for the six months ended June 30, 1997
give effect to items (ii), (iii), (iv) and (v), as if these had occurred at
January 1, 1996. The related pro forma balance sheet data as of June 30,
1997 give effect to items (iii), (iv) and (v) as if these had occurred at
June 30, 1997.
(5) The Summary Unaudited Pro Forma Data for the twelve months ended June 30,
1997, have been derived by combining the pro forma financial data for the
year ended December 31, 1996, with the pro forma financial data for the six
month period ended June 30, 1997, and deducting the pro forma financial
data for the six month period ended June 30, 1996. These pro forma data are
presented for the purpose of additional information and analysis, and are
not a required part of the Unaudited Pro Forma Financial Data. Such
financial data give effect to the APX Acquisition, the Eagle-Picher
Acquisition, the Goodyear-Jackson Acquisition, the Initial Offering and the
Credit Agreement and application of the net proceeds therefrom, as if such
items had occurred at the beginning of the period.
(6) On August 1, 1994, the Company changed its tax status from Subchapter S to
Subchapter C; in 1993, the Company's earnings were included in the taxable
income of the Company's stockholders. If the Company had operated as a
Subchapter C corporation for the full year ended December 31, 1994, the
income tax provision would have been approximately $4.1 million, and net
income would have been approximately $6.6 million. See Note 12 to the
Company's financial statements included elsewhere in this Prospectus.
13
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to the other information set forth in this Prospectus before
tendering the Old Notes for the New Notes. This Prospectus contains forward-
looking statement that involve risk and uncertainties. Actual results could
differ materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those
identified below as well as those discussed elsewhere in this Prospectus.
LEVERAGE; STOCKHOLDER'S DEFICIT
As a result of the 1995 Transaction and the Company's borrowings in
connection with the acquisitions of GenCorp RPD, APX, Eagle-Picher and
Goodyear-Jackson, the Company is highly leveraged. The Company has a
stockholder's deficit which, at June 30, 1997, on a pro forma basis, after
giving effect to the Initial Offering and the Credit Agreement and the
application of the proceeds thereof, was approximately $70.4 million. See
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company's indebtedness was
approximately $305.1 million, on a pro forma basis, assuming the Initial
Offering and the Credit Agreement and application of the net proceeds
therefrom had occurred on June 30, 1997. In addition, subject to the
restrictions in the Credit Agreement and the Indenture, the Company and its
subsidiaries may incur additional indebtedness (including additional Senior
Debt) from time to time to finance acquisitions or capital expenditures or for
other purposes.
The level of the Company's indebtedness could have important consequences to
holders of the Notes, including: (i) a substantial portion of the Company's
cash flow from operations must be dedicated to debt service and will not be
available for other purposes; (ii) the Company's ability to obtain additional
debt financing in the future for working capital, capital expenditures,
research and development or acquisitions may be limited; and (iii) the
Company's substantial leverage may make it more vulnerable to adverse economic
conditions and limit its ability to withstand competitive pressures or take
advantage of business opportunities.
The Company's ability to pay principal and interest on the Notes and to
satisfy its other debt obligations depend upon its future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond its control
as well as the availability of revolving credit borrowings under the Credit
Agreement or a successor facility. The Company anticipates that its operating
cash flow, together with borrowings under the Credit Agreement, will be
sufficient to meet its operating expenses and to service its debt requirements
as they become due. If the Company is unable to service its indebtedness, it
will be forced to take actions such as reducing or delaying capital
expenditures, selling assets, restructuring or refinancing its indebtedness
(which could include the Notes), or seeking additional equity capital. There
is no assurance that any of these remedies can be effected on satisfactory
terms, if at all.
SUBORDINATION OF NOTES AND THE GUARANTEES
The Notes and the Guarantees are and will be subordinated in right of
payment to all Senior Debt of the Company and the Guarantors, respectively. In
the event of bankruptcy, liquidation or reorganization of the Company, the
assets of the Company or the Guarantors will be available to pay obligations
on the Notes only after all Senior Debt of the Company or the Guarantors, as
the case may be, has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Notes then outstanding. On a
pro forma basis, after giving effect to the Initial Offering and the Credit
Agreement and the application of the net proceeds therefrom, as if they
occurred on June 30, 1997, the Company would have had approximately $205.1
million of Senior Debt outstanding. Additional Senior Debt may be incurred by
the Company and the Guarantors from time to time, subject to certain
restrictions. Although the Indenture generally provides that a Subsidiary (as
defined) may incur indebtedness only if such Subsidiary agrees to guarantee
the Notes on a senior subordinated basis, a Foreign Subsidiary (as defined)
may incur an unlimited amount of indebtedness without providing a Guarantee.
If indebtedness is incurred by a Foreign Subsidiary which is not a Guarantor,
the Notes will be structurally subordinated to such indebtedness with respect
to the assets of such Subsidiary. See "Description of
14
<PAGE>
Notes" and "Description of Credit Agreement." The holders of the Notes have no
direct claim against the Guarantors other than the claim created by the
Guarantees, if any, which may themselves be subject to legal challenge in the
event of the bankruptcy or insolvency of a Guarantor. See "--Fraudulent
Conveyance Considerations." If such a challenge were upheld, the Guarantees
would be invalidated and unenforceable. To the extent that the Guarantees are
held to be unenforceable or have been released pursuant to the terms of the
Indenture, the rights of holders of the Notes to participate in any
distribution of assets of any Guarantor upon liquidation, bankruptcy or
reorganization may, as is the case with other unsecured creditors of the
Company, be subject to prior claims against such Guarantor.
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indenture restricts, among other things, the Company's and the
Guarantors' ability to incur additional indebtedness, incur liens, pay
dividends or make certain other restricted payments, consummate certain asset
sales, enter into certain transactions with affiliates, incur indebtedness
that is subordinate in right of payment to any Senior Debt and senior in right
of payment to the Notes, merge or consolidate with any other person or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of the assets of the Company. In addition, the Credit Agreement contains
other and more restrictive covenants and prohibits the Company and its
subsidiaries from prepaying other indebtedness (including the Notes). The
Credit Agreement also requires the Company to maintain specified financial
ratios and satisfy certain financial condition tests. The Company's ability to
meet those financial ratios and tests can be affected by events beyond its
control, and there can be no assurance that the Company will meet those tests.
A breach of any of these covenants could result in a default under the Credit
Agreement and/or the Indenture. Upon the occurrence of an event of default
under the Credit Agreement, the lenders could elect to declare all amounts
outstanding under the Credit Agreement, together with accrued interest, to be
immediately due and payable. If the Company were unable to repay those
amounts, the lenders could proceed against the collateral granted to them to
secure that indebtedness. If the Senior Debt were to be accelerated, there can
be no assurance that the assets of the Company would be sufficient to repay in
full that indebtedness and the other indebtedness of the Company, including
the Notes. Substantially all the assets of the Company and its subsidiaries
are pledged as security under the Credit Agreement. See "Description of Credit
Agreement" and "Description of Notes--Certain Covenants."
INDUSTRY CONDITIONS
The Company's business is tied to the North American vehicle industry which
is highly cyclical and dependent on consumer spending and general economic
conditions in North America. There can be no assurance that North American
automotive production will not decline in the future or that the Company will
be able to utilize any additional capacity it adds in the future. Economic
factors adversely affecting automotive sales and production and consumer
spending could adversely impact the Company's sales and its operating results.
See "Business--Automobile and Light Truck Components Industry." In addition,
the growing trend among OEMs to reduce their supplier base and to reduce costs
while increasing quality control puts great pressure on suppliers such as the
Company.
Many OEMs and their suppliers have unionized work forces. Work stoppages or
slow-downs experienced by OEMs or their suppliers could result in slow-downs
or closures of assembly plants where the Company's products are included in
assembled vehicles. These events could have a material adverse effect on the
Company's results of operations.
INDUSTRY CONSOLIDATION
The automotive plastic component supply industry has undergone, and is
likely to continue to experience, consolidation. See "Business--Automobile and
Light Truck Components Industry--Consolidation of Supplier Base by OEMs." The
Company believes that in order for it to maintain and enhance its position as
a Tier 1 supplier to OEMs, it is important that it participate in this
consolidation. Accordingly, the Company intends to selectively pursue
acquisition targets that will broaden its product and process capabilities.
There can be no
15
<PAGE>
assurance, however, that it will be successful in consummating such
acquisitions or that it will be able to successfully integrate any such
acquisitions without adversely affecting the Company's financial position or
results of operations.
COMPETITION
The Company's industry is highly competitive. A large number of actual or
potential competitors exist, including the internal component operations of
the OEMs as well as independent suppliers, some of which are larger than the
Company and have substantially greater resources. There can be no assurance
that the Company's business will not be adversely affected by increased
competition in the market in which it currently operates or in markets in
which it will operate in the future, or that the Company will be able to
improve or maintain its profit margins on sales to OEMs. In addition, the
Company principally competes for new business both at the beginning of the
development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years
prior to the marketing of such models to the public. Although the Company has
been successful in obtaining significant new business on new models, there can
be no assurance that the Company will continue to be able to obtain such new
business. Certain of the Company's competitors currently are larger, have
greater operating flexibility and have greater financial resources than the
Company. See "Business--Competition."
RELIANCE ON MAJOR CUSTOMERS
For the year ended December 31, 1996, on a pro forma basis (including the
Eagle-Picher Acquisition and the Goodyear-Jackson Acquisition), approximately
24.9% of the Company's sales were to General Motors, approximately 35.4% of
the Company's sales were to Ford and approximately 8.1% of the Company's sales
were to Chrysler. Sales to these customers consist of a large number of
different parts, tooling and other services, which are sold to separate
divisions and operating groups within each customer's organization. Although
the Company believes that its overall relations with customers are good, there
can be no assurance that such customers will continue to purchase the Company
products, continue with a particular vehicle program or purchase the Company's
products for any successor vehicle program. The loss of any one of such
customers, or a significant decrease in demand for certain models or a group
of related models sold by any of its major customers, could have a material
adverse effect on the Company. The failure of the Company to obtain new
business for new models or to retain or increase business on redesigned
existing models could have a material adverse effect on the Company. Decline
in the production of new North American vehicles, due to reductions in North
American vehicle demand or an increase in the share of the North American
vehicle market by foreign OEMs manufacturing in their home countries, could
have a material adverse effect on the Company. Moreover, because sales are
typically secured during the two to five year vehicle model development period
prior to marketing to the public, there can be no assurance that efforts to
replace any lost sales, if successful, would yield cash revenues in time to
prevent a material adverse effect on the Company. See "Business--Customers."
Automotive suppliers are under constant pressure to reduce product prices.
General Motors, Ford and Chrysler have established policies which do not
permit price increases, even though underlying material or other costs may
have increased due to circumstances beyond a supplier's control. Most of the
Company's products are manufactured using petroleum-based plastic resins. The
price of petroleum, while relatively stable in recent years, has experienced
wide fluctuations in the past. Significant increases in the price of petroleum
could result in increased cost of the Company's principal raw materials which,
if not recoverable from the Company's customers, could have a material adverse
effect on the Company's results of operations.
At the same time, OEMs continue to pressure suppliers such as the Company to
reduce costs, to increase quality control and, in some cases, to share cost
savings with them through a reduction of parts prices. Although the Company
believes that its prices will remain competitive, there can be no assurance
that it will be able to improve or maintain its profit margins on sales to
OEMs.
16
<PAGE>
INTEGRATION OF ACQUISITIONS
Although the Company has successfully integrated a number of significant
operations in the past and believes that it has developed comprehensive plans
to integrate Eagle-Picher and Goodyear-Jackson, no assurance can be given that
the integration of Eagle-Picher, Goodyear-Jackson or future acquisitions will
be successful or that the anticipated strategic benefits of Eagle-Picher,
Goodyear-Jackson or of future acquisitions will be realized. If the Company is
unable to successfully integrate Eagle-Picher, Goodyear-Jackson or future
acquisitions, the Company's results from operations may be adversely affected.
See "Business--The Eagle-Picher Acquisition" and "--The Goodyear-Jackson
Acquisition."
ENVIRONMENTAL MATTERS
Like similar companies, the Company's operations and properties are subject
to extensive federal, state, local and foreign regulation under environmental
laws and regulations concerning, among other things, emissions into the air,
discharges into the water, the remediation of contaminated soil and
groundwater, and the generation, handling, storage, transportation, treatment
and disposal of waste and other materials (collectively, "Environmental
Laws"). Violations of these Environmental Laws can result in civil or criminal
penalties being levied against the Company or in a cease and desist order
against the operations that are not in compliance. Inherent in manufacturing
operations and property use or ownership is the risk of environmental
liabilities as a result of both current and past operations, which liabilities
cannot be predicted with certainty. The Company has incurred and will continue
to incur costs, on an ongoing basis, associated with compliance and liability
under Environmental Laws in its business. In 1994, the Company determined that
certain of its facilities evidenced soil and groundwater contamination in
excess of applicable state cleanup levels. It also determined that the
facilities acquired from Rockwell had certain contamination and non-compliance
issues. The Company is indemnified by Rockwell for certain pre-existing
environmental exposures associated with the former Rockwell plants, subject to
a maximum aggregate contribution by the Company of $0.6 million and to the
survival period of Rockwell's environmental representations and warranties,
which expire July 2004. In 1996, the Company consummated the GenCorp
Acquisition. The Company did not assume any liabilities arising from pre-
existing violations of Environmental Laws, pre-existing contamination at
GenCorp RPD facilities or off-site disposal of waste materials. The Company is
indemnified for such non-assumed liabilities (the "GenCorp Indemnity"). As
part of the GenCorp Acquisition, the Company determined that certain former
GenCorp RPD facilities were not in complete compliance with Environmental
Laws. The Company has subsequently brought the facilities into substantial
compliance.
In connection with the Eagle-Picher Acquisition, the Company has determined
that certain Eagle-Picher facilities are not in complete compliance with
Environmental Laws, face potential exposure for past off-site disposal of
waste materials and contain hazardous materials in soil, sediments and
groundwater in excess of applicable regulatory standards. Under the terms of
the Eagle-Picher Acquisition, Eagle-Picher agreed to remediate all identified
on-site contamination above state industrial standards as presently calculated
or as materially changed prior to 2003. Eagle-Picher also indemnified the
Company for any fines or penalties arising out of certain identified non-
compliance issues. Eagle-Picher also agreed to indemnify the Company for
unidentified on-site contamination for a period of four years. The total
maximum exposure to Eagle-Picher for such remediation of unidentified
contamination, unidentified pre-existing non-compliance issues and additional
remediation necessary due to a change in clean-up standards is $3.25 million.
Based upon its pre-acquisition due diligence, the Company does not expect any
such liabilities to exceed this $3.25 million limit. In addition, the Company
is indemnified by Eagle-Picher for any off-site disposal liabilities arising
under Environmental Laws.
In connection with the Goodyear-Jackson Acquisition, the Company has
determined that the Jackson facility may not be in complete compliance with
Environmental Laws, may face potential exposure for past off-site disposal of
waste materials and may contain hazardous materials in soil and groundwater in
excess of applicable regulatory standards. Under the terms of the Goodyear-
Jackson Acquisition, Goodyear agreed to indemnify the Company for all costs
associated with pre-existing non-compliance issues. In addition, subject to a
maximum
17
<PAGE>
payment of $1.0 million, Goodyear agreed to reimburse the Company for further
investigation and necessary repairs of the causes or sources of the
contamination. After completion of the foregoing investigation and repairs,
Goodyear agreed to remediate all identified on-site contamination at the
facility and to make reasonable efforts to obtain a covenant not to sue under
applicable state law. With respect to any unidentified environmental costs,
including unidentified on-site contamination or unidentified pre-existing non-
compliance with Environmental Laws, Goodyear agreed to indemnify the Company
for a period of three years following the closing, with the Company agreeing
to bear the first $0.25 million of such unidentified environmental costs and
to share in some portion of the costs thereafter. Goodyear's maximum exposure
for any unidentified environmental costs is limited to $2.5 million.
A number of the Company's facilities are likely to be required to comply
with Titles III and V of the Clean Air Act ("CAA"). The cost of such
compliance could be material. Title III of the CAA includes provisions
requiring the implementation of Maximum Achievable Control Technology (MACT)
to reduce emissions of certain hazardous air pollutants, including styrene, at
certain manufacturing facilities emitting designated quantities of such
pollutants. Air pollution controls to address styrene emissions could cost
approximately $1.0 million per facility and, if MACT is ultimately required in
connection with both the manufacture and use of this compound, may be required
at three to five of the Company's facilities.
Based upon the Company's experience to date, as well as the existence of
certain remediation and indemnification agreements obtained in connection with
those acquisitions described above, the Company believes that the future cost
of compliance with existing Environmental Laws and liability for identified
environmental claims will not have a material adverse effect on the Company's
business, results of operations or financial position. However, future events,
such as new information, more vigorous enforcement policies of regulatory
agencies, stricter or different interpretations of existing Environmental
Laws, changes in existing Environmental Laws or their interpretation, or the
failure of indemnitors to fulfill their contractual obligations, may give rise
to additional costs or claims that could have a material adverse effect on the
Company's business, results of operations or financial condition. See
"Business--Environmental Matters."
PURCHASE OF THE NOTES UPON CHANGE OF CONTROL
Upon a Change of Control, the Company is required to offer to purchase all
outstanding Notes at 101% of the principal amount thereof plus accrued
interest to the date of purchase. The source of funds for any such purchase
will be the Company's available cash or cash generated from operating or other
sources, including borrowing, sales of assets, sales of equity or funds
provided by a new controlling person. A Change of Control will likely trigger
an event of default under the Credit Agreement which will permit the lenders
thereto to accelerate the debt under the Credit Agreement. However, there can
be no assurance that sufficient funds will be available at the time of any
Change of Control to make any required repurchases of Notes tendered, or that,
if applicable, restrictions in the Credit Agreement will allow the Company to
make such required repurchases. See "Description of Notes--Change of Control."
FRAUDULENT CONVEYANCE CONSIDERATIONS
The incurrence by the Company and the Guarantors of the indebtedness
evidenced by the Notes and the Guarantees is subject to review under relevant
U.S. federal and state fraudulent conveyance statutes ("Fraudulent Conveyance
Statutes") in a bankruptcy case or a lawsuit by or on behalf of creditors of
the Company or the Guarantors. Under these statutes, a court could subordinate
all or part of such indebtedness to presently existing and future indebtedness
of the Company or the Guarantors, as the case may be, avoid the issuance of
such indebtedness and direct the repayment of any amounts paid thereunder to
the Company's or the Guarantors', as the case may be, creditors or take other
action detrimental to the holders of such indebtedness, if at the time the
Notes were issued and the proceeds applied: (i) the Company or the Guarantors
incurred such indebtedness or the Company applied the proceeds with the intent
of hindering, delaying or defrauding creditors; or (ii) the Company or the
Guarantors received less than a reasonably equivalent value or fair
consideration for incurring
18
<PAGE>
such indebtedness and, after so applying the proceeds, the Company or the
Guarantors (a) was insolvent or rendered insolvent by reason of such
transactions, (b) was engaged in a business or transaction for which the
assets remaining with the Company or the Guarantors constituted unreasonably
small capital or (c) intended to incur, or believed that it would incur, debts
beyond its ability to pay as they matured (as the foregoing terms are defined
in or interpreted under Fraudulent Conveyance Statutes).
The holders of the Notes will have the benefit of the Guarantees. However,
the Guarantees will be limited to the maximum amount the Guarantors are
permitted to guarantee under applicable law. As a result, the Guarantors'
liability under their Guarantees could be reduced to zero, depending upon the
amount of other obligations of the Guarantors. Notwithstanding such provision,
such Guarantees may be subject to review by a court under relevant fraudulent
conveyance statutes and, if a court makes certain findings, it could take
certain actions detrimental to the holders of the Notes. The Guarantees may
also be released under certain circumstances. See "Description of Notes--
Guarantees."
Based upon the financial and other information currently available to it,
each of the Company and the Guarantors believes that the indebtedness and
obligations evidenced by the Notes and the Guarantees will be incurred and the
proceeds of the Notes will be used for proper purposes and in good faith. Each
of the Company and the Guarantors believes that at the time of, and after
giving effect to, the incurrence of the indebtedness and obligations evidenced
by the Notes and the Guarantees, the Company will be solvent and will have
sufficient capital to carry on the business and that it will pay its debts as
they mature. No assurance can be given, however, that a court would concur
with such beliefs and positions.
In the event the Guarantee of a Guarantor is voided as a fraudulent
conveyance, holders of the Notes would effectively be subordinated to all
indebtedness and other liabilities and commitments of such Guarantor.
The measure of insolvency for these purposes will vary depending upon the
law of the jurisdiction being applied. Generally, a company will be considered
insolvent for these purposes if the company is unable to pay its debts as they
become due in the usual course of its business or the sum of the company's
debts is greater than all of the company's property at a fair valuation or if
the present fair salable value of the company's assets is less than the amount
that will be required to pay its probable liability on its existing debts as
they become absolute and mature.
In rendering their opinions with respect to the validity of the Old Notes
and the Guarantees, counsel for the Company and the Guarantors and counsel for
the Initial Purchaser did not express any opinion as to the applicability of
federal or state statutes relating to fraudulent conveyances and obligations.
ABSENCE OF PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF THE NOTES
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange
Offer, there has not been any public market for the Old Notes. The Old Notes
have not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
New Notes by holders who are entitled to participate in this Exchange Offer.
The holders of Old Notes (other than any such holder that is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act) who are
not eligible to participate in the Exchange Offer are entitled to certain
registration rights, and the Company is required to file a Shelf Registration
Statement with respect to such Old Notes. The New Notes will constitute a new
issue of securities with no established trading market. The Company does not
intend to list the New Notes on any national securities exchange or seek the
admission thereof to trading in the National Association of Securities Dealers
Automated Quotation System. The Initial Purchaser has advised the Company that
it currently intends to make a market in the New Notes, but it is not
obligated to do so and may discontinue such market making at any time. In
addition, such market making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the Exchange
Offer and the pendency of the Shelf Registration Statement. Accordingly, no
assurance can be given that an active public or other market will develop for
the New Notes or as to the liquidity of the trading
19
<PAGE>
market for the New Notes. If a trading market does not develop or is not
maintained, holders of the New Notes may experience difficulty in reselling
the New Notes or may be unable to sell them at all. If a market for the New
Notes develops, any such market may be discontinued at any time.
If a public trading market develops for the New Notes, future trading prices
of such securities will depend on many factors including, among other things,
prevailing interest rates, the Company's results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the New Notes may trade at a discount from their principal amount.
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the New Notes in exchange for the Old Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Company of such
Old Notes, a properly completed and duly executed Letter of Transmittal or
Agent's Message and all other required documents. Therefore, holders of the
Old Notes desiring to tender such Old Notes in exchange for New Notes should
allow sufficient time to ensure timely delivery. The Company is under no duty
to give notification of defects or irregularities with respect to the tenders
of Old Notes for exchange. Old Notes that are not tendered or are tendered but
not accepted will, following the consummation of the Exchange Offer, continue
to be subject to the existing restrictions upon transfer thereof, and, upon
consummation of the Exchange Offer, certain registration rights under the
Registration Rights Agreement will terminate. In addition, any holder of Old
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes may be deemed to have received restricted
securities, and if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a Prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." To the extent
that Old Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Notes could be adversely
affected. See "The Exchange Offer."
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements, including,
without limitation, statements concerning the Company's operations, economic
performance and financial condition, including in particular statements
relating to the Company's business and growth strategy. The words "believe,"
"expect," "anticipate" and other similar expressions generally identify
forward-looking statements. Holders are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of their dates. These
forward-looking statements are based largely on the Company's current
expectations and are subject to a number of risks and uncertainties,
including, without limitation, those identified under "Risk Factors" and
elsewhere in this Prospectus and other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and Exchange
Commission. Actual results could differ materially from these forward-looking
statements. In addition, important factors to consider in evaluating such
forward-looking statements include changes in external market factors, changes
in the Company's business or growth strategy or an inability to execute its
strategy due to changes in its industry or the economy generally, the
emergence of new or growing competitors and various other competitive factors.
In light of these risks and uncertainties, there can be no assurance that the
matters referred to in the forward-looking statements contained in this
Prospectus will in fact occur.
20
<PAGE>
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the New Notes offered hereby.
In consideration for issuing the New Notes contemplated in this Prospectus,
the Company will receive Old Notes in like principal amount, the form and
terms of which are the same as the form and terms of the New Notes (which
replace the Old Notes), except as described herein.
The gross proceeds of $100.0 million from the Initial Offering, together
with borrowings under the Credit Agreement, were used to consummate the Eagle-
Picher Acquisition and the Goodyear-Jackson Acquisition, to repay existing
indebtedness and to pay related fees and expenses.
The following table illustrates the sources and uses of funds from the
Initial Offering and the Credit Agreement.
<TABLE>
<CAPTION>
AMOUNTS
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
SOURCES OF FUNDS
Credit Agreement(1)................................... $205.1
Initial Offering...................................... 100.0
------
Total Sources of Funds.............................. $305.1
======
USES OF FUNDS
Purchase price of Eagle-Picher Acquisition............ $ 32.2
Purchase price of Goodyear-Jackson Acquisition........ 37.6
Repay debt under Previous Credit Agreement(2)......... 189.4
Repurchase Holdings' Senior Subordinated Notes(3)..... 14.9
Repurchase Holdings' Junior Subordinated Notes(4)..... 5.1
Repurchase Existing Senior Subordinated Notes(5)...... 11.9
Fees and expenses(6).................................. 14.0
------
Total Uses of Funds................................. $305.1
======
</TABLE>
- - --------
(1) The Credit Agreement consists of $205.0 million in aggregate principal
amount of term loans and a $75.0 million revolving credit facility, of
which $0.1 million was drawn upon consummation of the Initial Offering,
the Eagle-Picher Acquisition and the Goodyear-Jackson Acquisition. See
"Description of Credit Agreement."
(2) The amount shown for repayment was the Company's balance of debt
outstanding under a credit agreement among the Company, as borrower,
Holdings, as guarantor, and Bankers Trust Company, as agent, as amended
and restated as of March 1, 1996 (the "Previous Credit Agreement"), at
July 10, 1997, the closing date under the Credit Agreement. Of the total
repayment of approximately $189.4 million, (i) approximately $50.2 million
accrued interest at 8.00%; (ii) approximately $45.8 million accrued
interest at 8.50%; (iii) approximately $51.5 million accrued interest at
9.00%; (iv) approximately $22.9 million accrued interest at 9.25%; and (v)
approximately $19.0 million accrued interest at approximately 9.5% under a
variable rate revolving credit agreement.
(3) Holdings' 8% Notes due 2006 ("Holdings' Senior Subordinated Notes") issued
in the aggregate principal amount of $13.75 million to GenCorp Inc. in
connection with the GenCorp Acquisition, plus $1.1 million in accrued,
unpaid interest for the year ended March 1, 1997, which was capitalized
into the amended and restated Holdings' Senior Subordinated Notes on June
27, 1997. The Holdings' Senior Subordinated Notes bear interest at 8% and
mature on March 1, 2006.
(4) Holdings' 12% Junior Subordinated Notes due 2005 ("Holdings' Junior
Subordinated Notes") issued in the aggregate principal amount of $5.1
million to the Bain MezFunds (as defined) in connection with the GenCorp
Acquisition. Such amounts include an original issue discount of $0.2
million.
(5) The Company's 12% Senior Subordinated Notes due 2005 ("Existing Senior
Subordinated Notes") issued in the aggregate principal amount of $11.9
million to the Bain MezFunds in connection with the 1995 Transaction. Such
amounts include original issue discount of $0.1 million.
(6) Includes discounts to the Initial Purchaser, bank fees, financial advisory
fees and legal, accounting and other costs payable or reimbursable by the
Company in connection with the Initial Offering and related transactions.
21
<PAGE>
CAPITALIZATION
The following table sets forth the historical capitalization of the Company
at June 30, 1997 and as adjusted to give effect to the Initial Offering and
borrowings under the Credit Agreement and application of the proceeds thereof
as if such transactions had occurred on that date. This table should be read
in conjunction with the Selected Historical and Unaudited Pro Forma Financial
Data and the Financial Statements included elsewhere in this Prospectus. The
Exchange Offer has no effect on the Company's "As Adjusted" Capitalization at
June 30, 1997.
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED
---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long term debt (including current portion):
Previous Credit Agreement(1)........................ $ 189,422 --
Credit Agreement(1)................................. -- $ 205,095
Initial Offering.................................... -- 100,000
Holdings' Senior Subordinated Notes................. 14,850 --
Existing Senior Subordinated Notes.................. 11,800 --
Holdings' Junior Subordinated Notes................. 4,886 --
---------- -----------
Total long-term debt.............................. 220,958 305,095
---------- -----------
Total stockholder's deficit(2).................... (60,604) (70,370)
---------- -----------
Total capitalization.............................. $ 160,354 $ 234,725
========== ===========
</TABLE>
- - --------
(1) Excludes letters of credit in the aggregate face amount of $4.4 million.
(2) "As Adjusted" amounts reflect the write-off of existing financing costs,
remaining original issue discount and expense on early extinguishment of
debt, net of tax.
22
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data (the "Unaudited Pro Forma
Financial Data") as of June 30, 1997, for the six months ended June 30, 1997
and for the year ended December 31, 1996 have been derived by the application
of pro forma adjustments to the financial statements of the Company included
elsewhere in this Prospectus. The pro forma results of operations data for the
year ended December 31, 1996 give effect to: (i) the GenCorp Acquisition; (ii)
the APX Acquisition; (iii) the Eagle-Picher Acquisition; (iv) the Goodyear-
Jackson Acquisition; and (v) the completion of the Initial Offering and the
Credit Agreement and application of the proceeds therefrom, as if each had
occurred on January 1, 1996. The pro forma consolidated statement of
operations data for the six months ended June 30, 1997, give effect to (ii),
(iii), (iv) and (v) as if each had occurred on January 1, 1996. The related
pro forma balance sheet data give effect to (iii), (iv) and (v) as if each had
occurred on June 30, 1997. The adjustments are described in the accompanying
notes. The Exchange Offer has no effect on the Unaudited Pro Forma Financial
Data. The Unaudited Pro Forma Financial Data do not purport to represent what
the Company's results of operations actually would have been if those
transactions had been consummated on the date or for the periods indicated, or
what such results will be for any future date or for any future period. The
Unaudited Pro Forma Financial Data should be read in conjunction with
"Selected Historical Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements
included elsewhere in this Prospectus.
23
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET--PRO FORMA BASIS
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
ADJUSTMENT ADJUSTMENTS
---------- ------------------------
INITIAL
OFFERING EAGLE- GOODYEAR-
AND CREDIT PICHER JACKSON
CAMBRIDGE AGREEMENT SUBTOTAL ACQUISITION ACQUISITION PRO FORMA
--------- ---------- -------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.................. $ 7,255 $ (20)(1) $ 7,235 $ 7,235
Receivables........... 47,282 47,282 $ 9,027(2) $ 75(3) 56,384
Inventories........... 20,200 20,200 4,328(2) 2,326(3) 26,854
Reimbursable tooling
costs................ 23,820 23,820 110(2) 8,487(3) 32,417
Income tax
refundable........... 3,270 3,270 3,270
Deferred income taxes
and other............ 3,596 3,596 4,155(2) 2,577(3) 10,328
-------- ------- -------- ------- ------- --------
Total current assets.... 105,423 (20) 105,403 17,620 13,465 136,488
Property, Plant and
Equipment, Net......... 131,509 131,509 31,406(2) 34,156(3) 197,071
Other assets............ 18,467 (435)(4) 18,032 1,865(2) 3,823(3) 23,720
-------- ------- -------- ------- ------- --------
Total assets............ $255,399 $ (455) $254,944 $50,891 $51,444 $357,279
======== ======= ======== ======= ======= ========
LIABILITIES AND
STOCKHOLDER'S EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Current portion of
long-term debt....... $ 11,196 $(7,521)(5) $ 3,675 $ 3,675
Accounts payable...... 48,141 48,141 $ 2,460(2) $ 2,753(3) 53,354
Accrued liabilities... 19,903 (5,031)(6) 14,872 5,456(2) 3,841(3) 24,169
-------- ------- -------- ------- ------- --------
Total current
liabilities............ 79,240 (12,552) 66,688 7,916 6,594 81,198
NONCURRENT LIABILITIES:
Long-term debt........ 209,762 21,863 (5) 231,625 32,220(5) 37,575(5) 301,420
Workers'
compensation......... 968 968 968
Postretirement health
care benefits........ 16,360 16,360 4,715(3) 21,075
Accrued commitments
under acquired
contracts............ 6,600(2) 6,600
Deferred income
taxes................ 9,673 9,673 4,155(2) 2,560(3) 16,388
-------- ------- -------- ------- ------- --------
Total liabilities....... 316,003 9,311 325,314 50,891 51,444 427,649
STOCKHOLDER'S EQUITY
(DEFICIT):
Common stock..........
Paid-in capital....... 17,539 17,539 17,539
Unrealized foreign
currency
translation.......... (85) (85) (85)
Accumulated deficit... (78,058) (9,766)(6) (87,824) (87,824)
-------- ------- -------- ------- ------- --------
Total stockholder's
deficit................ (60,604) (9,766) (70,370) (70,370)
-------- ------- -------- ------- ------- --------
Total liabilities and
stockholder's equity
(deficit).............. $255,399 $ (455) $254,944 $50,891 $51,444 $357,279
======== ======= ======== ======= ======= ========
</TABLE>
See Notes to Unaudited Pro Forma Balance Sheet.
24
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) Pro forma adjustments to cash assuming consummation of the Initial
Offering and Credit Agreement at June 30, 1997.
<TABLE>
<S> <C>
Sources of Funds:
Initial Offering.............................................. $ 100,000
Borrowings under the Credit Agreement......................... 135,300
---------
Total sources............................................... 235,300
---------
Uses of Funds:
Repayment of Previous Credit Agreement........................ (189,422)
Repayment of Existing Senior Subordinated Notes and Holdings'
Junior Subordinated Notes.................................... (17,000)
Repayment of Holdings' Senior Subordinated Notes ............. (14,850)
Fees and expenses............................................. (14,048)
---------
Total uses.................................................. (235,320)
---------
Net change in cash balance.................................... $ (20)
=========
</TABLE>
(2) Reflects management's preliminary allocation of purchase price for the
Eagle-Picher Acquisition in accordance with the purchase method of
accounting, as follows:
<TABLE>
<S> <C>
Purchase price:
Purchase price consideration.................................... $32,220
Estimated fees and expenses..................................... 416
-------
Total......................................................... $32,636
=======
Allocated as follows:
Historical book value of Eagle-Picher net assets acquired....... $28,492
Estimated increase in property, plant and equipment to fair
value.......................................................... 14,534
Estimated transaction-related liabilities, including severance.. (3,790)
Estimated commitments under acquired contracts.................. (6,600)
-------
Total......................................................... $32,636
=======
</TABLE>
Transaction-related liabilities accrued in the allocation of the purchase
price include an accrual for severance costs related to duplicative sales
forces and administrative personnel of $1,242.
The above purchase price allocation represents management's preliminary
allocation and may change after management completes its final analysis.
(3) Reflects management's preliminary allocation of purchase price for the
Goodyear-Jackson Acquisition in accordance with the purchase method of
accounting, as follows:
<TABLE>
<S> <C>
Purchase price:
Purchase price consideration...................................... $37,575
Estimated fees and expenses....................................... 750
-------
Total........................................................... $38,325
=======
</TABLE>
25
<PAGE>
<TABLE>
<S> <C>
Allocated as follows:
Historical book value of Goodyear-Jackson net assets acquired... $31,880
Estimated fair value adjustment to property, plant and equipment
............................................................... 7,567
Estimated fair value of favorable lease agreement............... 3,823
Liabilities assumed for certain postretirement healthcare
benefits and other employee benefits........................... (4,945)
-------
$38,325
=======
</TABLE>
The above purchase price allocation represents management's preliminary
allocation and may change after management completes its final analysis.
(4) Pro forma adjustments to other assets.
<TABLE>
<S> <C>
Financing transaction fees........................................ $ 12,212
Write-off of existing financing costs............................. (12,647)
--------
Net adjustment................................................ $ (435)
========
</TABLE>
(5) Pro forma adjustments to long-term debt.
<TABLE>
<S> <C>
The Initial Offering and Credit Agreement:
Initial Offering and borrowings under the Credit Agreement....... $ 235,300
Amounts repaid related to Previous Credit Agreement, Holdings'
Senior Subordinated Notes (excluding accrued interest), Existing
Senior Subordinated Notes and Holdings' Junior Subordinated
Notes, net of discount.......................................... (220,958)
---------
Total increase................................................... 14,342
Decrease in current portion...................................... 7,521
---------
Increase in long-term debt....................................... $ 21,863
=========
Eagle-Picher Acquisition:
Borrowings under the Credit Agreement.......................... $ 32,220
=========
Goodyear-Jackson Acquisition:
Borrowings under the Credit Agreement.......................... $ 37,575
=========
</TABLE>
(6) Pro forma adjustment to accumulated deficit to record the write-off of
existing financing costs, remaining original issue discount, and expense
on the early extinguishment of debt, net of tax, with a corresponding pro
forma adjustment to accrued liabilities to record the tax effect of the
preceding items:
<TABLE>
<CAPTION>
AFTER-
PRE-TAX TAX
AMOUNT TAX EFFECT AMOUNT
------- ---------- ------
<S> <C> <C> <C>
Write-off of existing financing costs............ $12,647 $(4,300) $8,347
Expense on early extinguishment, including
original issue discount of approximately $300... 2,150 (731) 1,419
------- ------- ------
$14,797 $(5,031) $9,766
======= ======= ======
</TABLE>
26
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS--PRO FORMA BASIS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ADJUSTMENTS ADJUSTMENTS
-------------------------------- --------------------------
INITIAL EAGLE- GOODYEAR-
COMPLETED OFFERING AND PICHER JACKSON PRO
CAMBRIDGE ACQUISITIONS CREDIT AGREEMENT SUBTOTAL ACQUISITION ACQUISITION FORMA
--------- ------------ ---------------- -------- ----------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales................... $346,026 $14,671 (1) $376,440 $79,363 (2) $53,899(3) $509,702
15,743 (4)
Cost of sales........... 294,742 9,624 (1) 320,653 75,789 (2) 46,560(3) 443,002
16,287 (4)
-------- ------- ----- -------- ------- ------- --------
Gross profit............ 51,284 4,503 55,787 3,574 7,339 66,700
Selling, general and
administrative 469 (1)
expenses............... 26,240 1,503 (4) 28,212 1,075 (2) 1,579(3) 30,866
-------- ------- ----- -------- ------- ------- --------
Income from operations.. 25,044 2,531 27,575 2,499 5,760 35,834
Other expense (income):
Interest expense...... 23,190 663 (5) $(381)(6) 23,685 2,819 (7) 3,287(9) 29,791
213 (8)
Other, net............ 180 (91)(4) 89 (13)(2) 0 76
-------- ------- ----- -------- ------- ------- --------
Income (loss) before
income tax............. 1,674 1,746 381 3,801 (307) 2,473 5,967
Income tax expense
(benefit).............. 565 646 (10) 141 (10) 1,352 (114)(10) 989(10) 2,227
-------- ------- ----- -------- ------- ------- --------
Net income (loss)....... $ 1,109 $ 1,100 $ 240 $ 2,449 $ (193) $ 1,484 $ 3,740
======== ======= ===== ======== ======= ======= ========
Other Data:
Ratio of earnings to
fixed charges (11)..... 1.07 1.20
</TABLE>
See Notes to Unaudited Pro Forma Statements of Operations.
27
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS--PRO FORMA BASIS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
ADJUSTMENT
----------------
COMPLETED ADJUSTMENTS
ACQUISITION, --------------------------
INITIAL OFFERING EAGLE- GOODYEAR-
AND CREDIT PICHER JACKSON
CAMBRIDGE AGREEMENT SUBTOTAL ACQUISITION ACQUISITION PRO FORMA
--------- ---------------- -------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Sales................... $186,631 $556 (1) $187,187 $33,008 (2) $33,269(3) $253,464
Cost of sales........... 159,626 396 (1) 160,022 31,877 (2) 28,221(3) 220,120
-------- ---- -------- ------- ------- --------
Gross profit............ 27,005 160 27,165 1,131 5,048 33,344
Selling, general and
administrative
expenses............... 12,793 1 (1) 12,794 209 (2) 735(3) 13,738
-------- ---- -------- ------- ------- --------
Income from operations.. 14,212 159 14,371 922 4,313 19,606
Other expense (income):
Interest expense...... 11,781 18 (8) 11,843 1,410 (7) 1,643(9) 14,896
44 (6)
Other, net............ (24) (24) (24)
-------- ---- -------- ------- ------- --------
Income before income
tax.................... 2,455 97 2,552 (488) 2,670 4,734
Income tax expense
(benefit).............. 920 36 (10) 956 (180)(10) 1,068(10) 1,844
-------- ---- -------- ------- ------- --------
Net income (loss)....... $ 1,535 $ 61 $ 1,596 $ (308) $ 1,602 $ 2,890
======== ==== ======== ======= ======= ========
Other Data:
Ratio of earnings to
fixed charges(11)...... 1.21 1.32
</TABLE>
See Notes to Unaudited Pro Forma Statements of Operations.
28
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(1) Pro forma adjustments to reflect the operations of APX for the year ended
December 31, 1996 and for the six months ended June 30, 1997. APX results
after January 31, 1997 are included in the Company's historical results.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
------------------------------
SELLING,
COST OF GENERAL AND
SALES SALES ADMINISTRATIVE
------- ------- --------------
<S> <C> <C> <C>
Historical.................................... $10,948 $9,624 $469
Effect of pricing agreement................... 3,723
------- ------ ----
Total adjustment.............................. $14,671 $9,624 $469
======= ====== ====
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997
------------------------------
SELLING,
COST OF GENERAL AND
SALES SALES ADMINISTRATIVE
------- ------- --------------
<S> <C> <C> <C>
Historical.................................... $ 114 $ 396 $ 1
Effect of pricing agreement................... 442
------- ------ ----
Total adjustment.............................. $ 556 $ 396 $ 1
======= ====== ====
</TABLE>
A pricing agreement was entered into immediately prior to, and as a
condition of, the Company's acquisition of APX. The agreement provides for
volume-based pricing adjustments for certain major products of APX.
(2) Pro forma adjustments to reflect the operations of Eagle-Picher for the
year ended December 31, 1996 and for the six months ended June 30, 1997:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------------- -----------------------
SELLING, SELLING,
COST OF GENERAL AND COST OF GENERAL AND
SALES ADMINISTRATIVE SALES ADMINISTRATIVE
------- -------------- ------- --------------
<S> <C> <C> <C> <C>
Historical expense......... $76,533 $ 4,554 $33,984 $ 1,976
Increased depreciation due
to excess of fair value of
assets over historical
cost...................... 1,972 104 986 52
Elimination of defined
benefit pension plans..... (516) (258)
Staff reductions in
recognition of duplication
of sales forces and
administrative
personnel(*).............. (2,333) (1,167)
Elimination of loss related
to commitments under
acquired contracts
(related commitments are
accrued on the pro forma
balance sheet)............ (2,200) (2,835)
Elimination of corporate
allocations, net of $400
and $200 of incremental
expenses, respectively.... (1,250) (652)
------- ------- ------- -------
$75,789 $ 1,075 $31,877 $ 209
======= ======= ======= =======
Historical sales........... $79,363 $33,008
======= =======
Historical other (income),
net....................... $ (13)
=======
</TABLE>
--------
* Sales force reductions principally represent duplicative automotive sales
personnel. Management expects to service Eagle-Picher automotive
customers through the Company's existing sales force and does not
anticipate any reduction in sales volumes or revenues as a result of
staff reductions. Related severance costs are accrued on the pro forma
balance sheet.
29
<PAGE>
(3) Pro forma adjustments to reflect the operations of Goodyear-Jackson for
the year ended December 31, 1996 and the six months ended June 30, 1997:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
-------------------------- --------------------------
SELLING, SELLING,
GENERAL GENERAL
COST OF AND COST OF AND
SALES ADMINISTRATIVE(*) SALES ADMINISTRATIVE(*)
------- ----------------- ------- -----------------
<S> <C> <C> <C> <C>
Historical expense...... $46,864 $ 2,835 $28,373 $1,468
Increased depreciation
due to excess of fair
value of assets over
historical cost........ 1,617 809
Reduced pension and
other postretirement
benefit expense related
to retired employees
(obligations retained
by seller)............. (1,921) (961)
Elimination of corporate
allocations, net of
$254 and $128 of
incremental expenses,
respectively........... (1,256) (733)
------- ------- ------- ------
$46,560 $ 1,579 $28,221 $ 735
======= ======= ======= ======
Historical sales........ $53,899 $33,269
======= =======
</TABLE>
--------
* Historical expense includes corporate franchise fees allocated to
Goodyear-Jackson of $666 and $292 for the year ended December 31, 1996
and the six months ended June 30, 1997, respectively. The corporate
franchise fee, as well as certain other corporate overhead costs
allocated to Goodyear-Jackson, are eliminated in the pro forma
adjustments above.
(4) Pro forma adjustments to reflect the GenCorp Acquisition for the two
months ended February 29, 1996. After February 29, 1996, results of the
GenCorp Acquisition are included in the Company's historical results.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------------
SELLING,
COST OF GENERAL AND
SALES ADMINISTRATIVE
------- --------------
<S> <C> <C>
Historical expense.................................. $17,361 $1,650
Reduced pension and other postretirement benefit
expense and other restructuring of employee
benefits........................................... (1,074) (57)
Elimination of corporate allocations, net of
incremental expenses............................... (90)
------- ------
$16,287 $1,503
======= ======
Adjustment to sales................................. $15,743
=======
Adjustment to other (income), net................... $ (91)
=======
</TABLE>
(5) Pro forma adjustments to interest expense for the year ended December 31,
1996 to reflect debt incurred in connection with the GenCorp Acquisition.
Interest expense related to debt incurred in connection with the GenCorp
Acquisition is included in the Company's historical results after February
29, 1996.
<TABLE>
<S> <C>
Interest expense on Previous Credit Agreement at an average rate of
9%.................................................................. $378
Interest expense on Holdings' Junior Subordinated Notes at 12%....... 102
Interest expense on Holdings' Senior Subordinated Notes at 8%........ 183
----
Total adjustment..................................................... $663
====
</TABLE>
30
<PAGE>
(6) Pro forma adjustments to interest expense to reflect the Initial Offering
and Credit Agreement for the year ended December 31, 1996 and for the six
months ended June 30, 1997, respectively.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Interest expense on the Initial Offering at
10.25%...................................... $10,250 $ 5,125
Interest expense under the Credit Agreement
at 8.75%.................................... 11,839 5,919
Amortization of deferred financing costs..... 1,221 611
Commitment fees of 1/2% on unused revolving
line of credit.............................. 375 188
Amortization of financing costs written off.. (2,181) (1,134)
Interest on refinanced debt.................. (21,885) (10,665)
------- -------
Total adjustment............................. $ (381) $ 44
======= =======
</TABLE>
The interest on refinanced debt includes the Company's historical interest
expense, excluding amortization of deferred financing costs, as well as the
incremental interest expense incurred in connection with the GenCorp
Acquisition and APX Acquisition, calculated on a pro forma basis as
described in Notes 5 and 8.
A 1/8% increase in the interest rate under the Credit Agreement would
increase interest expense and reduce pre-tax income by $256 for the year
ended December 31, 1996 and by $128 for the six months ended
June 30, 1997.
(7) Pro forma adjustment to interest expense to reflect debt incurred in
connection with the Eagle-Picher Acquisition for the year ended December
31, 1996 and the six months ended June 30, 1997.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Interest expense under the Credit Agreement
at an average rate of 8.75%................. $ 2,819 $ 1,410
</TABLE>
(8) Pro forma adjustment to interest expense to reflect debt incurred in
connection with the APX Acquisition for the year ended December 31, 1996,
and the month ended January 31, 1997. Interest expense related to debt
incurred in connection with the APX Acquisition is included in the
Company's historical results after January 31, 1997.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Interest expense under the Previous Credit
Agreement at an average rate of 9%.......... $ 213 $ 18
</TABLE>
(9) Pro forma adjustment to interest expense to reflect debt incurred in
connection with Goodyear-Jackson Acquisition for the year ended December
31, 1996 and the six months ended June 30, 1997.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Interest expense under Credit Agreement at an
average rate of 8.75%....................... $ 3,287 $ 1,643
</TABLE>
(10) These adjustments record the income tax effect of the pro forma
adjustments, assuming a combined federal and state income tax rate of
37%, applicable to the pro forma pre-tax income or loss. The pro forma
adjustment for the Goodyear-Jackson Acquisition records income tax on pro
forma income before tax at a combined statutory federal and state tax
rate of 40%.
(11) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as income before income taxes, plus fixed charges.
Fixed charges consist of interest expense on all indebtedness (including
amortization of deferred debt issuance costs) and a portion of operating
lease expense that is representative of the interest factor. A pro forma
ratio of earnings to fixed charges to reflect the effect of the Initial
Offering and Credit Agreement is not presented as the effect of such
transactions did not change the historical ratio by ten percent or more.
31
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data should be read in
conjunction with the Financial Statements included elsewhere in this
Prospectus. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The selected consolidated balance sheet and
statement of operations data presented below, as of December 31, 1996 and
1995, and for the years ended December 31, 1996, 1995 and 1994, are derived
from the Company's audited consolidated financial statements included
elsewhere in this Prospectus. The selected balance sheet data and the selected
statement of operations data as of December 31, 1994 and as of and for the
years ended December 31, 1993 and 1992, were derived from audited financial
statements, not presented herein. The selected interim statement of operations
and balance sheet data as of and for the six months ended June 30, 1997 and
1996 are derived from unaudited financial statements that, in the opinion of
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial position and
results of operations for such periods. The results of operations for interim
periods are not necessarily indicative of those to be expected for a full
year.
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------------- ------------------
1992 1993(1) 1994(2) 1995 1996(3) 1996(3) 1997(4)
------- ------- -------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
DATA:
Sales................... $14,438 $74,544 $190,944 $297,746 $346,026 $185,968 $186,631
Cost of sales........... 11,600 62,727 159,455 253,893 294,742 156,638 159,626
------- ------- -------- -------- -------- -------- --------
Gross profit............ 2,838 11,817 31,489 43,853 51,284 29,330 27,005
Selling, general and
administrative
expenses............... 2,153 9,654 15,312 17,678 26,240 10,592 12,793
------- ------- -------- -------- -------- -------- --------
Income from operations.. 685 2,163 16,177 26,175 25,044 18,738 14,212
Interest expense........ 538 1,769 6,161 12,388 23,190 11,053 11,781
Other income (expense).. 17 519 657 746 (180) (135) 24
------- ------- -------- -------- -------- -------- --------
Income before income
taxes.................. 164 913 10,673 14,533 1,674 7,550 2,455
Income tax expense
(benefit)(5)........... -- -- (1,450) 5,410 565 2,561 920
------- ------- -------- -------- -------- -------- --------
Income before
extraordinary item..... 164 913 12,123 9,123 1,109 4,989 1,535
Extraordinary item(6)... -- -- -- 4,426 -- -- --
------- ------- -------- -------- -------- -------- --------
Net income.............. $ 164 $ 913 $ 12,123 $ 4,697 $ 1,109 $ 4,989 $ 1,535
======= ======= ======== ======== ======== ======== ========
OTHER DATA:
Depreciation and
amortization........... $ 260 $ 1,893 $ 8,952 $ 16,715 $ 21,319 $ 10,160 $ 10,956
Capital expenditures.... 46 70 3,972 10,646 9,630 4,213 8,642
Ratio of earnings to
fixed charges(7)....... 1.28 1.50 2.71 2.16 1.07 1.68 1.21
BALANCE SHEET DATA (AT
PERIOD END):
Working capital
(deficit).............. $ 661 $ (269) $ 24,887 $ 25,544 $ 37,529 $ 33,117 $ 26,183
Total assets............ 7,563 40,547 189,317 175,115 262,230 244,694 255,399
Long-term debt, less
current portion........ 3,859 16,254 124,500 177,133 224,112 215,804 209,762
Total stockholders'
equity (deficit)....... 433 1,787 (14,753) (63,839) (62,141) (58,575) (60,604)
</TABLE>
- - --------
(1) Includes results of Voplex from its February 1993 acquisition, which was
accounted for as a purchase.
(2) In August 1994, the Company acquired Rockwell Plastics, and such
transaction was accounted for as a purchase. The operating results of
Rockwell Plastics are included in consolidated operating results from
August 1, 1994. Also, effective August 1, 1994, the stockholders of Wolf
Engineering Company ("Wolf"), Voplex Company ("Voplex") and Voplex of
Canada, Inc. ("Voplex Canada") formed the Company and contributed shares
of such businesses or merged such businesses into the Company. This
transaction constituted a combining of interests under common control and
was accounted for in a manner similar to a pooling of interests and prior
year separate company financial statements were consolidated.
(3) In March 1996, the Company acquired GenCorp RPD for a purchase price of
$32 million. The operating results of GenCorp RPD are included in the
consolidated operating results from March 1, 1996.
(4) In February 1997, the Company acquired APX for a purchase price of $2.4
million. The operating results of APX are included in the consolidating
operating results from February 1, 1997.
32
<PAGE>
(5) In August 1994, the Company changed its tax status from Subchapter S to
Subchapter C; prior to 1994, the Company's earnings were included in the
taxable income of the Company's stockholders. If the Company had operated
as a Subchapter C corporation during each of the periods presented, the
pro forma income tax provision would be approximately $4.1 million, $0.4
million and $0.1 million in 1994, 1993 and 1992, respectively.
(6) As part of the refinancing which occurred in 1995, a prepayment premium of
$3.7 million was incurred, and approximately $3.4 million in deferred
financing costs were charged against operations, net of certain tax
benefits of $2.7 million.
(7) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as income before income taxes, plus fixed charges.
Fixed charges consist of interest expense on all indebtedness (including
amortization of deferred debt issuance costs) and a portion of operating
lease expense that is representative of the interest factor.
33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is a leading designer, developer and manufacturer of plastic
components and systems for a variety of automobile, light truck and heavy
truck OEMs.
The Company has experienced rapid growth since 1990 due to increased plastic
usage by OEMs, five major acquisitions (including the Eagle-Picher Acquisition
and the Goodyear-Jackson Acquisition) and significant new product
introductions. Such acquisitions include: Voplex and Voplex Canada in 1993,
Rockwell Plastics in 1994, GenCorp RPD in 1996 and the anticipated Eagle-
Picher Acquisition and Goodyear-Jackson Acquisition. Following each
acquisition and its successful integration with the Company's existing
operations, the Company's consolidated sales and operating margins have
improved.
The acquisition of Voplex and Voplex Canada increased the Company's overall
molding and painting capabilities and significantly increased its sales
through the entry into the interior plastic trim market. The acquisition of
Rockwell Plastics increased sales to Ford, added Transplants and heavy truck
OEMs as customers, enhanced the Company's functional parts manufacturing
capabilities and added structural and exterior body panel manufacturing
capabilities. The GenCorp Acquisition increased the Company's SMC
capabilities, significantly increased its sales to General Motors and added
Volvo Heavy Truck and Kenworth as heavy truck customers. The Eagle-Picher
Acquisition is expected to add top coat painting capability, expand the
Company's non-automotive markets presence, enhance relationships with
Transplants, add to the Company's compression molding press capacity and
enable the Company to consolidate its manufacturing of SMC. The Goodyear-
Jackson Acquisition is expected to strengthen the Company's position as the
leading SMC supplier to the medium and heavy truck OEMs, enhance relationships
with Ford and Freightliner, expand its product offerings, and expand its SMC
manufacturing, compression molding and injection molding capacity.
Management believes that the Company has significant competitive advantages,
including: (i) Tier 1 status and strong relationships with OEMs, which are
important elements in achieving continued profitable growth; (ii) diversity of
processes and materials which, in contrast to many competitors, allows the
Company to manufacture each part in a cost effective manner, utilizing the
optimal raw material and manufacturing method; (iii) a low cost, high quality
manufacturing position; and (iv) strong design and engineering expertise. See
"Business--Competitive Advantages."
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------- ------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
% OF % OF % OF % OF % OF
SALES SALES SALES SALES SALES
<S> <C> <C> <C> <C> <C>
Sales....................... 100.0% 100.0% 100.0% 100.0% 100.0%
Gross Profit................ 16.5 14.7 14.8 15.8 14.5
Selling, general and admin-
istrative expenses......... 8.0 5.9 7.6 5.7 6.9
Income before extraordinary
item....................... 6.3 3.1 0.3 2.7 0.8
Extraordinary item.......... -- 1.5 -- -- --
Net income.................. 6.3 1.6 0.3 2.7 0.8
</TABLE>
34
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
SALES
The Company's sales increased by $0.6 million, or 0.4% to $186.6 million in
the six month period ended June 30, 1997, compared to $186.0 million in the
six month period ended June 30, 1996. The increase in sales was primarily the
result of the February 1997 acquisition of the Production Molded Composites
Division ("APX") of APX International, which added sales of approximately $7.2
million for the six months ended June 30, 1997. Increases in volume on certain
other programs, such as the Ford PN 96, also contributed to an increase in
sales. These increases were offset by changes in product mix resulting from
the termination and launch of certain significant programs. Program
terminations included General Motors' U-Van (which was terminated earlier than
expected) and C-4 Corvette and Ford's Bronco liftgate and L Series heavy
truck. New program launches during the second half of 1996, including the Jeep
CJ, C-5 Corvette, Volvo 2200, Kenworth T-2000 and GMT 530 truck, partially
offset the program terminations noted above. Additional decreases in sales can
be attributed to lower volumes for the Taurus/Sable Wagon load floor, Honda
Accord sunshades and the Ford Aerostar liftgate.
GROSS PROFIT
Gross profit decreased by $2.3 million, or 7.9%, to $27.0 million for the
1997 Period, compared to $29.3 million for the 1996 Period. The decrease was
attributable to the product mix and volume changes indicated above. In
addition, the gross margin on the new programs launched during the second half
of 1996 were on average lower than the programs that were terminated.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") increased to 6.9% of
sales or $12.8 million in the 1997 Period, compared to 5.7% of sales or $10.6
million in the 1996 Period. The increase in SG&A was the result of
management's decision to invest in administrative infrastructure at corporate
headquarters, which added personnel in the areas of management and information
systems, finance, program management, human resources, sales/marketing,
quality and materials control. Management believes these investments position
the Company for growth without significant incremental increases in SG&A.
NET INCOME
Net Income decreased to $1.5 million in the 1997 Period, compared to $5.0
million for the 1996 Period. This decrease was the result of the items
mentioned above and an increased in interest expense of $0.7 million to $11.8
million for the 1997 Period, compared to $11.1 million for the 1996 Period.
The increase in interest expense for the six months ended June 30, 1997 was
partially attributable to the increase in debt outstanding related to the
acquisition of GenCorp RPD.
1996 COMPARED TO 1995
SALES
The Company's sales increased by $48.3 million, or 16.2%, to $346.0 million
in 1996, compared to $297.7 million in 1995. The increase was primarily the
result of the inclusion of GenCorp RPD operations for ten months following the
GenCorp Acquisition, which added sales of $53.8 million compared to 1995.
Sales at the existing Cambridge operations were $5.6 million lower than in
1995. This decrease resulted primarily from lower production volumes on the
Chrysler Viper due to issues at other suppliers to the Viper and the Ford L&H
series heavy trucks, which were discontinued earlier than expected in favor of
the HN80, the L&H replacement vehicle.
GROSS PROFIT
Gross profit increased by $7.4 million, or 16.9%, to $51.3 million in 1996,
compared to $43.9 million in 1995. Gross margins remained relatively constant
in 1996 at 14.8% of sales compared to 14.7% in 1995. The inclusion of GenCorp
RPD operations for ten months following the GenCorp Acquisition added $1.2
million of gross profit, or 2.2% of GenCorp RPD sales. The GenCorp RPD gross
margin reflects termination of GM's APV vehicle and delays associated with the
launch of the following new programs: the Jeep hard top; the Volvo 2200; the
GMT 530; and the Kenworth T2000. The impact of GenCorp RPD operations on
consolidated gross margin was largely offset by strong gross margins in the
Company's existing operations, reflecting production
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efficiencies for programs including the Cross Car Beam, Honda bumpers and
Freightliner heavy truck programs, which the Company is able to realize as it
gains experience with manufacturing new programs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A increased to 7.6% of sales, or $26.2 million, in 1996, compared to 5.9%
of sales or $17.7 million, in 1995. The increase was due in part to inclusion
of GenCorp RPD operations for ten months following the GenCorp Acquisition
which added $3.4 million in SG&A. An additional increase of $3.1 million is
attributable to the investment in infrastructure at corporate headquarters
(described above), increased sales commissions and increases in professional
fees associated with acquisition activities. Technical services increased $1.1
million in 1996 compared to 1995 as the Company opened its technical center.
NET INCOME
The Company's net income was $1.1 million in 1996, compared to $9.1 million
(before an extraordinary item of $4.4 million) in 1995. This decrease was
primarily the result of the increased SG&A explained above and increased
interest expense, which grew to $23.2 million in 1996, from $12.4 million in
1995, partially offset by the increase in gross profit explained above. The
increase in interest was primarily due to additional indebtedness associated
with the 1995 Transaction and the GenCorp Acquisition. The Company's effective
tax rate in 1996 was 34%, compared to 37% in 1995.
1995 COMPARED TO 1994
SALES
The Company's sales increased by $106.8 million, or 56%, in 1995, compared
to $190.9 million in 1994. The increase was primarily the result of the full
year's effect of the 1994 acquisition of Rockwell Plastics, which added sales
of $118.5 million compared to 1994. Sales also increased due to the success of
the Cross Car Beam project. Offsetting this increase was a decrease in sales
volume resulting from a 2% decrease in North American passenger vehicle
production, to 14.9 million vehicles in 1995, compared to 15.2 million
vehicles in 1994, and the loss of the Chrysler ZJ part program, which had
provided $8.3 million in sales in 1994.
GROSS PROFIT
Gross profit increased by $12.4 million, or 39.3%, to $43.9 million in 1995,
as compared to $31.5 million in 1994. Gross margin decreased in 1995 to 14.7%
of sales compared to 16.5% in 1994. The inclusion of Rockwell Plastics
operations added $26.6 million of gross profit, or 12.7% of Rockwell Plastics
sales. Rockwell Plastics' gross margin reflects the launching of the Cross Car
Beam in 1994 which decreased gross margin percentage by 1.8%.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A declined to 5.9% of sales or $17.7 million in 1995, compared to 8.0% of
sales or $15.3 million in 1994. This decrease as a percentage of sales was
primarily attributable to special management bonuses paid in 1994, whereas no
corresponding bonuses were granted in 1995. Also contributing to the decrease
was the continuing integration of Rockwell Plastics functions as well as other
corporate cost reduction programs. The increase in aggregate SG&A was
attributable to the full year effect of the 1994 acquisition of Rockwell
Plastics, which caused an increase in headcount, payroll and payroll-related
costs and added SG&A of $2.6 million in comparison to 1994.
NET INCOME
The Company's net income was $9.1 million before extraordinary items,
compared to $12.1 million in 1994. This decrease was primarily the result of
increased interest expense which grew to $12.4 million in 1995,
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compared to $6.2 million in 1994, as the result of the acquisition of Rockwell
Plastics. The increase in interest expense was somewhat offset by the
improvement in absolute gross profit. The effective tax rate in 1995 was
37.2%, compared to a tax benefit of $1.5 million in 1994, as the Company
changed its tax status from a Subchapter S, whereby the earnings were included
in the taxable income of the Company's shareholders, to that of a Subchapter C
corporation.
EXTRAORDINARY LOSS
An extraordinary loss of $4.4 million was incurred in 1995, attributable to
the 1995 Transaction whereby a prepayment penalty of $3.7 million was paid and
$3.4 million in financing costs related to the extinguishment of debt were
charged to expense. A tax benefit of $2.7 million was also recognized which
reduced the loss incurred. No similar losses occurred in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash needs historically have been for operating
expenses, working capital and capital expenditures. Acquisitions have been
financed through debt facilities collateralized by the Company's assets and
cash flows. Management expects future cash will be required for additional
acquisitions, capital expenditures and to fund working capital as the Company
continues to expand its operations. Management expects capital expenditures to
be approximately $6.1 million during the remainder of 1997, and approximately
$21.0 million for the Company, Eagle-Picher and Goodyear-Jackson in 1998.
Upon consummation of the Initial Offering, the Previous Credit Agreement was
replaced by the Credit Agreement, pursuant to which the Company may borrow up
to $280.0 million. The Credit Agreement consists of $205.0 million in
aggregate principal amount of term loans and a $75.0 million revolving credit
facility available for working capital and general corporate purposes. The A
Term Loans and B Term Loans of the Credit Agreement will mature on the fifth
and eighth anniversary of the initial borrowing, respectively, and will
require annual principal payments (payable in quarterly installments)
totalling approximately $7.4 million in 1998, $13.9 million in 1999, $16.4
million in 2000, $21.4 million in 2001, $34.0 million in 2002, $35.0 million
in 2003, $40.0 million in 2004 and $37.1 million in 2005. The revolving credit
portion of the Credit Agreement will mature on the fifth anniversary of the
initial borrowing. The interest rate under the Credit Agreement is based on
the Eurodollar rate plus the applicable Eurodollar margin. The Credit
Agreement contains restrictive covenants which, among other things, limit the
incurrence of additional indebtedness, dividends, transactions with
affiliates, asset sales, acquisitions, mergers and consolidations, prepayments
of other indebtedness, liens and encumbrances, capital expenditures and other
matters customarily restricted in such agreements. See "Description of Credit
Agreement."
The Company believes that following the consummation of the Initial
Offering, based on current levels of operations and anticipated growth, its
cash from operations, together with other available sources of liquidity,
including borrowings under the Credit Agreement, will be sufficient over the
next several years to make required payments of principal and interest on its
debt, including payments due on the Notes and remaining obligations under the
Credit Agreement, permit anticipated capital expenditures and fund working
capital requirements.
Net cash flow from operating activities for the six months ended June 30,
1997 was $19.9 million. Net income for the period was $1.5 million with non-
cash adjustments of $15.2 million. The non-cash items consisted of
depreciation and amortization of $11.0 million, a non-cash charge to income
for postretirement benefits of $1.2 million and a deferred income tax
provision of $3.0 million. Changes in working capital components provided $3.2
million, partially the result of improved inventory turns and timing of
collections on trade accounts receivables. This improvement was offset
slightly by an increase in reimbursable tooling as the Company awaits customer
approvals for L-5, Viper, Kenworth and GMX programs.
Net cash flows from operating activities was $3.4 million for the six months
ended June 30, 1996. This surplus was generated primarily by net income of
$5.0 million, non-cash expenses of $10.7 million and a negative change in
working capital of $12.3 million. The negative cash flow from working capital
is the result of timing of collections on customer tooling and other trade
receivables.
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The Company spent approximately $8.6 million and $4.2 million for the six
months ended June 30, 1997 and 1996, respectively, on capital items. Such
capital items in the 1997 Period relate primarily to the Step Assist and L-5
programs. Acquisitions of $2.4 and $18.2 million in the 1997 and 1996 periods
relate to APX and GenCorp RPD, respectively.
In March 1996, the Company purchased certain assets and liabilities of
GenCorp RPD for a purchase price of approximately $32.0 million, comprised of
a cash payment of $18.2 million and debt issued of $13.8 million. The Company
and Holdings retired indebtedness related to the subordinated notes payable
and paid down the debt under the Previous Credit Agreement with the proceeds
from the issuance of the Initial Offering.
Net cash used in operating activities in 1996 was $4.2 million. The net use
of cash is attributable to changes in working capital components of $29.8
million primarily as the result of an increase in accounts receivable and the
timing of payments to tooling vendors in 1996. These uses were partially
offset by net income of $1.1 million and non-cash items of $24.5 million. The
non-cash expenses included depreciation and amortization of $21.3 million and
a non-cash charge to income for other postretirement benefits of $2.2 million.
The decrease in working capital is primarily the result of an increase in
accounts receivable and the timing of payments to tooling vendors in 1996, as
well as the settlement of certain contract obligations assumed in the GenCorp
Acquisition. New product launches in 1996 required substantial funding for
tooling builds in advance of reimbursement from customers.
Net cash flow from operating activities was $33.8 million in 1995. Such
amounts were generated primarily from net income before extraordinary items of
$9.1 million, non-cash expenses of $16.6 million and net positive changes in
working capital components of $8.1 million. The non-cash expenses were
principally comprised of depreciation and amortization of $16.7 million,
postretirement benefit expense, net of cash payments made, of $1.0 million,
offset by an income tax benefit of $1.1 million. The change in working capital
reflects favorable timing of receipts from customers and payments to
suppliers, as well as improved management of tooling and Rockwell receivables.
Net cash flow from operating activities was $9.5 million for the year ended
December 31, 1994. Such amount was generated primarily by net income of $12.1
million and non-cash expenses of $9.6 million, offset by an increase in
working capital of $8.2 million and a deferred income tax benefit of $4.0
million. The non-cash expenses were principally depreciation and amortization
of $8.9 million and a net non-cash charge to income for other postretirement
benefits of $0.7 million. The increase in working capital reflects year end
timing of receipts from customers and payments to suppliers.
The Company spent approximately $9.6 million, $10.6 million and $4.0 million
for the years ended December 31, 1996, 1995 and 1994, respectively, on capital
improvements. The expenditures in 1996 were related to new launches and the
consolidation of the Ionia facility into other Company facilities. The
expenditures in 1995 related to the Cross Car Beam and other similar
investments in platform programs.
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BUSINESS
GENERAL
The Company is a leading Tier 1 supplier of plastic components and systems
for GM, Ford, Chrysler, Toyota, Honda, Mazda, Nissan, BMW, Volkswagen,
Freightliner, Kenworth, Mack Truck and Volvo Heavy Truck. As a Tier 1
supplier, the Company is increasingly responsible for the design, engineering,
manufacturing and quality control testing of parts and pre-assembled
components for original equipment manufacturers OEMs. Within the automotive
OEM market for plastic products there are three distinct segments, all of
which the Company services: exterior, structural/functional and interior. The
Company manufactures components, modules and systems for the exterior and
structural/functional segments and components and modules for the interior
segment. In addition to products supplied to its automotive OEM customers, the
Company also manufactures a number of products for non-automotive customers.
The Company's production utilizes a wide range of processes, including
compression, injection, extrusion and blow molding, and with the Eagle-Picher
Acquisition, top coat painting capabilities at Automotive Class A standards.
The Company has experienced rapid growth since 1991 due to increased plastic
usage by OEMs, five major acquisitions (including the Eagle-Picher Acquisition
and the Goodyear-Jackson Acquisition) and significant new product
introductions. Additionally, the Company's average content per vehicle
(automobile, light truck and heavy truck) produced in North America has
increased from approximately $0.86 in 1991 to approximately $33.03, on a pro
forma basis in 1996 (including the Eagle-Picher Acquisition and the Goodyear-
Jackson Acquisition).
AUTOMOBILE AND LIGHT TRUCK COMPONENTS INDUSTRY
As automobile and light truck manufacturers have faced increased competitive
pressures, they have sought to significantly reduce costs, improve quality and
shorten the development time required for new vehicle platforms. These changes
have altered the OEM/supplier relationship and benefited larger suppliers such
as the Company that have low costs, strong product engineering and development
capabilities, superior quality and the ability to deliver products on a timely
basis. The Company believes the following are the primary trends in the
automotive components industry:
Increased Use of Plastics
The combined pressures of cost reduction, increased durability requirements
and rising fuel economy standards have caused OEMs to concentrate on
developing and employing lower cost, more durable and lighter weight
materials. As a result, the average plastic content per passenger vehicle has
increased by 14%, from approximately 209 pounds in 1991 to approximately 238
pounds in 1996, and is projected to grow another 22% to approximately 291
pounds per vehicle by 2006. While plastics historically have been used for
many interior trim components, they are now being used more extensively in
such structural components as grille opening retainers, floor panels, bumpers
and support beams, as well as in such nonstructural components as exterior
trim panels, grilles, duct systems, tail lights, fluid reservoirs, intake
manifolds, valve covers and drive train components. These trends toward the
increased use of plastics in exterior and structural/functional components
have been driven by innovations in material, molding and painting
technologies, which have improved the performance and appearance of molded
plastic components as well as lowering their costs. Additionally, recently
introduced plastics that can withstand the hot, corrosive environment of the
engine compartment are becoming more prevalent. For example, the Company has
developed plastic rocker arm covers for use on the high production volume Ford
3.0L engine. Furthermore, according to industry sources, plastics usage in
engine and mechanical components will increase by more than 50% from 1995 to
2005.
Historically, due to lower upfront tooling costs, plastic generally has had
an advantage over steel in low volume production runs. With its lower tooling
costs, the Company benefits from the increase in niche vehicles (such as the
Chrysler Viper and Prowler and the GM Corvette), customization of high volume
vehicles (such as the addition of flare fenders to the Ford Ranger and Ford F-
150 pick-ups) and the use of optional accessories
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(such as step-assists on sport utility vehicles, GM's GMT800, and Chrysler's
Jeep Wrangler hard-top). For higher volume production runs where tooling costs
may be amortized over a larger number of units, steel generally has an
advantage, because it is generally a less expensive raw material with lower
finishing costs.
Increased Outsourcing by Domestic OEMs
In an effort to reduce costs, speed product design and simplify
manufacturing, domestic OEMs have outsourced the manufacture of many
components, systems and modules which were previously manufactured internally.
Independent suppliers generally are able to design, manufacture and deliver
components at a lower cost than the OEMs due to: (i) their significantly lower
direct labor, fringe benefit and overhead costs; (ii) the ability to spread
R&D and engineering costs over products provided to multiple OEMs; and (iii)
the economies of scale inherent in product specialization. The domestic OEMs
have benefited because outsourcing has allowed them to reduce costs and to
focus on overall vehicle design and consumer marketing.
Suppliers such as the Company have benefited from outsourcing because the
aggregate number and value of components which they manufacture have increased
dramatically. In addition, the outsourcing trend has increased the complexity
of components which are manufactured by independent suppliers and this has
favored low cost, full service, high quality suppliers such as the Company
which can develop modules and systems that OEMs can easily install.
Consolidation of Supplier Base by OEMs
The OEMs have significantly consolidated their supplier bases in an effort
to reduce their procurement related costs and accelerate new platform
development. Many suppliers have either been eliminated or tiered (i.e., they
supply other suppliers) in order to minimize the number of direct supplier
contacts the OEM must maintain. From 1987 to 1997, Ford and Chrysler reduced
their supplier bases by an average of 79% and have announced plans to further
reduce their supplier base by an average of 60% between 1997 and 2002.
This consolidation has altered the typical structure of supplier contracts.
In the past, OEMs generally outsourced relatively simple parts under annual
contracts primarily on the basis of cost, and such suppliers generally have
functioned as contract manufacturers, with the OEM performing all development,
design and engineering related tasks. With the trend towards the outsourcing
of increasingly complex multicomponent systems, the basis of competition among
suppliers has shifted to one encompassing a broad range of additional criteria
including design capabilities, speed of development, manufacturing and process
expertise, consistency of quality and reliability of delivery. In many cases,
sole-source supply contracts cover the life of a vehicle or platform.
Suppliers benefit because this enables them to devote the resources necessary
for proprietary product development with the knowledge that they will have the
opportunity to earn an adequate return on such investment over the multiyear
life of a contract. In turn, the OEMs benefit because they share in the
manufacturing cost savings attributable to long, multiyear production runs at
high capacity utilization levels. As a result, smaller, poorly capitalized
suppliers with limited product lines and engineering and design capabilities
have been eliminated or have lost market share. Larger suppliers, such as the
Company, with broad product lines, in-house design and engineering
capabilities and the ability to effectively manage their own supplier bases,
have increased market share.
Increased Levels of Manufacturing in North America by Transplants
Japanese automotive manufacturers have gained a significant share of the
United States market, initially by exporting their vehicles but more recently
by acquiring and developing manufacturing facilities located in North America.
Due to the relative cost advantage of producing vehicles in North America and
to political pressures, sales of vehicles imported from Japan declined from
1983 to 1996, while Transplant manufacturing has offset this decline by
shifting more production to North America. Transplants have increased their
share of North American vehicle production from approximately 3% in 1985 to
approximately 21% in 1996. Industry sources forecast that this trend will
continue. For example, both Mercedes Benz and BMW commenced manufacturing
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in the U.S. in 1996. Further, Toyota has announced plans to build its T-100
pickup truck in Indiana by 1998, Honda has announced plans to build its
Odyssey minivan in North America by 1999 and Volkswagen has announced that it
is considering re-entering North America as a manufacturer.
Increased levels of manufacturing by Transplants, as well as higher levels
of local content, will continue to benefit the Company by allowing it to
participate in new platforms that previously had been imported or supplied by
manufacturers located in Japan or Europe. In 1996, the Company, on a pro forma
basis after giving effect to the Eagle-Picher Acquisition and the Goodyear-
Jackson Acquisition, as if each had occurred on January 1, 1996, had sales to
Transplants of $55.5 million or 10.9% of total Company sales.
HEAVY TRUCK COMPONENTS INDUSTRY
The heavy truck components industry has also experienced increased use of
plastics, increased outsourcing by Domestic OEMs, consolidation of Supplier
base by OEMs and increased levels of manufacturing in North America by
Transplants. The increased use of plastics is particularly pronounced in the
Heavy Truck Industry. Plastics allow for significant weight savings and
improved fuel economy relative to steel. For example, the Company believes
that a composite truck hood assembly made by the Company weighs approximately
30% less than a comparable steel assembly. In addition, because of low annual
volumes of heavy truck production, lower up front tooling costs give plastic
an advantage over steel. Finally, in contrast to the automotive component
industry, the heavy truck industry historically has not manufactured its own
components, but rather has relied heavily on suppliers for their design,
engineering and manufacturing of components. These industry characteristics
favor suppliers like the Company, which have broad design and engineering
capabilities and extensive heavy truck component manufacturing experience. The
Company is a key supplier to Kenworth, Freightliner, GM, Volvo and Mack Truck,
all of whom launched new platforms in the last 18 months.
NON-AUTOMOTIVE COMPONENTS INDUSTRY
The non-automotive market includes recreation, agriculture, transportation,
construction, marine, military, health and medical, and business equipment
industries. A substantial portion of the reinforced plastic products supplied
in these markets comes from SMC, much of which is captively molded by
companies such as General Electric, White Westinghouse, Therma-Tru, Kohler,
Rubbermaid, RCA and Kawasaki. Management believes that the non-automotive SMC
marketplace presents significant opportunities for growth. The development of
business in this market typically comes from two areas of opportunity:
conversion from alternate materials and conversion from alternate composite
processes due to increased volume requirements.
BACKGROUND AND ACQUISITION HISTORY
The Company has grown rapidly since its inception by capitalizing on both
the consolidation of the industry and the increase in plastic content per
vehicle. It has responded to the consolidation by building or acquiring full-
service design, engineering and manufacturing capabilities. The Company's
ability to offer a comprehensive range of processes and materials has given it
a strong competitive position among full-service OEM suppliers.
The Company has acquired businesses that have attractive products or new
technologies, but have been undermanaged. Typically, the Company has targeted
either privately owned manufacturers that lack the management depth and other
resources necessary to compete as major suppliers or divisions of large
companies that considered such operations to be peripheral to their core
businesses.
The Company's management has successfully integrated three major and four
minor acquisitions over the past nine years by implementing a focused strategy
which has rapidly enhanced profitability and repositioned the acquired
entities for growth. This strategy has included one or more of the following
steps designed to reduce costs, simplify manufacturing and rapidly increase
profitability: (i) placing strong managers in key positions in the newly
acquired company to implement changes; (ii) rationalizing raw materials and
components purchasing (the Company's largest single cost component) to reduce
costs of goods sold; (iii) redesigning manufacturing
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and material flow to eliminate indirect costs, reduce inventories and shorten
production cycle times; (iv) replacing or modifying accounting systems to
improve the accuracy, timeliness and usefulness of management information; (v)
reducing headcount; and (vi) reducing overall administrative costs, including
insurance, benefit plans, and professional fees. See "Risk Factors--
Integration of Acquisitions."
The following summarizes the Company's acquisition history:
1988 Nortec Precision Plastics
Precision functional parts manufacturer. Principal customer was
Chrysler.
1990 Wolf Engineering Corporation
Enhanced functional parts capabilities and added tool building
capability. Added GM as customer. Management improved
manufacturing material flow, improved labor productivity and
reduced SG&A.
1993 Voplex Corporation (including Voplex Canada)
Entered interior plastic trim market. Added blow-molding,
compression-molded fiber processing, extrusion, co-extrusion,
paint and large press capabilities. Added Canadian manufacturing
facilities. Management reduced manufacturing and supervisory
headcount, improved labor productivity, closed two facilities,
increased raw material yields and substantially increased sales
to GM.
1993 Troy Products
Added larger tonnage press capacity and structural foam
technology.
1994 Rockwell Plastics
Added thermoset and compression molding technology. Enhanced
functional parts market position and added structural parts
capabilities. Added Honda, Mazda, Nissan and Suzuki to customer
base as well as significant Ford business. Added heavy truck
OEMs as customers. Management consolidated sales forces,
renegotiated insurance and benefit policies and reduced plant
level administration head-count.
1996 GenCorp RPD
Substantially increased SMC capabilities, making the Company the
leading manufacturer of SMC. Added Volvo Heavy Truck and
Kenworth to customer base as well as significantly increased
business with GM. To date, management has re-negotiated
insurance and benefit policies and significantly reduced
intercompany charges related to corporate level administration.
See "Business--GenCorp RPD" for additional cost savings plans.
1997 APX--PMC Division
Additional RTM technology and paint priming. In house RTM
tooling and prototype capabilities. Strengthened supplier
relationship with Chrysler.
1997 Eagle-Picher--Plastics Division
Improved painting capabilities by adding top coat painting which
meets OEM Class A standards. Added non-automotive product lines
and expected to strengthen Transplant relationships. Added
additional large tonnage presses and open plant capacity and
ability to consolidate SMC production with other Company plants.
1997 Goodyear-Jackson--Engineered Composites Business
Strengthened the Company's position as the leading SMC supplier
to medium and heavy truck OEMs and expected to enhance its
relationship with Ford and Freightliner. Added products (grill
opening panels & retainers, air brake pistons) and new
manufacturing processes (SMC injection molding). Increased SMC
production capacity with the addition of compression and
injection molding presses.
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THE EAGLE-PICHER ACQUISITION
On July 10, 1997, the Company consummated the Eagle-Picher Acquisition for a
total purchase price of $32.2 million, subject to post-closing adjustments.
The Eagle-Picher assets acquired by the Company include three manufacturing
facilities which produce automotive (body panels, hoods, spoilers) and non-
automotive (jet ski components, tractor panels) parts using SMC.
Eagle-Picher's SMC production facilities and process capability enhance the
Company's existing leadership position in the manufacture of SMC parts for
automotive and non-automotive applications. Additionally, significant overlap
in sales to GM, Ford and Chrysler will allow the Company to offer more
products to these OEM customers. Because the overall volume of business, and
the range of products provided to an OEM customer are factors in achieving and
retaining Tier 1 status, the overlap resulting from the Eagle-Picher
Acquisition further enhances the Company's Tier 1 position. Through plant
consolidations, raw material purchasing and production rationalization,
manufacturing material flow redesign, headcount reduction and selling, general
and administrative reductions, the Company expects to realize profit
improvements.
Specifically, the Company expects to realize several strategic and financial
benefits, including:
Top coat painting capability: Eagle-Picher's top coat painting capability
and state-of-the-art paint systems will allow the Company to deliver
painted assembly-ready parts meeting OEM Class A standards.
Non-automotive market presence: Eagle-Picher's business will allow the
Company to diversify its customer base beyond automotive OEMs, thus further
capitalizing upon the Company's core SMC manufacturing technologies and
processes. Eagle-Picher manufactures non-automotive products, including
jet-ski components for Polaris and Kawasaki, tractor panels for John Deere,
residential door systems for Pease and Caradon Peachtree and outboard motor
housings for Mercury Marine. This business is supported by a dedicated
sales force, product design staff and manufacturing facility.
Transplant relationships: The addition of Eagle-Picher's customer base
will allow the Company to strengthen its relationships with certain
Transplants, further solidifying the Company's position as a leading Tier 1
supplier.
Compression molding presses: The Company has positioned itself for future
growth opportunities by acquiring Eagle-Picher's 48 compression molding
presses, of which 21 are in the 1,000-4,400 ton range. These large presses
are comparatively scarce, expensive and time-consuming to install and
enhance the Company's ability to bid for and produce large, complex
automotive and non-automotive parts.
SMC production capability: Eagle-Picher has an advanced SMC production
capability at its Grabill, IN facility. This will allow the Company to
consolidate its manufacturing of SMC, which will result in significant raw
material production cost savings.
In connection with the Eagle-Picher Acquisition, the Company has formed an
integration taskforce, led by the Company's top management, which will
implement a plan to reduce costs in the near-term by closing the facility in
Huntington, Indiana and transferring production and assembly from that
facility to other Company facilities.
THE GOODYEAR-JACKSON ACQUISITION
On July 10, 1997, the Company consummated the Goodyear-Jackson Acquisition
for a total purchase price of $37.6 million, subject to post-closing
adjustments. The Goodyear-Jackson assets acquired by the Company include one
manufacturing facility which produces automotive parts, including body panels,
grill opening panels and retainers, primarily using SMC in compression and
injection manufacturing processes.
The Company does not anticipate substantial alterations to the Goodyear-
Jackson manufacturing facilities. The Company, however, has identified profit-
improvement opportunities that it expects to realize in the areas of purchased
materials price, plant overhead costs and selling, general and administrative
costs.
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<PAGE>
The Company anticipates a temporary reduction in sales from the acquired
Goodyear-Jackson operations during 1998 due to one-time events. As a result of
the announced sale and resulting transfer of manufacturing from Ford to
Freightliner, production of Ford's HN80 heavy truck platform is expected to be
interrupted for approximately three months during 1998. In addition, Ford has
announced its intention to replace the HN78 medium truck platform with its new
HN201 platform. These changeovers are expected to temporarily interrupt
production at Goodyear-Jackson for approximately eight months in 1998, thereby
reducing sales for 1998. The reductions in sales are expected to reduce
earnings disproportionately because the Company does not expect to achieve
proportional reductions in expenses during the period of temporary sales
decline.
Management believes the Goodyear-Jackson Acquisition expands the Company's
breadth of capabilities and assets, enhancing its status as a leading Tier 1
supplier. Specifically, Management believes the most significant acquired
capabilities and assets include:
Medium and Heavy Truck Sales: In 1996, the two platforms that contributed
the most to Goodyear-Jackson's sales were Ford's current medium (HN78) and
recently launched heavy (HN80) truck platforms. The Goodyear-Jackson
Acquisition strengthens the Company's position as the leading SMC parts
supplier to the medium and heavy truck OEMs. It also enhances the Company's
relationships with Ford and Freightliner. Freightliner has announced its
intention to purchase substantially all of Ford's heavy truck business,
including the HN80 platform.
New Products and Processes: The Goodyear-Jackson Acquisition adds SMC
injection molding to the array of process capabilities currently offered by
the Company to its customers. The Goodyear-Jackson Acquisition also adds a
number of new products, including air spring pistons for heavy trucks and
grill opening panels and grill opening retainers for all types of vehicles.
These additions further enhance the Company's position as the leading Tier
1 SMC supplier, offering the broadest range of products, processes and
materials.
Compression and Injection Molding Presses: Goodyear-Jackson has 16
compression molding presses (including 9 in the 1,000 ton to 3,000 ton
range) and 10 injection molding presses, (including 9 in the 1,000 ton to
2,200 ton range.) One of the 3,000 ton presses was recently installed and
began producing production parts in early 1997. These large presses are
comparatively scarce and expensive and are also time-consuming to install.
In acquiring more of these presses, the Company enhanced its ability to bid
for and produce large, complex automotive and non-automotive parts.
SMC Production Capability: The addition of Goodyear-Jackson's SMC
production capacity will allow the Company to continue producing all of
this key raw material in-house and will permit consolidation of SMC
production with the Company's existing facilities. Further, the fact that
Goodyear-Jackson's SMC maker is 60 inches wide (which the Company believes
is the widest in the industry) gives the Company greater flexibility in
product design and process engineering.
COMPETITIVE ADVANTAGES
The Company has significantly increased its size, improved profitability and
enhanced its strategic position. Management believes that the following are
the Company's primary competitive advantages.
Tier 1 Status and Strong Relationships with OEMs
The Company has established a position as a leading Tier 1 supplier of
plastic components and systems to Ford, General Motors, Chrysler, Toyota,
Honda, Mazda, Nissan, BMW, Volkswagen, Volvo Heavy Truck, Mack Truck, Kenworth
and Freightliner. Tier 1 status and strong customer relationships are
important elements in achieving continued profitable growth because as OEMs
narrow their supplier bases, well-regarded, existing suppliers have an
advantage in gaining new contracts. The evolution of OEM relationships into
strategic partnerships provides a significant advantage to Tier 1 suppliers
with systems integration capabilities (such as
44
<PAGE>
the Company) in retaining existing contracts as well as in participating
during the design phase for new vehicles, which is integral to becoming a
supplier to such new platforms.
Diverse Process and Material Manufacturing Capabilities
The Company utilizes a broad range of manufacturing processes including
compression molding, injection molding, blow molding, extrusion, resin
transfer molding ("RTM") and is able to use a wide variety of materials
including SMC, bulk molding compound ("BMC"), glass mat thermoplastic ("GMT"),
structural foam, glass reinforced urethane, polyethylene, polypropylene,
polyvinyl chloride, Azdel and resinated natural fibers. The Company has
secondary finishing capabilities including painting, in-mold coating,
ultrasonic and vibration welding and bonding with urethane and epoxy
adhesives. With the anticipated acquisition of Eagle-Picher, the Company will
have top coat painting capabilities sufficient to meet OEM Class A standards.
These capabilities give the Company the ability to select a cost effective
combination of materials and manufacturing methods for a given component and
to deliver a finished component which is ready for installation. They also
allow the Company to change its manufacturing techniques as technological
innovation allows in order to reduce costs and improve product performance.
Many competitors are dependent on fewer manufacturing processes and are at a
competitive disadvantage to the Company when changes in manufacturing
specifications by the OEM or new technologies or materials emerge that favor
one raw material or manufacturing method over another. The Company believes
this capability enhances its relationship with OEMs and further solidifies its
role as a Tier 1 supplier.
Low Cost, High Quality Manufacturing Position
The Company believes that it is one of the lowest cost Tier 1 suppliers of
plastic automotive components in North America. This is largely due to the
strict cost controls implemented following its acquisitions and continuous
improvement programs to enhance productivity and further reduce costs.
Management believes OEMs prefer stable suppliers who can generate productivity
gains that can be shared to reduce OEM costs. The Company's cost controls are
closely integrated with its high quality manufacturing operations, thereby
allowing it to profitably deliver high quality, easy to install and
competitively priced components on a just-in-time basis. The Company has
received numerous quality and performance awards including Ford's Q1, General
Motors' Targets of Excellence award, GM Supplier of the Year (1995 and 1996),
Chrysler's QE designation, Honda's Quality, Plant & Delivery Award and Mazda's
Total Quality Excellence award. Quality levels are currently being
standardized across OEMs through the QS 9000 program. The Company has achieved
QS 9000 certification in its Lenoir, NC and Newton, NC facilities and is in
the process of obtaining QS 9000 certification in the remainder of its
facilities.
Strong Design and Engineering Expertise
The Company has an engineering and research and development staff that
develops new products, materials and processing technologies through computer-
aided design techniques. The Company works directly with OEM designers to
create innovative solutions that simplify vehicle assembly. For example, the
Company redesigned the rocker arm cover for the Ford 3.0L engine by combining
the gasket, attachments, tubes and plates into one lightweight unit that can
be more easily installed by the OEM. This part weighs 2 pounds (or 48%) less
than a comparable steel rocker arm cover. Subsequently, this rocker arm cover
has been successfully rolled out to Ford's 4.6L engine and a similar design
was used for the 7.3L diesel engine cover. The Company also designed,
engineered and now produces the Cross Car Beam, a structural component for the
Ford Ranger/Explorer platform on which all of the instrument panel components
are mounted. This Cross Car Beam eliminates approximately 20 separate metal
and plastic parts, weighs less and reduces noise and vibration by
approximately 33% compared to the steel structure it replaced. In 1996, the
Company supplemented its design capabilities by opening an engineering and
technical center in association with MascoTech, Inc. which further
strengthened its existing design capabilities to the automotive industry. The
Company recently won a contract to supply the step-assist on GM's GMT800 sport
utility vehicle. The Company's step-assist allowed design flexibility not
possible with steel and is 20% lighter than a functionally similar steel step-
assist.
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<PAGE>
BUSINESS STRATEGY
The Company's strategy is to capitalize on its competitive advantages in
order to enhance its leadership position in the industry through the
following:
Capitalize on Increased Plastic Usage for Exterior and Structural/Functional
Components
The Company continues to seek opportunities to increase plastic content per
vehicle through the design, development and manufacture of plastic components
and systems which have been historically fabricated in metal. For example, the
Company generates significant revenue from several products which were not
previously fabricated in plastic, such as the plastic rocker arm covers, the
Cross Car Beam and the step-assist. The Company is now actively marketing
these technologies to other OEMs for use in other platforms. The Company has
also developed and is field testing a composite pickup truck bed that weighs
less and has increased durability compared to steel beds currently in use. The
Company expects plastic content per vehicle for exterior,
structural/functional components to continue to increase during the next
several years.
Acquire Complementary Manufacturers
The Company intends to selectively pursue attractive opportunities to
acquire exterior, structural/functional parts manufacturers that have the
potential to increase profitability and improve its strategic position. These
acquisition opportunities are available because: (i) these product segments
have been historically fragmented; (ii) OEMs are focusing their supplier
consolidation efforts in these areas, requiring fewer, but more competitive,
suppliers; and (iii) many such suppliers are subsidiaries or divisions of
significantly larger entities (as in the acquisitions of Rockwell, GenCorp
RPD, Eagle-Picher and Goodyear-Jackson) which may not be inclined to devote
the resources necessary to compete effectively as a Tier 1 supplier.
Successful acquisitions could broaden the Company's product lines and
manufacturing capabilities, improve the absorption of corporate overhead and
enhance its attractiveness as a Tier 1 supplier to the OEMs.
Penetrate New Markets and Access New Technologies Through Joint Ventures and
Licensing Arrangements
The Company seeks to exploit joint ventures and licensing arrangements to
develop new products, materials and processing technologies that provide
opportunities for growth while limiting its investment risk. The Company
currently has joint ventures with E.I. du Pont de Nemours and Company, Siebe
Fluid Systems and Menzolit Fibron and a licensing agreement with Empe Ernst
Pelz GmbH & Co. KG and Empe Ernst Pelz Vetrebs GmbH.
Expand Non-automotive Market Presence
Consummation of the Eagle-Picher Acquisition will allow the Company to
diversify its customer base beyond OEMs, thus further capitalizing upon the
Company's core SMC manufacturing technologies and processes. Eagle-Picher
manufactures non-automotive products, including jet-ski components for Polaris
and Kawasaki, tractor panels for John Deere, residential door systems for
Pease and Caradon Peachtree and outboard motor housings for Mercury Marine.
This business is supported by a dedicated sales force, product design staff
and manufacturing facility.
Pro Forma for the Eagle-Picher Acquisition and the Goodyear-Jackson
Acquisition, the Company generated non-automotive sales of approximately $22
million in 1996. Management believes that there exists significant opportunity
to expand SMC sales to non-automotive customers as such customers better
realize the product attributes of SMC.
EXISTING JOINT VENTURES AND LICENSING ARRANGEMENTS
The Company has established several joint venture and alliances in the
United States and in Europe to gain access to new materials, new processing
technologies and to open new markets. The forming of these joint ventures
provide considerable advantages to the Company over their traditional
competitors.
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The DuPont joint venture is currently working to a high grade, low cost,
fiber reinforced, recycled PET material, which will be used as an automotive
interior material, when reinforced with nature fibers, or as an exterior
material, when reinforced with glass fibers or as a structural material, when
reinforced with carbon fibers. The Company believes that it will have a
considerable competitive advantage, through the joint development of this
multipurpose, recycled material. This program is partially funded by the
United States Government under the NIST program.
The Empe licensing agreement gives the Company exclusive rights in the NAFTA
market to the patented Empeflex material. This material consists of a matrix
of polypropylene and natural fibers which allows that an interior Door Panel
or Package Shelf can be decorated during the compression molding cycle in a
cost saving, one step system.
The Company has developed the Siebe Fluid System quick connect/disconnect
automotive fluid handling system. This system provides for a two part, self
contained snap on design. This allows the automotive manufacturer to integrate
their new fluid connect systems directly to the radiator, transmission or to
the brake cylinders. At the same time it provides quick access to the system
for repair mechanics. The system is currently being tested by all major U.S.
auto manufacturers and the Company expects a job award from GM soon.
The Menzolit Fibron joint venture was established to give the Company direct
access to the European automakers. The Company believes that Menzolit Fibron
is one of Europe's largest SMC supplier. The Company also has access to their
material and processing technologies. This joint venture has resulted in the
job award of a spoiler from BMW, and a trunk lid from Mercedes.
CUSTOMERS
The Company has a diverse customer base, including Ford, GM, Chrysler,
Honda, Mazda, Nissan, Volkswagen, Freightliner, Kenworth, Mack Truck and Volvo
Heavy Truck. The Company has close ties to the automobile manufacturing
community and has integral components in some of the industry's most popular
vehicles. The Company currently has products in over 70 vehicles, including
high-volume, long-lasting model cars sold in the United States such as the
Ford Explorer, Ranger, Taurus and F-150 truck, the GM Suburban and Astro Mini-
Van and the Honda Accord. The following chart highlights vehicles which use
products produced by the Company:
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<PAGE>
1996 VEHICLE NAMEPLATES--AND SELECTED NON-AUTOMOTIVE CUSTOMERS
<TABLE>
<CAPTION>
COMPANY MODELS
- - ------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUTOMOBILE AND LIGHT
TRUCK:
Auto Alliance(1)........ Mazda 626 Mazda MX6
Chrysler
Automobiles............ Chrysler Concorde Dodge Intrepid Dodge Viper Dodge Viper
Eagle Vision Neon Convertible Coupe
Light Trucks........... Dodge Caravan Dodge Dakota Dodge Ram Van* Jeep Cherokee
Jeep Grand Jeep Wrangler Plymouth Voyager
Cherokee
Ford
Automobiles............ Ford Crown Ford Mustang Ford Taurus Ford
Victoria Lincoln Lincoln Mark Lincoln Town Thunderbird**
Continental** VIII Car** Mercury Cougar**
Mercury Grand
Marquis**
Light Trucks........... Ford Aerostar Van Ford Bronco Ford Econoline Ford Explorer
Ford F-Series Ford Ranger Ford Windstar Mercury
Pickup Villager*
General Motors
Automobiles............ Buick LeSabre Buick Park Buick Regal
Cadillac Avenue Cadillac Seville
Eldorado Cadillac Chevrolet Lumina
Buick Riviera Chevrolet Camero Fleetwood Oldsmobile
Cadillac Deville Oldsmobile Chevrolet Intrigue Saturn
Chevrolet Barretta Aurora Pontiac Corvette SL
Chevrolet Monte Firebird Oldsmobile
Carlo Pontiac Cutlass Saturn
Bonneville SC
Light Trucks........... CK Chevrolet Astro Chevrolet Blazer Chevy Lumina APV
Pickup/Tahoe/Yukon Chevrolet Tahoe Oldsmobile Oldsmobile
Chevrolet Suburban Pontiac Trans Bravada Silhouette*
Opel Saturn Sport
Honda................... Honda Accord Acura
Nissan.................. Quest*
Volkswagen.............. Jetta Golf
CAMI(2)................. GEO Tracker
Mazda................... Miata* MPV*
Toyota.................. Micro Bus* Sierra Minivan
Subaru.................. Legacy Wagon* Legacy Sedan*
Isuzu................... Frontera*
Mitsubishi.............. Eclipse* Eagle*
HEAVY TRUCKS:
Freightliner
GM
Ford
Volvo Heavy Truck
Mack Truck
Kenworth
NON-AUTOMOTIVE:
Caradon................. Residential door
skins*
Pease................... Residential door
skins*
Premedoor............... Residential door
skins*
AM General.............. Hummer* Humvee*
John Deere.............. Tractors* Combines*
Kawasaki................ Jet skis*
Ford New Holland........ Tractors*
U.S. Military........... Tank set*
Polaris................. Jet skis*
Hyster.................. Lift Trucks
Toyota.................. Lift Trucks*
Mercury Marine.......... Marine outboard
engines*
Kodak................... Toner bottles
Xerox................... Toner bottles
Purex................... Swimming pool
filters
Menasha.................
</TABLE>
- - --------
* Attributable solely to the Eagle-Picher Acquisition.
**Attributable solely to the Goodyear-Jackson Acquisition.
(1)Ford/Mazda joint venture.
(2)GM/Suzuki joint venture.
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<PAGE>
PRODUCTS
The Company's principal products include the exterior,
structural/functional, interior form and industrial parts listed below. The
products manufactured by the Company are made from a variety of thermoset and
thermoplastic materials. See "--Manufacturing Processes." The Company's
product diversity, illustrated by the table below, positions the Company as a
versatile source to the automotive and truck industry.
<TABLE>
<CAPTION>
EXTERIOR STRUCTURAL AND FUNCTIONAL INTERIOR NON-AUTOMOTIVE
-------- ------------------------- ------------------- -------------------
<S> <C> <C> <C>
Hoods and hood assem- Headlamp carriers Steering column Blow molded bottles
blies Engine bezels Forklift body
Liftgates and doors shields/covers Glove box door and panels*
Roof and roof moldings Structural beams assemblies Swimming
Fenders Bumper beams Instrument panel poolfilters/heater
Bodyside Structural trim components covers
moldings/rubstrips component carriers Liftgate trim Residential door
Windshield surrounds Load floors panels systems*
Deck lids Fuel tank shields Door trim panels Personal watercraft
Hatches Seat pans/backs Rear shelf panels decks & covers*
Storage doors Knee bolsters Consoles Military vehicle
Spoilers Fluid systems Seat backs/bases hoods, engine
Fairings linkages Shift knobs covers & seats*
Grill opening retain- Rocker arm covers Garnish molding Tractor hoods,
ers** Fan shrouds systems shields/pans,
Grill opening panels** Radiator support Handles consoles and
beams Rear shelves seats*
Bearing cages Electrical carriers Combine components*
Steering yokes Cargo doors Lift truck hoods*
Battery trays Sunshades Outboard engine
Gears cowls*
Fuel valves
Plenums (firewalls)
Windshield cowls
Air spring
pistons**
</TABLE>
- - --------
* These parts are attributable solely to Eagle-Picher.
** These parts are attributable solely to Goodyear-Jackson.
MANUFACTURING PROCESSES
The Company has a full range of equipment, including compression molding
presses from 50 to 4,000 tons, injection molding presses from 28 to 2,500
tons, single and twin screw extrusion and co-extrusion machines and 7 to 90
ton blow-molding machines. These capabilities allow the various operating
divisions of the Company extensive manufacturing flexibility. The Company is
capable of processing both thermosets and thermoplastics. Thermosets are
heated and pressurized plastics which undergo a chemical change and generally
provide superior impact strength, dimensional stability and heat resistance as
compared to other plastics. Thermoplastics are heated into a liquid state and
then formed through injection, blow-molding, extrusion or compression
processing techniques. Thermoplastics can be re-heated to be used again in
conjunction with virgin materials.
Through the GenCorp Acquisition, the Company has become the leading
manufacturer of SMC, a material from which large exterior body panels are
molded. SMC is one of the newest technologies in the automotive plastics
industry and the Shelbyville, Indiana facility, acquired in connection with
the GenCorp Acquisition, is one of the newer state of the art facilities
producing parts from SMC. SMC is a type of fiber reinforced plastic, which, in
1995, was used for over 400 components on over 100 domestic and import
passenger and truck lines produced by 16 manufacturers. The use of SMC has
increased from approximately 147 million pounds in 1992 to 240 million pounds
in 1996, a CAGR of approximately 13%. SMC is particularly well-suited for
exterior and structural/functional parts because of its superior design
flexibility, corrosion resistance, dent resistance and
49
<PAGE>
dimensional and structural stability. Management believes that it is the
leading manufacturer of SMC automotive products in North America.
Through the Eagle-Picher Acquisition, the Company acquired 48 additional
compression molding presses ranging up to 4,400 tons and also acquired
additional SMC production capacity. Further, the Eagle-Picher Acquisition
added top coat paint producing lines, providing a capability to top coat paint
automotive components to Class A standards which the company did not
previously have.
Eagle-Picher's automated paint systems have high volume capabilities. The
conveyor lines have adjustable speeds and can handle parts in a variety of
sizes (up to ten feet in length by five feet wide and three feet thick).
Related systems include ovens (up to 500(degrees)F) with high discharge rates;
multi-stage power washers; and numerous waterfall spray booths connected to
ovens by conveyors.
Through the Goodyear-Jackson Acquisition, the Company acquired 16
compression molding presses ranging from 250 to 3,000 tons and 10 injection
molding presses ranging from 500 to 2,200 tons. The Goodyear-Jackson
Acquisition also added additional SMC making production capacity.
Quality throughout the manufacturing process is maintained through the
implementation of statistical process control ("SPC") techniques. Typical
characteristics measured and controlled through SPC methods include material
properties such as viscosity, gel time, sheen or gloss color and other
quantifiable physical and appearance properties for exterior and interior
components. Characteristics for structural/functional parts including physical
properties and dimensional stability at both the component and systems level
are monitored. SPC data provide the production operator with trend information
on the process which allows for proactive measures to be implemented to assure
product specifications are maintained and to minimize variation.
RAW MATERIALS AND SUPPLIERS
The Company's primary raw materials include engineered resins, glass-filled
resins, mineral-filled resins, polyethylene, polypropylene, polyvinyl chloride
and ABS resins. Additionally, the Company manufactures all of its own SMC. The
Company's principal suppliers include General Electric Company (resins), Bayer
(resins), Ashland Chemical (resins), Alpha Owens Corning (resins), Dow
Chemical Company (resins), DuPont (resins), GenCorp, Inc. (adhesives and
paint), Vetrotex Certainteed (glass fiber), Owens Corning (glass fiber), PPG
(glass fiber and paint) and Sherwin Williams (paint). Historically, the vast
majority of the Company's raw materials generally have been available, and no
serious shortages or delivery delays have been encountered. Certain of the
Company's suppliers must be pre-qualified by the Company's customers.
Management believes that its relations with its principal suppliers are good.
The Company has never experienced major disturbances in its flow of raw
material or supplies. The Company attempts to work with suppliers to obtain
longer-term buying agreements, share technologies and resources and build
relationships.
ENGINEERING/RESEARCH AND DEVELOPMENT
The Company has the ability to design and engineer its products to meet its
customers' specific applications and needs. The Company has an engineering and
research and development staff of professionals. The Company utilizes advanced
quality planning techniques by coordinating manufacturing and engineering in
development/launch teams. These teams work together to produce the most
efficient, cost competitive design for the customer using advanced techniques
including integrated CAD/CAM design systems. In addition, in 1996, the Company
supplemented its design capabilities by opening an engineering and technical
center in association with MascoTech, Inc., which further strengthens its full
service design capabilities to the automotive industry.
COMPETITION
The Company operates in a highly competitive environment. Recently, the
automotive plastic parts industry has consolidated many small entities into
fewer, much larger entities. The OEMs have adopted supplier management
policies designed to rationalize their supply base. See "--Automobile and
Light Truck Components
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<PAGE>
Industry--Consolidation of Supplier Base by OEMs." In the exterior and
structural/functional market segments, the Company's major competitors include
Budd Canada, Venture Holdings Trust and Rymac Investment Trust. The interior
business is largely consolidated around such suppliers as Magna International,
Textron Automotive Division, JCI, Inc., United Technologies Automotive
Division and Lear Seating. Although the exterior and structural/functional
market segments are still fragmented, the Company expects them to consolidate
along the lines of the interior market segments.
The Company competes on the basis of cost, product quality, timely delivery,
design support, customer service, product mix and new product innovation. The
Company competes for new business both at the beginning of the development of
new models and upon the redesign of existing models by its major customers.
New model development generally begins two to five years prior to the
marketing of such models to the public. Once a supplier has been designated to
supply parts to a new program, an OEM will usually continue to purchase those
parts from the designated supplier for the life of the program, and generally
the supplier has an advantage in obtaining replacement business.
PROPERTIES
The Company's executive offices are located in approximately 24,000 square
feet of owned space at 555 Horace Brown Drive, Madison Heights, Michigan. The
Company has 19 operating facilities with a total of approximately 2.4 million
square feet of space. Molding operations are located at all of its operating
facilities other than Rushville, Indiana, which is an assembly and warehouse
facility. The Company believes that substantially all of its property and
equipment is in good condition and that it has sufficient capacity to meet its
current and projected manufacturing and distribution needs through the 1997
model year. The following sets forth certain information concerning the
Company's operating facilities:
<TABLE>
<CAPTION>
LOCATION SQUARE FOOTAGE OWNED/LEASED
- - -------- -------------- ------------
<S> <C> <C>
Dearborn, MI (3 facilities)......................... 87,000 Owned
Lapeer, MI.......................................... 230,000 Owned
Woodstock, Ontario, Canada.......................... 50,000 Leased
Canandaigua, NY (3 facilities)...................... 280,000 Owned
Newton, NC.......................................... 54,000 Owned
Lenoir, NC (3 facilities)........................... 160,000 Owned/Leased
Centralia, IL....................................... 473,000 Owned
Shelbyville, IN..................................... 366,000 Owned
Rushville, IN....................................... 97,440 Leased
Madison Heights, MI (APX facility).................. 90,000 Leased
Grabill, IN*........................................ 225,000 Owned
Ashley, IN*......................................... 130,000 Owned
Huntington, IN*..................................... 174,000 Owned
Jackson, OH**....................................... 220,400 Leased
---------
Total............................................. 2,636,840
=========
</TABLE>
- - --------
* Eagle-Picher facilities.
** Goodyear-Jackson facility.
The Company also owns property and improvements in Vassar, Michigan, which
is currently being used by the Company for storage, but which is expected to
be leased (with an option to purchase) to a third party. The Company also owns
property in Pittsford Township, New York, which is currently unoccupied.
EMPLOYEES
As of June 30, 1997, the Company had approximately 4,339 employees of whom
approximately 1,798 are union members. Approximately 3,663 employees are
hourly and approximately 676 are salaried. The
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<PAGE>
Company is a party to collective bargaining agreements with respect to hourly
employees at its Centralia, Lapeer, Woodstock and Dearborn facilities. The
agreement with the UAW at the Centralia facility expires on October 1, 1998.
With respect to this agreement, the Company and the UAW will begin preliminary
discussions regarding benefits and other issues to minimize potential
obstacles to reaching an acceptable agreement in August 1997. The agreement
with the UAW at Dearborn expires on September 30, 1999 and the agreement with
the UAW at the Lapeer facility expires on February 1, 2000. The agreement with
The Canadian Automobile Workers Union ("CAW") at the Woodstock facility
expires on March 22, 1998 and the company anticipates commencing preliminary
negotiations with the CAW on this agreement in the fall of 1997. Each of the
Company's agreements with the UAW contains a no-strike clause. The Company has
successfully negotiated closing agreements with the International Union of
Electrical Workers, Furniture Workers Division, Local No. 420 and the
International Union, United Plant Guard Workers of America and its affiliated
Local No. 40 in connection with the cessation of operations at Ionia. The
Company, in relation to certain former employees of Goodyear-Jackson, is a
party to a collective bargaining agreement with the United Steel Workers of
America, AFL-CIO/CLC Local No. 820-L and subject to a collective bargaining
agreement which expires April 15, 2000.
Management believes its relationship with its employees generally is good.
The Company has not experienced significant work interruptions resulting from
serious labor disputes with its employees.
PATENTS
The Company owns various patents which aid in maintaining its competitive
position. These patents expire in the next ten years. The expiration of such
patents are not expected to have a material adverse effect on the Company's
operations.
ENVIRONMENTAL MATTERS
Like similar companies, the Company's operations and properties are subject
to extensive federal, state, local and foreign regulation under environmental
laws and regulations concerning, among other things, emissions into the air,
discharges into the water, the remediation of contaminated soil and
groundwater, and the generation, handling, storage, transportation, treatment
and disposal of waste and other materials (collectively, "Environmental
Laws"). Inherent in manufacturing operations and the Company's real estate
ownership and occupance activities is the risk of environmental liabilities as
a result of both current and past operations, which liabilities cannot be
predicted with certainty. The Company has incurred and will continue to incur
costs associated with Environmental Laws in its business. As is the case with
manufacturers in general, if a release of hazardous materials occurs on the
Company's properties or at any off-site disposal location utilized by the
Company or its predecessors, the Company may be held strictly, jointly and
severally liable for response costs and natural resource damages under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended and similar state and foreign laws (collectively, "Superfund").
While the Company devotes resources to ensuring that its operations are
conducted in a manner which reduces such risks, the amount of such liability
could be material.
The soil and groundwater at the Company's Brickyard Road facility, located
in Canandaigua, New York, contain hazardous materials in excess of applicable
state cleanup standards. The Company currently estimates that the total cost
to be incurred at this facility as a result of environmental conditions could
range up to $0.6 million.
The soil and groundwater at the Company's 111 North Street facility, located
in Canandaigua, New York, contain hazardous materials in excess of applicable
state cleanup standards. The Company is currently remediating the facility
pursuant to a consent order entered into with the State of New York. The
Company has spent approximately $0.25 million to date and currently estimates
that remediation costs over the next four or five years should not exceed an
additional $0.5 million.
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<PAGE>
The soil and groundwater at a facility located on Linden Road in Rochester,
New York, which is vacant, contain hazardous materials in excess of applicable
state cleanup standards. The Company currently estimates that expenditures for
remediation could reach $0.5 million.
Each of these preliminary cost estimates is based upon currently available
information. The actual cost of further investigation or remediation could
differ materially from these projections.
Under the terms of the Rockwell Plastics acquisition transaction, Rockwell
has indemnified the Company for past environmental liabilities (the "Rockwell
Environmental Indemnity"), subject to a maximum aggregate contribution by the
Company of $0.6 million and to the survival period of Rockwell's environmental
representations and warranties, which expire July 2004. Since the time of the
Rockwell Plastics acquisition, Rockwell, pursuant to the Rockwell
Environmental Indemnity, has performed additional investigation and analyses
of the facilities acquired in that acquisition. These assessments verified
some of the Company's findings but disagreed with others. Rockwell has
subsequently remediated certain areas of the facilities and Rockwell and the
Company are currently discussing the remaining unremediated areas.
Notwithstanding the Rockwell Environmental Indemnity, the Company could be
pursued in the first instance by governmental authorities or third parties
with respect to such matters, subject to its right to seek indemnification
from Rockwell. If Rockwell fails to honor its obligations under the Rockwell
Environmental Indemnity, the Company would be required to bear the cost of
bringing the former Rockwell facilities into substantial compliance in which
event the Company's total exposure could be material. However, the Company has
no reason to believe that Rockwell will not honor its remediation commitments.
With respect to the facilities acquired in the GenCorp Acquisition, the
Company identified a number of permitting, contamination, off-site liability,
recordkeeping, reporting and hazardous waste regulation non-compliance issues.
Since that acquisition, the Company believes it has brought the former GenCorp
facilities into substantial compliance with applicable Environmental Laws.
Under the terms of the transaction, the Company did not assume any liabilities
arising from pre-existing violations of Environmental Laws, pre-existing
contamination at GenCorp RPD facilities or off-site disposal of waste
materials under Superfund. The Company is completely indemnified for these
non-assumed liabilities (the "GenCorp Indemnity"). Notwithstanding the GenCorp
Indemnity, the Company could be pursued in the first instance by governmental
authorities or third parties with respect to such matters, subject to its
right to seek indemnification from GenCorp, Inc. If GenCorp, Inc. fails to
honor the GenCorp Indemnity, the Company's total exposure for environmental
matters arising from the GenCorp Acquisition could be material. However, the
Company has no reason to believe that GenCorp, Inc. will not honor the GenCorp
Indemnity.
With respect to the facilities acquired in the Eagle-Picher Acquisition, the
Company identified a number of permitting, contamination, off-site liability,
recordkeeping, reporting and hazardous waste regulation non-compliance issues.
The Company intends to bring the Eagle-Picher facilities into substantial
compliance with applicable Environmental Laws as soon as possible. Under the
terms of the transaction, the Company did not assume any liabilities arising
from off-site disposal of waste materials under Superfund, and the Company is
completely indemnified for this potential Superfund liability by Eagle-Picher.
In addition, the Company is indemnified by Eagle-Picher against any fines or
penalties arising out of any pre-existing violations of Environmental Laws.
Subject to a maximum indemnification limit of 53.25 million, the Company is
also indemnified for any unidentified on-site contamination at, on, under or
about the former Eagle-Picher facilities and unindemnified non-compliance
issues, provided the Company asserts an indemnification claim within four
years of the Eagle-Picher Acquisition. Finally, and in addition to its
indemnity obligations, Eagle-Picher covenanted to remediate identified
contamination as presently in place or as materially changed prior to 2003,
(subject to certain financial limitations in the event of change in clean-up
standards) at the former Eagle-Picher facilities pursuant to and in accordance
with applicable state industrial standards. Notwithstanding these Eagle-Picher
covenants and indemnification obligations, the Company could be pursued in the
first instance by governmental authorities or third parties with respect to
such matters, subject to its right to seek indemnification from Eagle-Picher.
If Eagle-Picher fails to honor those indemnities or covenants provided to the
Company, the
53
<PAGE>
Company's total exposure for environmental matters arising from the Eagle-
Picher Acquisition could be material. However the Company has no reason to
believe that Eagle-Picher will not honor the covenants or indemnities provided
to the Company under the Eagle-Picher Acquisition.
With respect to the facility acquired in the Goodyear-Jackson Acquisition,
the Company identified a number of contamination, off-site liability,
recordkeeping, hazardous waste regulation, underground storage tank,
wastewater discharge and permitting non-compliance issues. The Company intends
to bring the Goodyear-Jackson facility into substantial compliance with
Environmental Laws as soon as possible. Under the terms of the acquisition,
the Company is indemnified for the costs associated with rectifying identified
violations of Environmental Laws. The Company did not assume any liabilities
arising from off-site disposal of waste materials under Superfund, and the
Company is fully indemnified for any potential Superfund liability by
Goodyear. In addition, the Company is indemnified by Goodyear, subject to a
maximum indemnification limit of $2.5 million and after bearing the first
$0.25 million of claims and a cost-sharing formula thereafter, against any
unidentified pre-existing compliance issues under Environmental Laws and any
unidentified on-site contamination at, on, under or about the former Goodyear-
Jackson facility, provided the Company asserts an indemnification claim within
three years of the Goodyear-Jackson Acquisition. In addition to its indemnity
obligations, Goodyear covenanted to remediate identified contamination in
excess of applicable regulatory limits and to make reasonable efforts to
obtain a covenant not to sue under applicable state laws. Before remediating,
Goodyear agreed to reimburse the Company, up to a maximum of $1.0 million, to
investigate and repair the causes or sources of the identified contamination.
Notwithstanding these Goodyear covenants and indemnification obligations, the
Company could be pursued in the first instance by governmental authorities or
third parties with respect to such matters, subject to its right to seek
indemnification from Goodyear. If Goodyear refuses to honor the indemnities or
covenants provided to the Company, the Company's total exposure for
environmental matters arising from the Goodyear-Jackson Acquisition could be
material. However, the Company has no reason to believe that Goodyear will not
honor the covenants or indemnities provided to the Company in connection with
the Goodyear-Jackson Acquisition.
A number of the Company's facilities are likely to be required to comply
with the provisions of the Federal Clean Air Act, including Titles III and V
of the CAA. Title III of the CAA includes provisions requiring the
implementation of Maximum Achievable Control Technology (MACT) to reduce
emissions of certain hazardous air pollutants, including styrene, at certain
manufacturing facilities emitting designated quantities of such pollutants.
Air pollution controls to address styrene emissions could cost approximately
$1.0 million per facility and, if MACT is ultimately required in connection
with both the manufacture and use of this compound, may be required at three
to five of the Company's facilities. It is possible that the cost of complying
with the CAA could be material and the Company's failure to comply with the
CAA in the future would likely have a material adverse effect on the Company.
Based upon the Company's experience to date, as well as the existence of
certain remediation and indemnification agreements obtained in connection with
those acquisitions described above, the Company believes that the future cost
of compliance with existing Environmental Laws and liability for identified
environmental claims will not have a material adverse effect on the Company's
business, results of operations or financial position. However, future events,
such as new information, more vigorous enforcement policies of regulatory
agencies, stricter or different interpretations of existing Environmental
Laws, changes in existing Environmental Laws or their interpretation, or the
failure of indemnitors to fulfill their contractual obligations, may give rise
to additional costs or claims that could have a material adverse effect on the
Company's business, results of operations or financial condition.
The Company's accounting policy is to accrue for environmental claims which
it considers probable and reasonably estimable and to disclose a range of
reasonably possible claims. See Note 1 to the Company's consolidated financial
statements contained elsewhere in this Prospectus.
54
<PAGE>
LEGAL PROCEEDINGS
From time to time the Company is engaged in routine litigation arising in
the ordinary course of business; however, the Company is not party to any
lawsuit or proceeding which, individually or in the aggregate, in the opinion
of management, is likely to have a material adverse effect on the financial
condition or results of operations of the Company.
Eagle-Picher is a defendant in litigation commenced in May 1997 by Caradon
Doors and Windows Inc. ("Caradon"), in the U.S. District Court, Northern
District of Georgia. Caradon alleges that Eagle-Picher induced it to buy door
skins from Eagle-Picher, causing Caradon to infringe upon a patent held by
Therma-Tru Corporation, contrary to Eagle-Picher's representations. The
complaint alleges claims for damages exceeding $10 million. Eagle-Picher
intends to vigorously defend the claims in the complaint. The proceedings are
not sufficiently advanced to allow an assessment of likely exposure for the
claims, if any. Under the terms of the Eagle-Picher Acquisition, the Company
believes that it will be fully indemnified by Eagle-Picher for any amounts
ultimately owed to Caradon resulting from the litigation.
55
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the names, ages as of August 5, 1997 and a brief account
of the business experience of each person who will be a director, executive
officer or other significant employee of the Company or Holdings.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard S. Crawford..... 50 Chairman of the Board and Chief Executive Officer
Kevin J. Alder.......... 39 Chief Operating Officer and President
John M. Colaianne....... 41 Chief Financial Officer and Secretary
C. Keith Chulumovich.... 36 Corporate Controller and Treasurer
Thomas N. Paisley....... 45 President--Structural/Functional Division
Richard H. Frank........ 58 President--Specialty Vehicle/Commercial Truck Division
Patrick Pavelka......... 45 President--Interior Systems Division
Terry S. Werrell........ 61 President--Industrial Products Division
Wilson W. Sick, III..... 39 Executive Vice President--Business Development and Marketing
Michael E. Kilpinen..... 51 Executive Vice President--R&D-Technical Services
Dale L. Freel........... 40 Vice President--Purchasing and Tooling
Alan M. Swiech.......... 39 Vice President--Human Resources
David W. Marten......... 41 Vice President--Quality
Jerrold L. Glick........ 53 Director
Ira J. Jaffe............ 57 Director
Robert C. Gay........... 44 Director
Edward W. Conard........ 40 Director
Ronald P. Mika.......... 36 Director
</TABLE>
RICHARD S. CRAWFORD founded a predecessor of the Company in 1988. Mr.
Crawford was President, Chief Executive Officer and director of the Company,
Holdings and its predecessors from their inception to March, 1996 when he
became Chairman of the Board of the Company and Holdings. Prior to founding
the company which was to become the Company, Mr. Crawford founded a real
estate, construction and marketing firm, the Lakeside Investment Company. He
has also been active as a real estate developer, financial investor and merger
and acquisition specialist.
KEVIN J. ALDER joined the Company in November 1996. Mr. Alder possesses 17
years of industrial experience varying from Engineering to Operations
Management. Prior to joining the Company, Mr. Alder was the Vice President
Operations & Sales at Magna Interior Systems Group. In addition, he held the
position of Vice President Operations at Textron, President and Chief
Operating Officer at US Farathane Corporation and Vice President Operations
(General Plants Manager) at Johnson Controls and Engineer/Quality Engineer at
John Deere.
JOHN M. COLAIANNE joined the Company in June 1996 and was appointed
Executive Vice President Business Development in December 1996, and in April
1997 he was appointed Chief Financial Officer. Mr. Colaianne has 18 years
financial experience with 12 years automotive related and six years aerospace
and railway experience. Prior to joining the Company, Mr. Colaianne was the
Chief Financial Officer at RPI, Inc. and Butler Metal Products, American &
Canadian subsidiaries of Oxford Investment Group, Corporate Controller and
Vice president of Freedom Forge Corporation (specializing in railway parts),
Corporate Controller/Controller at American Technologies/Ferro Manufacturing
(specializing in automotive and aerospace) and Auditor of automotive and
property development industries with Touche Ross & Co.
C. KEITH CHULUMOVICH joined the Company in 1993 as controller of the
Dearborn facility. Prior to becoming corporate controller in early 1996, he
was also controller of the Lapeer facility. Prior to joining the Company, Mr.
Chulumovich was a manager with Deloitte & Touche llp in Detroit, serving
clients for nine years in manufacturing, leasing and other industries.
56
<PAGE>
THOMAS N. PAISLEY joined the Company upon the consummation of the Company's
acquisition of Rockwell Plastics. Mr. Paisley has over 27 years experience in
manufacturing. Mr. Paisley joined the Company's Ontario facility of Butler
Polymet in 1976 as Production Manager. In 1983 he moved to Lenoir as
Manufacturing Manager. In 1990, after the acquisition of Butler Polymet by
Rockwell Plastics, Mr. Paisley was promoted to Plant Manager of the Lenoir
facility. In 1993, Mr. Paisley was promoted to Director of
Structural/Functional and Energy Management Systems for Rockwell Plastics. In
August 1994 Mr. Paisley became General Manager of Cambridge North Carolina
operations and was promoted to President of Engineered Products Division in
October 1994.
RICHARD H. FRANK joined the Company in 1994 upon the consummation of the
Company's acquisition of Rockwell Plastics, where he had been employed for 18
years. Prior to joining Rockwell, Mr. Frank was employed for 18 years in
various positions by General Motors. Mr. Frank is a member of the Industrial
Development Research Council, the Society of Plastic Engineers and the Project
Management Institute.
PATRICK PAVELKA joined the Company in 1988 and, prior to becoming the
General Manager of the Lapeer facility, was General Manager of the Dearborn
facility. Prior to joining the Company, Mr. Pavelka was a manufacturing and
materials manager for Signet Industries. Mr. Pavelka has over 20 years of
experience in the areas of manufacturing and materials management.
TERRY S. WERRELL joined a predecessor of the Company in June 1992. Mr.
Werrell has 42 years of manufacturing and engineering experience in the
automotive industry, 20 years with General Motors in various management
positions and 22 years in the supplier industry serving in general management
positions. Prior to joining the Company he was a co-owner of a decorative zinc
die casting company headquartered in Detroit.
WILSON W. SICK, III joined the Company on March 1, 1997 as the executive
Vice President-Business Development and Marketing. Mr. Sick is an 18 year
veteran in the automotive supplier industry. Prior to joining the Company, he
served as Director of International Sales & Marketing for Magna
International's interior systems group. During his tenure at Magna he also
served as the sales director for areas including electronics, exterior
mirrors, interior trim panels and international business development.
MICHAEL E. KILPINEN joined the Company in March 1996 upon the consummation
of the GenCorp Acquisition where he had been employed since 1989. Prior to
becoming Executive vice President Engineering and Technology, Mr. Kilpinen
served in various engineering management positions with ASC, Ford Motor
Company Body Engineering and American Motors Corporation.
DALE L. FREEL joined the Company in December 1996 as Vice President of
Purchasing and Tooling. Prior to joining the Company Mr. Freel held various
purchasing positions within the Lear Corporation. Prior to 1993 Mr. Freel held
various manufacturing and sales positions with General Motors, CPC Division,
specializing in stampings, plastics and tooling.
ALAN M. SWIECH joined the Company in August 1996. Prior to joining the
Company Mr. Swiech served as Employee & Industrial Relations Manager at United
Technologies Automotive since 1993. He was previously with Pratt & Whitney
Aircraft (United Technologies Corporation), an aerospace manufacturer, from
May 1982 until July 1993 where he held various management positions within the
Human Resources Organization. Mr. Swiech has over 18 years experience in the
area of labor relations and human resource management.
DAVID W. MARTEN joined the Company in 1996 as Vice President of Quality and
Continuous Improvement. Mr. Marten has over 22 years experience in automotive
and heavy truck component manufacturing. Prior to his arrival at Cambridge,
Mr. Marten held various quality or manufacturing related positions at Cummins
Engine Co., Rockwell Automotive (Plastics), TRW and Preferred Technical Group.
JERROLD L. GLICK was a director of the Company and Holdings from August 1,
1994 through November 17, 1995, and was re-elected as a director in March
1996. Mr. Glick is a Managing Partner in approximately twenty real estate
development partnerships and is general partner of Columbia Group Limited. Mr.
Glick is also Chairman of American Medical Laboratories, Inc., a Virginia
based health care services company.
57
<PAGE>
IRA J. JAFFE has been a director of the Company and Holdings since February
27, 1996. Mr. Jaffe is a member of the law firm of Jaffe, Raitt, Heuer &
Weiss, Professional Corporation, which provides legal services to Holdings and
the Company.
ROBERT C. GAY became a director of the Company and Holdings on November 17,
1995. Mr. Gay has been a Managing Director of Bain Capital, Inc. since April
1993 and has been a general partner of Bain Venture Capital since 1989. Mr.
Gay is a director of IHF Capital, Inc., parent of ICON Health and Fitness,
Inc., Physio-Control International Corporation, GT Bicycles, Inc., GS
Technologies Operating Co., Inc. and American Pad & Paper Company.
EDWARD W. CONARD became a director of the Company and Holdings on November
17, 1995. Mr. Conard has been a Managing Director of Bain Capital, Inc. since
April 1993. From 1990 to 1993, Mr. Conard was a director of Wasserstein
Perella, an investment banking firm that specializes in mergers and
acquisitions. Previously, he was a Vice President at Bain & Company, where he
headed the firm's operations practice area. Mr. Conard is a director of Waters
Corporation and Medical Specialties Group, Inc.
RONALD P. MIKA became a director of the Company and Holdings in March 1996.
Mr. Mika has been a Managing Director of Bain Capital, Inc. since January 1997
and, prior to that time, had been a principal of Bain Capital, Inc. since
December 1992. Mr. Mika is a director of IHF Capital, Inc., parent of ICON
Health and Fitness, Inc.
DIRECTORS' COMPENSATION POLICY
The outside directors will be reimbursed for out-of-pocket expenses incurred
in connection with attending meetings. Directors, other than Mr. Glick,
currently receive no other directors' compensation; Mr. Glick receives
compensation of $2,500.00 per Board meeting.
COMPENSATION OF EXECUTIVE OFFICERS
The following table and notes set forth information concerning the
compensation for 1996 for Mr. Crawford, the four other most highly compensated
executive officers and the two most highly compensated executive officers of
the Company or Holdings who were not executive officers as of the end of 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------
OTHER ANNUAL
SALARY COMPENSATION
NAME AND PRINCIPAL POSITION* ($) BONUS($) ($)
- - ---------------------------- -------- ------- ------------
<S> <C> <C> <C>
Richard S. Crawford, Director, CEO............. $462,500 -0- $2,321
Kevin J. Alder, COO/President(1)............... 62,893 $50,000 1,667
Thomas N. Paisley, President-
Structural/Functional Division................ 199,701 15,000 66,851
Richard Frank, President-Specialty
Vehicle/Commercial Vehicle.................... 166,708 10,000 9,578
Patrick Pavelka, President-Interior System
Division...................................... 175,000 25,000 10,483
Richard E. Warnick, COO(2)..................... 250,000 -0- 5,287
</TABLE>
- - --------
(1) Reflects Mr. Alder's 1996 cash compensation from November 1996, the date
he joined the Company. Mr. Alder is compensated at a current annual rate
of $253,000.
(2) In connection with the 1995 Transaction, Holdings purchased Mr. Warnick's
20% interest in Holdings (actually held by R&C Warnick, L.L.C., a limited
liability company owned by Mr. Warnick and his wife
58
<PAGE>
(the "Warnick LLC"), for $10 million, pursuant to a Stock Purchase
Agreement dated as of November 17, 1995 in which the Warnick LLC and Mr.
Warnick agreed to a five-year covenant not to compete. Simultaneously, Mr.
Warnick and the Company entered into an Employment Agreement pursuant to
which Mr. Warnick agreed to provide transitional assistance to the Company
for a period of two years. Under the Employment Agreement, Mr. Warnick will
receive an annual salary of $250,000.
* Effective December 4, 1996, the employment of Donald Holton as President
and a Director of the Company was terminated by mutual agreement of the
Company and Mr. Holton. The Company and Mr. Holton have negotiated terms of
an agreement, but a written agreement has not yet been concluded. The
negotiated terms include: (i) the purchase by Mr. Holton of shares of Class
A and Class L Common Stock of Holdings for an aggregate purchase price of
$1 million to be paid by application of approximately $350,000 of salary
and bonus earned by Mr. Holton during 1996, a promissory note from Mr.
Holton in the amount of $500,000 and approximately $150,000 in cash; (ii)
full vesting of 2,000 Tranche 1 option shares of Holdings previously
granted to Mr. Holton; (iii) payments of severance benefits of
approximately $42,000; (iv) continuation of Mr. Holton's non-competition
agreement with the Company until no later than December 31, 1997; and (v)
Mr. Holton's agreement not to sue Holdings and the Company. There can be no
assurance that an agreement with Mr. Holton will be concluded or that if
concluded, it will include these terms.
EMPLOYMENT AGREEMENTS
In connection with the 1995 Transaction, Mr. Crawford entered into an
employment agreement with the Company, pursuant to which Mr. Crawford receives
an annual base salary in the amount of $475,000 and an annual performance
based bonus for an amount not to exceed 50% of his base salary. In addition,
Mr. Crawford was paid a $412,500 consulting fee in connection with the GenCorp
Acquisition. Mr. Crawford's employment agreement also provides for a severance
payment equal to three months of his base salary in the event his employment
is terminated for any reason other than resignation. The employment agreement
provides that Mr. Crawford will not directly or indirectly compete with the
Company for two years following termination of his employment with the
Company.
STOCK PURCHASE AND STOCK OPTION AGREEMENTS
The Board of Directors of Holdings has approved the issuance of shares of
Holdings' Class L and Class A stock and the grant of options for shares of
Holdings' Class A stock to certain key employees of the Company, pursuant to a
form of Stock Purchase and Stock Option Agreement also approved by Holdings'
Board. Holdings' Board has approved the issuance of an aggregate of 166.45
shares Class L stock for an aggregate purchase price of $217,517 and an
aggregate of 261,818.14 shares of Class A stock for an aggregate purchase
price of $864,000 to fifteen key employees. In addition, the Board has
approved the grant of an aggregate of 4,750 shares of Holdings' Class A stock
exercisable in three tranches for an aggregate purchase price of $1,924,771.
A portion of the purchase price for the employees' stock will be paid in
cash with the remainder paid by delivery of a five year promissory note to
Holdings bearing interest at 8.5%.
59
<PAGE>
SECURITY OWNERSHIP
The Company is a wholly owned subsidiary of Holdings. The capital stock of
Holdings consists of preference stock, par value $.01 per share ("Preference
Stock"), Class A common stock, par value $0.01 per share ("Class A Common"),
Class L common stock, par value $0.01 per share ("Class L Common"), and
Class P common stock, par value $0.01 per share ("Class P Common" and
collectively with the Class A Common and Class L Common, "Common Stock"). The
Preference Stock is senior in right of payment to the Common Stock; the Class
L Common is senior in right of payment to the Class A Common and Class P
Common; and the Class P Common is senior in right of payment to the Class A
Common. All of the issued and outstanding shares of Preference Stock are owned
by Crawford Investment Group L.L.C. ("Crawford LLC"). Holders of Preference
Stock have no voting rights except as required by law. The holders of Common
Stock are entitled to one vote per share on all matters to be voted upon by
the stockholders of Holdings, including the election of directors. The Bain
Funds and Crawford LLC, own 55% and 42%, respectively, of the voting stock and
are parties to a stockholder agreement regarding the ownership (including the
voting) of such stock. By virtue of such stock ownership and agreement, the
Bain Funds and Crawford LLC will have the power to control all matters
submitted to a vote of stockholders, including election of directors of
Holdings and, indirectly, to elect all directors of the Company.
The following tables set forth certain information as of the date of the
Initial Offering regarding the beneficial ownership of (i) voting common stock
by each person (other than directors and executive officers of the Company)
known to the Company to own more than 5% of the outstanding voting common
stock of Holdings and (ii) voting and non-voting common stock by each director
of the Company, each named executive officer and all of the Company's
directors and executive officers as a group. To the knowledge of the Company,
each of such stockholders has sole voting and investment power as to the
shares shown unless otherwise noted.
<TABLE>
<CAPTION>
NUMBER AND NUMBER AND NUMBER AND NUMBER AND NUMBER AND
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING
SHARES OF SHARES OF SHARES OF SHARES OF SHARES OF
CLASS A CLASS L CLASS P PREFERENCE VOTING
COMMON(1) COMMON(1) COMMON(1) STOCK SECURITIES(1)
---------------- ---------------- ---------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bain Funds(2)........... 61,333.28 91.3% 15,333.32 57.4% -0- 0% -0- 0% 76,804.10 55.3%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Richard S. Crawford(3).. 2,640.84 3.9% 11,250.00 42.1% 45,000 100% 1,000 100% 58,890.84 42.4%
Cambridge Industries,
Inc.
555 Horace Brown Drive
Madison Heights, MI
48071
Robert C. Gay(2)........ 61,333.28 91.3% 15,333.32 57.4% -0- 0% -0- 0% 76,804.10 55.3%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Edward Conard(2)........ 61,333.28 91.3% 15,333.32 57.4% -0- 0% -0- 0% 76,804.10 55.3%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Ronald P. Mika(2)....... 61,333.28 91.3% 15,333.32 57.4% -0- 0% -0- 0% 76,804.10 55.3%
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
All Directors and 63,974.12 95.21% 26,720.82 100.0% 45,000 100% 1,000 100% 135,694.94 97.7%
Executive Officers as a
Group
(12 persons)(1)(2).....
</TABLE>
60
<PAGE>
- - --------
(1) Includes a total of 12,195.63 shares of Class A Common and a total of
1,720.82 shares of Class L Common, respectively, issuable upon exercise of
warrants and options exercisable currently or within 60 days from the date
hereof. Does not include shares which may be issued to Donald Holton, a
former officer and director of the Company. See "Business--Compensation of
Executive Officers".
(2) Amounts shown represent the aggregate number of shares of Class A Common
(including warrants to obtain Class A Common) and Class L Common
(including warrants to obtain Class L Common) held by Bain Capital Fund V,
L.P., Bain Capital Fund V-B, L.P., Bain Capital Fund IV, L.P., Bain
Capital Fund IV-B, L.P., BCIP Associates, BCIP Trust Associates, L.P. and
Bain Capital V Mezzanine Fund, L.P. (collectively, the "Bain Funds").
Messrs. Gay, Conard and Mika are directors of the Company and Holdings and
are managing directors of Bain Capital Investors, Inc. ("BCI") and Bain
Capital Investors V, Inc. ("BCI-V"). BCI is the general partner of Bain
Capital Partners IV ("BCP-IV"), BCI-V is the general partner of Bain
Capital Partners V ("BCP-V") and Bain Capital V Mezzanine Partners, L.P.
("BCMP-V"). Messrs. Gay and Conard are also limited partners of BCP-IV and
BCP-V and Mr. Mika is a limited partner of BCP-V. BCP-IV is the general
partner of Bain Capital Fund IV, L.P. and Bain Capital Fund IV-B, L.P.
BCP-V is the general partner of Bain Capital Fund V, L.P. and Bain Capital
Fund V-B, L.P. BCMP-V is the general partner of Bain Capital V Mezzanine
Fund, L.P. Messrs. Gay, Conard and Mika are general partners of BCIP
Associates and BCIP Trust Associates, L.P. Accordingly, Messrs. Gay,
Conard and Mika may be deemed to beneficially own shares owned by the Bain
Funds; although Messrs. Gay, Conard and Mika disclaim beneficial ownership
of any such shares.
(3) Includes 45,000 shares of Class P Common and 11,250 shares of Class L
Common and 1,000 shares of Preferred Stock beneficially owned by Richard
S. Crawford through Crawford Investment Group LLC, formerly known as
22708-12 Harper L.L.C., owned 45% by Mr. Crawford, 45% by the 1994 Richard
Crawford Qualified Annuity Trust u/a/d December 22, 1994, 5% by Elizabeth
T. Crawford, his wife, and 5% by the 1994 Elizabeth T. Crawford Qualified
Annuity Trust u/a/d December 23, 1994.
61
<PAGE>
CERTAIN TRANSACTIONS
THE 1995 TRANSACTION
In November 1995, Holdings was recapitalized in the 1995 Transaction which
included: (i) the purchase of Holdings' common stock for approximately $18
million by the Bain Funds; (ii) the repurchase by Holdings of shares of its
common stock (the "Redeemed Shares") (a) from Crawford LLC for $23.25 million,
(b) from an affiliate of Richard E. Warnick for $10.0 million, (c) from an
affiliate of John D. Craft, an officer and former director of the Company and
a former principal stockholder of Holdings, for $16 million and (d) from DLJ
Merchant Banking, Inc. for $21.3 million; and (iii) the exchange of shares of
Holdings' common stock (the "Exchanged Shares") held by Crawford LLC for newly
issued shares of Holdings' capital stock. The Exchanged Shares and the
Redeemed Shares represented all of the outstanding stock of Holdings prior to
the 1995 Transaction. As a result, the newly issued capital stock of Holdings
referred to above represents all of the capital stock of Holdings. See
"Security Ownership."
Simultaneously with the 1995 Transaction, the Company replaced a credit
facility with the Previous Credit Agreement which at that time provided term
and revolver facilities in the aggregate principal amount of $185 million. As
of March 1, 1996, the Previous Credit Agreement was amended and restated to
increase the indebtedness incurred under the various facilities to $215
million in the aggregate, in part to finance the GenCorp Acquisition.
STOCKHOLDERS AGREEMENT AND REGISTRATION RIGHTS AGREEMENT
Pursuant to a stockholders agreement (the "Stockholders Agreement"),
Holdings, Crawford LLC, the Bain Funds and certain other investors have agreed
that until certain designated events occur, such parties will vote for three
of Bain's nominees and three of Crawford LLC's nominees to the Company's and
Holdings' boards of directors. The Stockholders Agreement also contains
restrictions (with certain exceptions) on the transfer of the common stock by
a party thereto, including rights of first offer of Holdings and other
stockholders of Holdings and establishes drag-along and preemptive rights in
certain events. The parties to the Stockholders Agreement have also entered
into a registration rights agreement providing certain registration rights
relating to their shares of Common Stock.
STOCK OPTION AGREEMENT
At the time of the 1995 Transaction, Holdings entered into a stock option
agreement with Mr. Crawford (the "Stock Option Agreement") which grants him
options to acquire 15,845.08 shares of Class A Common in the following
tranches: (i) a three year straight-line vested option to purchase up to
7,922.54 shares of Class A Common for $3.30 per share; and (ii) options to
purchase up to 3,961.27 shares of Class A Common at an exercise price of
$312.13 per share and up to 3,961.27 shares of Class A Common at $642.13 per
share, exercisable after the Company has achieved earnings before interest and
taxes of at least $32 million. All three tranches expire on the earlier of the
November 17, 2005, the termination of Mr. Crawford's employment by the Company
or Holdings or the occurrence of certain transactions resulting in Holdings
becoming a public company or otherwise undergoing a change of control. The
Stock Option Agreement also includes restrictions on transfer and the right of
Holdings to repurchase the options or shares upon termination of Mr.
Crawford's employment with Holdings and the Company. Holdings may in the
future enter into additional stock option agreements with other members of
management.
MANAGEMENT SERVICES AGREEMENT
The Company is party to a five year management services agreement with Bain
Capital, Inc. ("Bain"), dated as of November 17, 1995 and amended as of March
1, 1996, pursuant to which the Company paid Bain a fee of $2.25 million in
connection with the 1995 Transaction and a fee of $412,500 in connection with
the GenCorp Acquisition and will pay Bain (i) at the closing of each
acquisition of an additional business an amount equal to 1% of the transaction
value of such acquisition and (ii) an annual fee of $950,000 per year, plus
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out-of-pocket expenses; provided that such annual fee payment will be reduced
by the amount of any payment of any closing fee described in clause (ii) above
for up to four consecutive fiscal quarters following the consummation of any
such acquisition. Pursuant to the management services agreement, during 1996
the Company paid Bain fees of approximately $937,000 and paid Bain $3.8
million in connection with the Initial Offering, the Credit Agreement, the
Eagle-Picher Acquisition and the Goodyear-Jackson Acquisition.
HOLDINGS SERVICES AGREEMENT
The Company and Holdings have entered into a ten year services agreement
dated as of July 1, 1997, pursuant to which Holdings provides the Company with
management services and personnel necessary to perform such services. Under
such agreement, the Company must reimburse Holdings for: (i) reasonable
out-of-pocket expenses actually paid to unaffiliated third parties in
connection with such services; and (ii) other expenses of Holdings of up to
$500,000 per year incurred in connection with such services.
LEGAL SERVICES
Ira J. Jaffe, a director of the Company, practices law with, and is a
shareholder of, the law firm of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation ("JRH&W"). JRH&W has served as general counsel to Holdings and the
Company since their inceptions and has represented them in a variety of legal
matters, including the 1995 Transaction, the GenCorp Acquisition, the APX
Acquisition, the Eagle-Picher Acquisition and the Goodyear Acquisition. During
1996 Holdings and the Company paid JRH&W legal fees of approximately $1.6
million.
SUBORDINATED NOTES AND WARRANT AGREEMENTS
In connection with the 1995 Transaction, the Company obtained a bridge loan
in the aggregate principal amount of $11.9 million from Bankers Trust. On
December 14, 1995, the notes evidencing this bridge loan were repurchased from
Bankers Trust by the Company using, inter alia, the proceeds received from
issuance of the Company's Senior Subordinated Notes to two of the Bain Funds,
Bain Capital V Mezzanine Fund, L.P. and BCIP Trust Associates, L.P.
(collectively the "Bain MezFunds"). The Company's Senior Subordinated Notes
issued to the Bain MezFunds bear interest at 12% and mature in November 2005.
Interest is due semi-annually, beginning on April 30, 1996. Voluntary
prepayment or mandatory prepayment in the case of a Change in Control (as
defined therein) bears a prepayment premium beginning at 12% and declining
annually. Prepayments are required to the extent permitted by the Credit
Agreement, upon the occurrence of an Asset Sale. Casualty Event (each as
defined therein) or Change in Control. To the extent the Bain MezFunds receive
any prepayments, they are obligated to use such prepayments to purchase
Holdings' Senior Subordinated Notes. See "Business--GenCorp RPD." The
Company's Senior Subordinated Notes are subordinated to the Company's Senior
Debt, including indebtedness under the Credit Agreement. The credit agreement
related to the Company's Senior Subordinated Notes contains covenants similar
to, but less onerous than, those in the Credit Agreement.
In connection with the issuance of the Company's Senior Subordinated Notes,
Holdings entered into a warrant agreement with the Bain MezFunds pursuant to
which the Bain MezFunds purchased warrants exercisable for an aggregate of
4,723.01 shares of Class A Common at an exercise price of $3.30 per share and
1,180.75 shares of Class L Common at an exercise price of $1,306.80 per share.
The warrants are exercisable immediately, provide for anti-dilution rights
upon the occurrence of certain events and are entitled to all dividends
distributed by Holdings on an as if exercised basis.
In connection with the GenCorp Acquisition, Holdings issued the Holdings'
Junior Subordinated Notes in the aggregate principal amount of $5.1 million to
the Bain MezFunds and Crawford LLC. Crawford LLC subsequently sold its notes
to the Bain MezFunds. The terms of these notes are substantially similar to
the terms of those issued under the Company's Senior Subordinated Notes, but
they are subordinated to indebtedness under the Credit Agreement, Holdings'
Senior Subordinated Notes and the Company's Senior Subordinated Notes.
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In connection with the issuance of Holdings' Junior Subordinated Notes,
Holdings entered into a warrant agreement with the Bain MezFunds and Crawford
LLC pursuant to which the Bain MezFunds and Crawford LLC purchased warrants
exercisable for an aggregate of 2,160.27 shares of Class A Common at an
exercise price of $3.30 per share and 540.07 shares of Class L Common at an
exercise price of $1,306.80 per share. The warrants are exercisable
immediately, provide for anti-dilution rights upon the occurrence of certain
events and are entitled to all dividends distributed by Holdings on an as if
exercised basis. Crawford LLC subsequently sold its warrants to the Bain
MezFunds in connection with the sale of its Holdings' Junior Subordinated
Notes to the Bain MezFunds.
DESCRIPTION OF CREDIT AGREEMENT
Upon consummation of the Initial Offering, the Previous Credit Agreement was
replaced by a Credit Agreement (the "Credit Agreement") with Bankers Trust
Company as agent (the "Agent") and other institutions party thereto (the
"Banks"), which provides loans up to $280.0 million. Loans under the Credit
Agreement consist of $70.0 million in aggregate principal amount of A Term
Loans and $135.0 million in aggregate principal amount of B Term Loans (the "A
Term Loans" and the "B Term Loans" are referred to collectively as the "Term
Loans") and a $75.0 million revolving credit facility (the "Revolving Credit
Facility"), which permits the Company to borrow to finance working capital,
letters of credit and other general corporate needs. The Company used the Term
Loans to repay term loans under the Previous Credit Agreement which provided a
portion of the funds necessary to consummate the 1995 Transaction and the
GenCorp Acquisition. This information relating to the Credit Agreement is
qualified in its entirety by reference to the complete text of the documents
entered into in connection therewith. The following is a description of the
general terms of the Credit Agreement.
Indebtedness of the Company under the Credit Agreement is guaranteed by
Holdings and any existing and future domestic subsidiaries of the Company and
is secured by: (i) a first priority security interest in all of the
receivables, contracts, contract rights, securities, equipment (other than
certain equipment secured by purchase money security interests), intellectual
property, inventory and real estate owned by Holdings, the Company and any
existing and future domestic subsidiaries; (ii) a first priority perfected
pledge of all capital stock and intercompany notes of the Company and any
existing and future domestic subsidiaries and 65% of the capital stock of any
existing and future first tier foreign subsidiaries; and (iii) a first
priority perfected pledge of intercompany notes of Holdings' or the Company's
foreign subsidiaries owed to the Company or Holdings.
Indebtedness under the Credit Agreement bears interest at a floating rate.
Indebtedness under the Revolving Credit Facility (the "Revolving Loans") and
the Term Loans bear interest at a rate based (at the Company's option) upon
(i) the Base Rate (defined as the higher of (x) the applicable prime rate of
Bankers Trust Company and (y) the Federal Reserve reported certificate of
deposit rate (as adjusted pursuant to the Credit Agreement) plus 1/2 of 1%),
in each case plus 1.50% in respect of the A Term Loans and the Revolving Loans
and 2.00% in respect of the B Term Loans or (ii) the Eurodollar Rate (as
defined in the Credit Agreement) for one, two, three or six months, in each
case plus 2.50% in respect of the A Term Loans and Revolving Loans and 3.00%
in respect of the B Term Loans.
The A Term Loans and the Revolving Loans mature 5 years following the date
of initial borrowing; the B Term Loans mature 8 years following the date of
initial borrowing. The Credit Agreement provides for mandatory repayments,
subject to certain exceptions, of the Term Loans (and after all Term Loans
have been repaid, certain commitment reductions under the Revolving Credit
Facility) based on certain net proceeds from asset sales outside the ordinary
course of business of Holdings and its subsidiaries, the net proceeds of
certain debt and equity issuances, and 75% of Excess Cash Flow (as defined
therein) per annum.
The Revolving Loans may be repaid and reborrowed. The Company is required to
pay to the lenders under the Credit Agreement a commitment fee equal to 1/2 of
1% per annum of the daily unutilized total commitment thereunder, payable on a
quarterly basis. The Company is also required to pay to the lenders
participating in the Revolving Credit Facility letter of credit fees equal to
2.50% plus 1/4 of 1% per annum on the daily stated amount of each letter of
credit outstanding (but not less than $500) payable annually.
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The Credit Agreement requires the Company to meet certain financial tests,
including minimum levels of EBITDA (as defined therein), minimum interest
coverage, maximum leverage ratio and maximum amounts of capital expenditures.
The Credit Agreement also contains covenants which, among other things, limit
the incurrence of additional indebtedness, dividends, transactions with
affiliates, asset sales, acquisitions, mergers and consolidations, prepayments
of other indebtedness, liens and encumbrances, capital expenditures and other
matters customarily restricted in such agreements.
The Credit Agreement contains customary events of default, including payment
defaults, breach of representations and warranties, covenant defaults, cross-
defaults to certain other indebtedness, certain events of bankruptcy and
insolvency, ERISA, judgment defaults, failure of any guaranty or security
agreement supporting the Credit Agreement to be in full force and effect and
change of control of Holdings or the Company.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on July 10, 1997 to the
Initial Purchaser pursuant to the Purchase Agreement. The Initial Purchaser
subsequently resold the Old Notes to qualified institutional buyers in
reliance on Rule 144A under the Securities Act and a limited number of
institutional "accredited investors" as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act. As a condition of the Purchase Agreement, the
Company entered into the Registration Rights Agreement with the Initial
Purchaser pursuant to which the Company has agreed, for the benefit of the
holders of the Old Notes, at the Company's cost, to use its best efforts to
(i) within 60 days after the original issue date (the "Issue Date"), file the
Exchange Offer Registration Statement with the Commission; (ii) within 120
days after the Issue Date, use its best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act; and
(iii) within 150 days after the Issue Date, use its best efforts to consummate
the Exchange Offer. Upon the Exchange Offer Registration Statement being
declared effective, the Company and the Guarantors will offer the New Notes in
exchange for surrender of the Notes. The Company and the Guarantors will keep
the New Offer open for not less than 20 business days (or longer if required
by applicable law) after the date notice of the Exchange Offer is mailed to
the holders of the Old Notes. For each Old Note surrendered to the Company
pursuant to the Exchange Offer, the holder will receive a New Note having a
principal amount equal to that of the surrendered Note. Interest on the New
Notes will accrue from the last interest payment date on which interest was
paid on the Notes surrendered in exchange therefor or, if no interest has been
paid on the Old Notes, from the Issue Date. Such interest will be paid with
the first interest payment on the New Notes to the persons who are registered
holders of the New Notes. Interest on the Old Notes accepted for exchange will
cease to accrue upon issuance of the New Notes.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the New Notes will, in general, be
freely tradeable after the Exchange Offer without further registration under
the Securities Act. However, any purchaser of Old Notes who is an "affiliate'
(as defined in the Securities Act) of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing the New
Notes (i) will not be able to rely on the interpretation of the staff of the
Commission, (ii) will not be able to tender its Old Notes in the Exchange
Offer and (iii) must comply with the registration and prospectus delivery
requirement of the Securities Act in connection with any sale or transfer of
the Old Notes, unless such sale or transfer is made pursuant to an exemption
from such requirements.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent
to the Company in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging and does not intend to engage in distribution of the
New Notes, (iii) the holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other person is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act, and (v)
the holder or any such other person acknowledges that if such holder or any
other person participating in the Exchange Offer for the purpose of
distributing the New Notes it must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale of
the New Notes and cannot rely on those no-action letters. As indicated above,
each Participating Broker-Dealer that receives a New Note for its own account
in exchange for Old Notes must acknowledge that it (i) acquired the Old Notes
for its own account as a result of market-making activities or other trading
activities, (ii) has not entered into any arrangement or understanding with
the Company or any "affiliate" of the Company (within the meaning of Rule 405
under the Securities Act) to distribute the New Notes to be received in the
Exchange Offer and (iii) will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Notes. For a
description of the procedures for resales by Participating Broker-Dealers, see
"Plan of Distribution."
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In the event that applicable interpretations of the staff of the Commission
do not permit the Company and the Guarantors to effect such an Exchange Offer,
or if for any other reason the Exchange Offer is not consummated within 150
days after the Issue Date, the Company and the Guarantors will, at their own
expense, (a) as promptly as practicable, file a shelf registration statement
covering resales of the Notes (the "Shelf Registration Statement"), (b) use
their best efforts to cause the Shelf Registration Statement to be declared
effective under the Act and (c) use their best efforts to keep effective the
Shelf Registration Statement until the earlier of two years after the Issue
Date and such time as all of the applicable Notes have been sold thereunder.
The Company will, in the event such a Shelf Registration Statement is
required, provide to each holder of the Old Notes copies of the prospectus
which is a part of such a Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement for the Notes has become
effective and take certain other actions as are required to permit
unrestricted resales of the Notes. A holder that sells its Notes pursuant to
the Shelf Registration Statement generally will be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus
to purchasers, will be subject to certain of the civil liability provisions
under the Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to such a
holder (including certain indemnification rights and obligations).
If the Company fails to comply with the above provisions or if such
registration statements fail to become effective, then, as liquidated damages,
additional interest (the "Additional Interest") shall become payable with
respect to the Old Notes as follows:
(i) if the Exchange Offer Registration Statement or Shelf Registration
Statement is not filed within 60 days following the Issue Date, Additional
Interest shall be accrued on the Notes over and above the stated interest
at a rate of 0.50% per annum for the first 90 days commencing on the 61st
day after the Issue Date, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period;
(ii) if an Exchange Offer Registration Statement or Shelf Registration
Statement is not declared effective within 120 days following the Issue
Date, then, commencing on the 121st day after the Issue Date, Additional
Interest shall be accrued on the Notes over and above the stated interest
at a rate of 0.50% per annum for the first 90 days immediately following
the 120th day after the Issue Date, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
subsequent 90-day period; or
(iii) if either (A) the Company and the Guarantors have not exchanged the
Exchange Notes for all Notes validly tendered in accordance with the terms
of the Exchange Offer on or prior to 150 days after the Issue Date or (B)
the Exchange Offer Registration Statement ceases to be effective at any
time prior to the time that the Exchange Offer is consummated or (C) if
applicable, the Shelf Registration Statement has been declared effective
and such Shelf Registration Statement ceases to be effective at any time
prior to the third anniversary of its effective date, then Additional
Interest shall accrue on the Notes (over and above any interest otherwise
payable on the Notes) at a rate of 0.50% per annum on (x) the 151st day
after such effective date, in the case of clause (A) above, or (y) the date
the Exchange Offer Registration Statement ceases to be effective, in the
case of clause (B) above, or (z) the day the Shelf Registration Statement
ceases to be effective, in the case of clause (C) above, such Additional
Interest rate increasing by an additional 0.50% per annum at the beginning
of each subsequent 90-day period;
provided that the Additional Interest rate on the Notes may not exceed 1.0%
per annum in the aggregate; provided, further, that (1) upon the filing of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in
the case of clause (i) above), (2) upon the effectiveness of the Exchange
Offer Registration Statement or a Shelf Registration Statement (in the case of
clause (ii) above), or (3) upon the exchange of Exchange Notes for all Notes
tendered (in the case of clause (iii)(A) above) or upon the effectiveness of
the Exchange Offer Registration Statement which has ceased to remain effective
(in the case of clause (iii)(B) above), or upon the effectiveness of the Shelf
Registration Statement which has ceased to remain effective (in the case of
clause (iii)(C) above), Additional Interest on the Notes as a result of such
clause (i), (ii) or (iii) above (or the relevant subclause thereof), as the
case may be, shall cease to accrue.
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Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii)
above will be payable in cash on scheduled interest payment dates for the
Notes, commencing with the first such date occurring after any such Additional
Interest commences to accrue. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes, multiplied by a fraction, the numerator of
which is the number of days such Additional Interest rate was applicable
during such period (determined on the basis of a 360-day year comprised of
twelve 30-day months) and the denominator of which is 360.
Holders of the Old Notes will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
Additional Interest set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by, all the provisions of the Registration Rights Agreement, a
copy of which is filed as an exhibit to the Exchange Offer Registration
Statement of which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Old Notes could be adversely
affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
of New Notes in exchange for each $1,000 principal amount of outstanding Old
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered
only in integral multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that (i) the New Notes bear a Series B designation and a
different CUSIP Number from the Old Notes, (ii) the New Notes will be issued
in a transaction that has been registered under the Securities Act and,
therefore, will not bear legends restricting the transfer thereof and (iii)
the holders of the New Notes will not be entitled to certain rights under the
Registration Rights Agreement, including the provisions providing for
liquidated damages in certain circumstances relating to the timing of the
Exchange Offer, all of which rights will terminate when the Exchange Offer is
terminated. The New Notes will evidence the same debt as the Old Notes and
will be entitled to the benefits of the Indenture.
As of the date of this Prospectus, $100,000,000 aggregate principal amount
of Old Notes were outstanding. The Company has fixed the close of business on
, 1997 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware, or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
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The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the exchange fees and expenses.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on ,
1997, unless the Company, in its sole discretion, extends the Exchange Offer,
in which case the term "Expiration Date" shall mean the latest date and time
to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practical by oral or
written notice thereof to the registered holders.
INTEREST ON THE NEW NOTES
Interest on the New Notes will accrue from the last interest payment date on
which interest was paid on the Notes surrendered in exchange therefor or, if
no interest has been paid on the Old Notes, from the Issue Date. Such interest
will be paid with the first interest payment on the New Notes to the persons
who are registered holders of the New Notes. Interest on the Old Notes
accepted for exchange will cease to accrue upon issuance of the New Notes.
Interest on the New Notes is payable semi-annually on each January 15 and
July 15, commencing on January 15, 1998.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal or transmit an Agent's
Message in connection with a book-entry transfer, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, or Agent's Message,
together with the Old Notes and any other required documents, to the Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date. To be
tendered effectively, the Old Notes, Letter of Transmittal or an Agent's
Message and other required documents must be completed and received by the
Exchange Agent at the address set forth below under "Exchange Agent" prior to
5:00 p.m., New York City time, on the Expiration Date. Delivery of the Old
Notes may be made by book-entry transfer in accordance with the procedures
described below. Confirmation of such book-entry transfer must be received by
the Exchange Agent prior to the Expiration Date.
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The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the Old Notes that such participant has
received and agrees: (i) to participate in the Automated Tender Option Program
("ATOP"); (ii) to be bound by the terms of the Letter of Transmittal; and
(iii) that the Company may enforce such agreement against such participant.
By executing the Letter of Transmittal or Agent's Message, each holder will
make to the Company the representations set forth above in the third paragraph
under the heading "Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal or Agent's Message.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL OR AGENT'S
MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDERS. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE
SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See
"Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined herein)
unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of a Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of the Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Old Notes with the
signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Old Notes at the Book-Entry Transfer Facility (as defined in the Letter of
Transmittal) for the purpose of facilitating the Exchange Offer, and subject
to the establishment thereof, any financial institution that is a participant
in the Book-Entry Transfer Facility's system may make book-entry delivery of
Old Notes by causing such Book-Entry Transfer Facility to transfer such Old
Notes into
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the Exchange Agent's account with respect to the Old Notes in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. Although
delivery of the Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility, unless an
Agent's Message is received by the Exchange Agent, in compliance with ATOP, an
appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to the Book-
Entry Transfer Facility does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right in its sole
discretion to waive any defects, irregularities or conditions of tender as to
particular Old Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Old Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution,
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of book-entry transfer of
such Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the Book-
Entry Transfer Facility), and all other documents required by the Letter of
Transmittal are received by the Exchange Agent upon five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
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WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Old Notes to be withdrawn
(the "Depositor"); (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case
of Old Notes transferred by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited); (iii) be signed
by the holder in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Old Notes register the transfer of such
Old Notes into the name of the person withdrawing the tender and (iv) specify
the name in which any such Old Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no New Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have
been tendered but which are not accepted for exchange will be returned to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described above under "Procedures for Tendering" at any time prior to the
Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the reasonable judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Company, Holdings or any of their
subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of holders to withdraw
such Old Notes (see "--Withdrawal of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Old Notes which have not been withdrawn.
EXCHANGE AGENT
State Street Bank & Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of
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Transmittal and requests for Notice of Guaranteed Delivery should be directed
to the Exchange Agent addressed as follows:
State Street Bank & Trust
Company
Attention: Steve Cimalore 777
Maine Street, 11th Floor
Hartford, Connecticut 06115
Delivery to an address other than as set forth above will not constitute a
valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is face value, as reflected in the Company's accounting records on the
date of exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be expensed
over the term of the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Old Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii) so
long as the Old Notes are eligible for resale pursuant to Rule l44A, to a
person inside the United States whom the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule l44A under the
Securities Act in a transaction meeting the requirements of Rule l44A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel reasonably acceptable to the Company), (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, or (iv) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States.
RESALE OF THE NEW NOTES
With respect to resales of New Notes, based on interpretations by the staff
of the Commission set forth in no-action letters issued to third parties, the
Company believes that a holder or other person who receives the New Notes,
whether or not such person is the holder (other than a person that is a
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who receives New Notes in exchange for Old Notes in the ordinary course
of business and who is not participating, does not intend to participate, and
has no arrangement or understanding with any person to participate, in the
distribution of the New Notes, will be allowed to resell the New Notes to the
public without further registration under the Securities Act and without
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delivering to the purchasers of the New Notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if any holder
acquires New Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the New Notes, such holder cannot rely on
the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration
is otherwise available. Further, each Participating Broker-Dealer that
receives New Notes for its own account in exchange for Old Notes, where such
Old Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such New Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent
to the Company in the Letter of Transmittal that (i) the New Notes are to be
acquired by the holder or the person receiving such New Notes, whether or not
such person is the holder, in the ordinary course of business, (ii) the holder
or any such other person (other than a broker-dealer referred to in the next
sentence) is not engaging and does not intend to engage, in the distribution
of the New Notes, (iii) the holder or any such other person has no arrangement
or understanding with any person to participate in the distribution of the New
Notes, (iv) neither the holder nor any such other person is a "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act, and (v)
the holder or any such other person acknowledges that if such holder or other
person participates in the Exchange Offer for the purpose of distributing the
New Notes it must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the New
Notes and cannot rely on those no-action letters. As indicated above, each
Participating Broker-Dealer that receives a New Note for its own account in
exchange for Old Notes must acknowledge that it will deliver a Prospectus in
connection with any resale of such New Notes. For a description of the
procedures for such resales by Participating Broker-Dealers, see "Plan of
Distribution."
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DESCRIPTION OF NOTES
The New Notes will be issued under the Indenture. The form and terms of the
New Notes are the same as the form and terms of the Old Notes (which they
replace) except that (i) the New Notes bear a Series B designation, (ii) the
New Notes have been issued in a transaction that has been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof, and (iii) the holders of New Notes will not be entitled to certain
rights under the Registration Agreement, including the provisions providing
for liquidated damages in certain circumstances relating to the timing of the
Exchange Offer, which rights will terminate when the Exchange Offer is
consummated. The following summary of certain provisions of the Indenture and
the Notes does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the Trust Indenture Act of 1939, as amended
(the "TIA"), and to all of the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part of the
Indenture by reference to the TIA as in effect on the date of the Indenture. A
copy of the Indenture may be obtained from the Company or the Initial
Purchaser. The definitions of certain capitalized terms used in the following
summary are set forth below under "Certain Definitions." For purposes of this
section, references to the "Company" include only Cambridge Industries, Inc.
and not its subsidiaries.
The Notes are and will be general unsecured obligations of the Company,
ranking subordinate in right of payment to all existing and future Senior Debt
of the Company.
The Notes are and will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
the Trustee will act as Paying Agent and Registrar for the Notes. The Notes
may be presented for registration of transfer and exchange at the offices of
the Registrar, which initially will be the Trustee's corporate trust office.
The Company may change any Paying Agent and Registrar without notice to
Holders of the Notes. The Company will pay principal (and premium, if any) on
the Notes at the Trustee's corporate office in New York, New York. At the
Company's option, interest, if any, may be paid at the Trustee's corporate
trust office or by wire transfer or check mailed to the registered address of
Holders.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $130,000,000, of
which $100,000,000 were issued in the Initial Offering, are the subject of the
Exchange Offer and will mature on July 15, 2007. Additional amounts may be
issued in one or more series from time to time, subject to the limitations set
forth under "Certain Covenants--Limitation on Additional Indebtedness and
Issuance of Preferred Stock." Interest on the Notes accrues at the rate of 10
1/4% per annum and are payable semiannually in arrears on each January 15 and
July 15, commencing on January 15, 1998, to the persons who are registered
Holders at the close of business on the January 1 and July 1 immediately
preceding the applicable interest payment date. Interest on the Notes accrues
from the most recent date to which interest has been paid or, if no interest
has been paid, from and including the date of issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Interest on the Notes may increase if the Company fails to fulfill its
obligations under the Registration Rights Agreement (as defined). See "The
Exchange Offer."
The Notes are not entitled to the benefit of any mandatory sinking fund.
REDEMPTION
Optional Redemption. The Notes are redeemable at the Company's option, in
whole at any time or in part from time to time, on and after July 15, 2002 at
the following redemption prices (expressed as a percentage of principal
amount), if redeemed during the twelve-month period commencing on July 15 of
each year set forth below, plus, in each case, accrued interest thereon to the
date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002............................................................ 105.125%
2003............................................................ 103.417%
2004............................................................ 101.708%
2005 and thereafter............................................. 100.000%
</TABLE>
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Optional Redemption upon Equity Offerings. At any time, or from time to
time, on or prior to July 15, 2000, the Company may, at its option, use the
net cash proceeds of one or more Equity Offerings (as defined below) to redeem
(the "Equity Proceeds Offer") up to 35% of the aggregate principal amount of
Notes originally issued at a redemption price of 110.25% of the aggregate
principal amount of Notes to be redeemed, plus accrued and unpaid interest, to
such redemption date; provided that at least $65.0 million in aggregate
principal amount of Notes remains outstanding immediately after any such
redemption. In order to effect the foregoing redemption with the proceeds of
any Equity Offering, the Company shall make such redemption not more than 90
days after the consummation of any such Equity Offering (the "Equity Proceeds
Purchase Date").
Within 30 days following the date upon which the Equity Offering is
consummated, the Company must send, by first class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Equity Proceeds Offer. Such notice will state, among other things, the Equity
Proceeds Purchase Date, which must be no earlier than 30 days nor later than
60 days from the date such notice is mailed, other than as may be required by
law, and the procedure which the Holder must follow to exercise such right.
The Equity Proceeds Offer is required to remain open for at least 20 Business
Days and until the close of business on the Equity Offer Purchase Date.
As used in the preceding paragraph, "Equity Offering" means an underwritten
public offering of Qualified Capital Stock of Holdings or the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act (other than on Form S-8 or any other form relating to
securities issuable under any benefit plan of the Company) or a private
placement of Capital Stock of the Company or Holdings; provided that, in the
event of an Equity Offering by Holdings, Holdings contributes to the capital
of the Company the portion of the net cash proceeds of such Equity Offering
necessary to pay the aggregate redemption price (plus accrued interest to the
redemption date) of the Notes to be redeemed pursuant to the preceding
paragraph.
SELECTION AND NOTICE OF REDEMPTION
In case of a partial redemption, selection of the Notes or portions thereof
for redemption shall be made by the Trustee by lot, pro rata or in such manner
as it shall deem appropriate and fair and in such manner as complies with any
applicable legal requirements; provided, however, that if a partial redemption
is made with the proceeds of a Equity Offering, selection of the Notes or
portions thereof for redemption shall be made by the Trustee only on a pro
rata basis, unless such method is otherwise prohibited. Notes may be redeemed
in part in multiples of $1,000 principal amount only. Notice of redemption
will be sent, by first class mail, postage prepaid, at least 30 days and not
more than 60 days prior to the date fixed for redemption to each Holder whose
Notes are to be redeemed at the last address for such Holder then shown on the
registry books. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after any redemption date,
interest will cease to accrue on the Notes or parts thereof called for
redemption as long as the Company has deposited with the Paying Agent funds in
satisfaction of the redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Debt. Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any total or partial liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of
assets of the Company or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to the Company or its
property, whether voluntary or involuntary, all Obligations due or to become
due upon all Senior Debt shall first be paid in full in cash or Cash
Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, before any payment or distribution of any kind or
character is made on account of any Obligations on the Notes, or for the
acquisition of any of the Notes for cash or property or otherwise (except that
Holders of Notes may receive securities of the Company that are unsecured and
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subordinated at least to the same extent as the Notes to Senior Debt as
provided in the Indenture, do not have a maturity any shorter than the
security which it is replacing and will not cause the Notes to be treated in
any case or proceeding as part of the same class of claims as the Senior Debt
or any class of claims pari passu with, or senior to, the Senior Debt for any
payment or distribution). If any default occurs and is continuing in the
payment when due, whether at maturity, upon any redemption, by declaration or
otherwise, of any principal of, interest on, unpaid drawings for letters of
credit issued in respect of or regularly accruing fees with respect to any
Senior Debt, no payment of any kind or character shall be made by or on behalf
of the Company or any other Person on its or their behalf with respect to any
Obligations on the Notes or to acquire any of the Notes for cash or property
or otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Debt, as such event of default is defined in
the instrument creating or evidencing such Designated Senior Debt, permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default
have been cured or waived or have ceased to exist or the Trustee receives
notice from the Representative for the respective issue of Designated Senior
Debt terminating the Blockage Period (as defined below), during the 179 days
after the delivery of such Default Notice (the "Blockage Period"), neither the
Company nor any other Person on its behalf shall (x) make any payment of any
kind or character with respect to any Obligations on the Notes or (y) acquire
any of the Notes for cash or property or otherwise. Notwithstanding anything
herein to the contrary, in no event will a Blockage Period extend beyond 179
days from the date the payment on the Notes was due and only one such Blockage
Period may be commenced within any 360 consecutive days. No event of default
which existed or was continuing on the date of the commencement of any
Blockage Period with respect to the Designated Senior Debt shall be, or be
made, the basis for commencement of a second Blockage Period by the
Representative of such Designated Senior Debt whether or not within a period
of 360 consecutive days unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed
or was continuing shall constitute a new event of default for this purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Debt,
including the Holders of the Notes, may recover less, ratably, than holders of
Senior Debt.
On a pro forma basis, after giving effect to the Initial Offering and the
Credit Agreement and the application of the proceeds therefrom, as if they
occurred on June 30, 1997, the Company would have had approximately $205.1
million of Senior Debt.
GUARANTEES
Each Guarantor unconditionally guarantees, on a senior subordinated basis,
jointly and severally, to each Holder and the Trustee, the full and prompt
performance of the Company's obligations under the Indenture and the Notes,
including the payment of principal of and interest on the Notes. The
Guarantees will be subordinated to Senior Debt of each Guarantor on the same
basis as the Notes are subordinated to Senior Debt. The obligations of each
Guarantor are limited to the maximum amount which, after giving effect to all
other contingent and fixed liabilities of such Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to its contribution obligations under the Indenture,
will result in the obligations of such Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a
Guarantee shall be entitled to a contribution from each other Guarantor in an
amount pro rata, based on the net assets of each Guarantor, determined in
accordance with GAAP.
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Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor that is a Wholly Owned Restricted Subsidiary of
the Company without limitation, or with other Persons upon the terms and
conditions set forth in the Indenture. See "Certain Covenants--Merger,
Consolidation and Sale of Assets." In the event all of the Capital Stock of a
Guarantor is sold by the Company and the sale complies with the provisions set
forth in "Certain Covenants--Limitation on Asset Sales," the Guarantor's
Guarantee will be released.
Separate financial statements of the Guarantors are not included herein
because such Guarantors are jointly and severally liable with respect to the
Company's obligations pursuant to the Notes, and the aggregate net assets,
earnings and equity of the Guarantors and the Company are substantially
equivalent to the net assets, earnings and equity of the Company on a
consolidated basis.
CHANGE OF CONTROL
The Indenture provides that upon a Change of Control the Company will be
required to make an offer to repurchase the Notes pursuant to the offer
described below (the "Change of Control Offer"), at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of repurchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full and terminate all commitments under
indebtedness under the Credit Agreement and all other Senior Debt the terms of
which require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the Credit Agreement
and all other such Senior Debt and to repay the Indebtedness owed to each
lender that has accepted such offer or (ii) obtain the requisite consents
under the Credit Agreement and all other Senior Debt to permit the repurchase
of the Notes as provided below. The Company shall first comply with the
covenant in the immediately preceding sentence before it shall be required to
repurchase Notes pursuant to the provisions described below. The Company's
failure to comply with the immediately preceding paragraph and the next
paragraph shall constitute an Event of Default described in clause (iii) and
not in clause (ii) under "Events of Default" below.
Within 30 days following the date upon which a Change of Control occurs, the
Company must send, by first class mail, a notice to each Holder, with a copy
to the Trustee, which notice shall govern the terms of the Change of Control
Offer. Such notice shall state, among other things, the purchase date, which
must be no earlier than 30 days nor later than 60 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). The Change of Control Offer is required to remain open for at
least 20 Business Days and until the close of business on the Change of
Control Payment Date. Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day prior to the Change of Control
Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company would have sufficient funds to pay the repurchase price for all the
Notes that might be delivered by Holders seeking to accept the Change of
Control Offer. In the event that the Company is required to purchase
outstanding Notes pursuant to a Change of Control Offer, the Company expects
that it would seek third-party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can be no
assurance that the Company would be able to obtain such financing.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
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The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchaser. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the
limitations discussed below, the Company could, in the future, enter into
certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit
ratings. The Indenture provides that the Company's obligations to make an
offer to repurchase the Notes as a result of a Change of Control may be waived
or modified with the written consent of the holders of a majority in principal
amount of the Notes.
The Credit Agreement prohibits the Company from purchasing any Notes and
also provides that certain change of control events with respect to the
Company would constitute a default thereunder. Any future credit agreements or
other agreements relating to Senior Debt to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control occurs at a time when the Company is prohibited from purchasing Notes,
the Company could seek the consent of its lenders to the purchase of Notes or
could attempt to refinance the borrowings that contain such prohibition. If
the Company does not obtain such a consent or repay such borrowings, the
Company will remain prohibited from purchasing Notes. In such case, the
Company's failure to purchase tendered Notes would constitute an Event of
Default under the Indenture, which would, in turn, constitute a default under
the Credit Agreement. In such circumstances, the subordination provisions in
the Indenture would likely restrict payments to the Holders of Notes.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Additional Indebtedness and Issuance of Preferred Stock. The
Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee, acquire, become liable contingently or otherwise, with respect to,
or otherwise become responsible for payment of any Indebtedness, (other than
Permitted Indebtedness), and the Company will not permit any of its
Subsidiaries to issue any shares of Preferred Stock other than Permitted
Subsidiary Preferred Stock; provided, however, that if no Default or Event of
Default shall have occurred or be continuing at the time of or as a
consequence of the incurrence of such Indebtedness or issuance of Preferred
Stock, the Company or any of its Restricted Subsidiaries that are Guarantors
may incur Indebtedness and Restricted Subsidiaries that are Guarantors may
issue shares of Preferred Stock if on the date of the incurrence of such
Indebtedness or issuance of such Preferred Stock, after giving effect to the
incurrence or issuance thereof, the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which
such additional Indebtedness is incurred or such Preferred Stock is issued,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Preferred Stock had been issued, as the case may be, at the beginning of
such four-quarter period would have been greater than 2.0 to 1.0 for
Indebtedness incurred or Preferred Stock issued on or prior to July 15, 2000
and 2.25 to 1.0 thereafter.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Equity Interests, (b) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company, (c)
purchase, redeem or otherwise acquire or retire for value any Indebtedness
(other than the Notes) that is subordinated to the Notes, except at final
maturity, (d) make any Investments (other than Permitted Investments) (all
such payments and other actions set forth in clauses (a) through (d) above
being referred to as "Restricted Payments"), if, at the time of or immediately
after giving effect to such Restricted Payment, (i) a Default or Event of
Default has occurred and is continuing or would result therefrom; (ii) the
Company is not able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with
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the "Limitation on Additional Indebtedness and Issuance of Preferred Stock"
covenant; (iii) the aggregate amount of Restricted Payments made subsequent to
the Issue Date (the amount of any such payment, if other than cash, to be
determined by the Board of Directors, whose determination shall be conclusive
and evidenced by a resolution in an Officers' Certificate delivered to the
Trustee), together with the aggregate of all other Restricted Payments made
after the date of the Indenture (including Restricted Payments permitted by
the next succeeding paragraph other than pursuant to clauses (ii), (iii),
(iv), (vii), (ix) or (x) or (vi) (to the extent "key-man" life insurance
policies are used to make such redemptions or repurchases in respect thereof),
shall exceed the sum of (1) $5,000,000, plus (2) the sum of (x) 50% of the
Consolidated Net Income of the Company (or, if such Consolidated Net Income
for such period is a loss, minus 100% of such loss) earned subsequent to the
Issue Date and on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting period); plus
(y) 100% of the aggregate net proceeds received by the Company (including the
fair market value of property other than cash) from the issue or sale
subsequent to the Issue Date of Qualified Capital Stock of the Company or of
Disqualified Capital Stock or debt securities of the Company that have been
converted into, or exchanged for, such Qualified Capital Stock (other than
Qualified Capital Stock sold or issued to a Subsidiary of the Company), plus
(3) 100% of the aggregate proceeds (including the fair value of property other
than cash) received by the Company as capital contributions to the Company
after the date on which the Notes are originally issued, plus (4) the amount
of the net reduction in Investments in Unrestricted Subsidiaries resulting
from (A) the payment of cash dividends or the repayment in cash of the
principal of loans or the cash return on any Investment, in each case to the
extent received by the Company or any Wholly Owned Restricted Subsidiary of
the Company from Unrestricted Subsidiaries and to the extent not included in
Consolidated Net Income, (B) to the extent that any Restricted Investment that
was made after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for cash and to the extent such proceeds are not included
in Consolidated Net Income, the after-tax cash return of capital with respect
to such Restricted Investment (less the cost of disposition, if any) and (C)
the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued as provided in the definition of "Investment"), such aggregate amount
of the net reduction in Investments not to exceed in the case of any
Unrestricted Subsidiary, the amount of Restricted 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.
Notwithstanding the foregoing, these provisions do not prohibit (i) the
payment of any dividend within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the
provisions of the Indenture; (ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company, or the defeasance,
redemption or repurchase of subordinated Indebtedness in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than any
Disqualified Stock) or out of the proceeds of a substantially concurrent cash
capital contribution received by the Company; (iii) the defeasance, redemption
or repurchase of subordinated Indebtedness with the net proceeds from an
incurrence of Refinancing Indebtedness; (iv) the making of Restricted Payments
to Holdings to be used by Holdings to pay its reasonable out-of-pocket
operating and administrative expenses, including directors' fees, legal and
audit expenses, Commission compliance expenses and corporate franchise and
other taxes; provided that no such payments may be made to any Affiliate of
Holdings; (v) the making of Investments in joint ventures that are engaged in
a Permitted Business in an aggregate amount not to exceed $10,000,000; (vi)
the making of Restricted Payments to Holdings of up to $2,000,000 per year or
$5,000,000 in the aggregate (which amount shall be increased by the aggregate
amount of (x) net cash proceeds from sales of Capital Stock of Holdings to
management employees subsequent to the date of the Indenture to the extent
contributed to the Company and not otherwise applied to any calculation under
clause (y) of the immediately preceding paragraph to make a Restricted Payment
and (y) any "key-man" insurance policies that are used to make such
redemptions or repurchases), net of the cash proceeds received by the Company
from subsequent reissuances of such Equity Interests to new members of
management, to be used by Holdings to redeem, repurchase or retire for value
any Equity Interests of Holdings held by one or more employees of Holdings or
the Company or any of its Subsidiaries in connection with the termination of
such employee's or employees' employment with such employer for any reason;
provided that the cancellation of Indebtedness owing to the Company from
members of management of the Company or any of its Restricted
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Subsidiaries in connection with a repurchase of Capital Stock of Holdings will
not be deemed to constitute a Restricted Payment under the Indenture; (vii)
the making of Restricted Payments to or for the benefit of Holdings pursuant
to the Tax Sharing Agreement or the Holdings Service Agreement in each case as
in effect on the Issue Date; (viii) the acquisition by a Receivables
Subsidiary in connection with a Qualified Receivables Transaction of Equity
Interests of a trust or other Person established by such Receivables
Subsidiary to effect such Qualified Receivables Transaction; (ix) so long as
no Default or Event of Default shall have occurred and be continuing, payments
to Holdings not to exceed $100,000 in the aggregate, to enable Holdings to
make payments to holders of its Capital Stock in lieu of issuance of
fractional shares of its Capital Stock; and (x) repurchases of Capital Stock
deemed to occur upon the exercise of stock options if such Capital Stock
represents a portion of the exercise price thereof.
Limitation on Asset Sales. The Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors, the approval shall be evidenced by a
Board Resolution); (ii) at least 75% of the consideration received by the
Company or the Restricted Subsidiary, as the case may be, from such Asset Sale
shall be cash or Cash Equivalents and is received at the time of such
disposition; provided, however, that the amount of (A) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet or in the notes thereto) of the Company or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated in right of
payment to the Notes) that are assumed by the transferee of any such assets
and (B) any notes or other obligations received by the Company or such
Restricted Subsidiary from such transferee that are immediately converted by
the Company or such Restricted Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision; and
provided, further, that the 75% limitation referred to in this clause (ii)
shall not apply to any Asset Sale in which the cash portion of the
consideration received therefrom, determined in accordance with the foregoing
proviso, is equal to or greater than what the after-tax proceeds would have
been had such Asset Sale complied with the aforementioned 75% limitation; and
(iii) upon the consummation of an Asset Sale, the Company shall apply, or
cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to
such Asset Sale within 270 days of receipt thereof either (A) to prepay any
Senior Debt and, in the case of any Senior Debt under any revolving credit
facility, effect a permanent reduction in the availability under such
revolving credit facility, (B) to invest in another business, capital
expenditures or other long-term tangible assets, in each case, in the same or
a similar line of business as the Company or any Subsidiary was engaged in on
the date of the Indenture ("Replacement Assets") or (C) a combination of
payment and investment permitted by clauses (A) and (B) above. On the 271st
day after an Asset Sale or such earlier date, if any, as the Board of
Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in
clauses (iii)(A), (iii)(B) or (iii)(C) of the next preceding sentence (each, a
"Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds
which have not been applied on or before such Net Proceeds Offer Trigger Date
as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding
sentence (each, a "Net Proceeds Offer Amount") shall be applied by the Company
or such Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on
a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than
45 days following the applicable Net Proceeds Offer Trigger Date, from all
Holders on a pro rata basis that amount of Notes equal to the Net Proceeds
Offer Amount at a price equal to 100% of the principal amount of the Notes to
be purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided, however, that if at any time any non-cash consideration
received by the Company or any Restricted Subsidiary of the Company, as the
case may be, in connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash (other than interest received with respect to
any such non-cash consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this covenant. A transfer of assets by the
Company to a Wholly Owned Restricted Subsidiary or by a Restricted Subsidiary
to the Company or to another Wholly Owned Restricted Subsidiary will not be
deemed to be an Asset Sale.
Notwithstanding the two immediately preceding paragraphs, the Company and
its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (i) at least
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75% of the consideration for such Asset Sale constitutes Replacement Assets,
cash, Cash Equivalents and/or marketable securities (i.e., such securities
which would be converted into cash within 180 days of the acquisition thereof)
and (ii) such Asset Sale is for fair market value (as determined in good faith
by the Company's Board of Directors); provided that any consideration not
constituting Replacement Assets received by the Company or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall be subject to the provisions of the two
preceding paragraphs.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than
$10,000,000, the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time
as such Net Proceeds Offer Amount plus the aggregate amount of all Net
Proceeds Offer Amounts arising subsequent to the Net Proceeds Offer Trigger
Date relating to such initial Net Proceeds Offer Amount from all Asset Sales
by the Company and its Restricted Subsidiaries aggregates at least
$10,000,000, at which time the Company or such Subsidiary shall apply all Net
Cash Proceeds constituting all Net Proceeds Offer Amounts that have been so
deferred to make a Net Proceeds Offer (the first date the aggregate of all
such deferred Net Proceeds Offer Amounts is equal to $10,000,000 or more shall
be deemed to be a "Net Proceeds Offer Trigger Date"). To the extent the
aggregate amount of the Notes tendered pursuant to the Net Proceeds Offer is
less than the Net Proceeds Offer Amount, the Company may use such deficiency
for general corporate purposes. Upon completion of such offer to purchase, the
Net Proceeds Offer Amount shall be reset at zero.
Each Net Proceeds Offer will be mailed to the record Holders as shown on the
register of Holders not less than 30 days nor more than 60 days following the
Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply
with the procedures set forth in the Indenture. Upon receiving notice of the
Net Proceeds Offer, Holders may elect to tender their Notes in whole or in
part in integral multiples of $1,000 in exchange for cash. To the extent
Holders properly tender Notes in an amount exceeding the Net Proceeds Offer
Amount, Notes of tendering Holders will be purchased on a pro rata basis
(based on amounts tendered). A Net Proceeds Offer shall remain open for a
period of 20 business days or such longer period as may be required by law.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset
Sale" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Asset Sale" provisions of the Indenture by
virtue thereof. The agreements governing certain outstanding Senior Debt of
the Company will require that the Company and its Subsidiaries apply all
proceeds from asset sales to repay in full outstanding obligations under such
Senior Debt prior to the application of such proceeds to repurchase
outstanding notes.
Merger, Consolidation and Sale of Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or
into any Person, or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of the Company's assets, whether as an entirety or
substantially as an entirety to any Person unless (i) either (A) the Company
is the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or (B) the surviving
person to which such sale, assignment, transfer, lease, conveyance or other
disposition (x) shall have been made is a corporation, partnership or trust
and validly existing under the laws of the United States, any state thereof or
the District of Columbia and (y) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made and shall expressly assume, by supplemental indenture, in a
form reasonably satisfactory to the Trustee all the obligations of the Company
under the Notes and the Indenture and the Registration Rights Agreement; (ii)
immediately after such transaction no Default or Event of Default exists; and
(iii) the Company or any Person formed by or surviving any such consolidation
or merger, or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made, will, at the time of such transaction
and after giving pro forma effect thereto (including giving effect to any
Indebtedness and Acquired Indebtedness
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incurred or anticipated to be incurred in connection with or in respect of
such transaction) as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
the "--Limitation on Additional Indebtedness and Issuance of Preferred Stock"
covenant. For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all
or substantially all of the properties and assets of one or more Subsidiaries
of the Company, the Capital Stock of which constitutes all or substantially
all of the properties and assets of the Company, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
The Indenture provides that upon any consolidation, combination or merger or
any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, the surviving entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture and the Notes with the same effect as if such surviving entity
had been named as such.
Each Guarantor (other than any Guarantor whose Guarantee is to be released
in accordance with the terms of the Guarantee and the Indenture in connection
with any transaction complying with the provisions of "--Limitation on Asset
Sales") will not, and the Company will not cause or permit any Guarantor to,
consolidate with or merge with or into any Person other than the Company or
any other Guarantor unless: (i) the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) or to which such sale,
lease, conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia; (ii) such entity assumes by supplemental
indenture all of the obligations of the Guarantor on the Guarantee; (iii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (iv) immediately after
giving effect to such transaction and the use of any net proceeds therefrom on
a pro forma basis, the Company could satisfy the provisions of clause (iii) of
the first paragraph of this covenant. Any merger or consolidation of a
Guarantor with and into the Company (with the Company being the surviving
entity) or another Guarantor that is a Wholly Owned Restricted Subsidiary of
the Company need only comply with the following sentence of this covenant. The
Company or the surviving entity shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with
such transaction, such supplemental indenture comply with the applicable
provisions of the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.
Limitation on Transactions with Affiliates. (a) The Company will not and
will not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, conduct any business or enter into any transaction or series of
transactions with or for the benefit of any of their Affiliates involving
aggregate consideration in excess of $1.0 million (each an "Affiliate
Transaction") other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y) Affiliate Transactions on terms that are not materially less
favorable to the Company than those that could have been obtained in a
comparable transaction on an arm's-length basis from a Person not an Affiliate
of the Company. With respect to all Affiliate Transactions involving aggregate
payments equal to or in excess of $5,000,000 and less than $10,000,000, the
Company or such Restricted Subsidiary, as the case may be, shall have
delivered a resolution of the Board of Directors set forth in an officers'
certificate to the Trustee certifying that such transaction or series of
transactions complies with clause (y) above. All Affiliate Transactions (and
each series of related Affiliate Transactions which are similar or part of a
common plan) involving aggregate payments or other property with a fair market
value in excess of $10,000,000, the Company or such Restricted Subsidiary, as
the case may be, shall, prior to the consummation thereof, obtain a favorable
opinion as to the fairness of such transaction or series of related
transactions to the Company or the relevant Restricted Subsidiary, as the case
may be, from a financial point of view from an investment bank of national
standing with an expertise in underwriting non-investment grade debt
securities and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to: (i) any
employment agreement or stock option agreement entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business; (ii)
transactions between or among the Company and its Restricted Subsidiaries;
(iii) transactions permitted by
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the provisions of the Indenture described above under "--Limitation on
Restricted Payments;" (iv) the payment of reasonable fees to directors of the
Company or its Restricted Subsidiaries; (v) 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 of the Company entered into in the ordinary course of business and
approved by the Board of Directors; (vi) transactions exclusively between or
among the Company and/or its Wholly Owned Restricted Subsidiaries; provided
that such transactions are not otherwise prohibited by the Indenture,
transactions exclusively between a Receivables Subsidiary and any Person in
which the Receivables Subsidiary has an Investment in connection with a
Qualified Receivable Transaction; (vii) any agreements as in effect as of the
Issue Date or any amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto) in any replacement agreement
thereto so long as any such amendment or replacement is not more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date; (viii) reasonable fees and related
expenses paid to the Principals and their Affiliates for management,
consulting and advisory services as determined in good faith by the Company's
Board of Directors or senior management; (ix) payments by the Company or any
of its Restricted Subsidiaries to the Principals and their Affiliates made
pursuant to any financial advisory, financing, underwriting or placement
agreement as in effect as of the Issue Date or any amendment thereto, or any
transaction contemplated thereby (including pursuant to any amendment thereto)
or any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any
material respect than the original agreement as in effect on the Issue Date;
(x) payments or loans to employees or consultants which are approved by the
Board of Directors of the Company in good faith; (xi) transactions permitted
by, and complying with, the provisions of the covenant described under "--
Merger, Consolidation and Sale of Assets"; and (xii) transactions with
customers, clients, suppliers, joint venture partners or purchasers or sellers
of goods or services, in each case in the ordinary course of business
(including, without limitation, pursuant to joint venture agreements) and
otherwise in compliance with the terms of the Indenture which are fair to the
Company or its Restricted Subsidiaries, in the reasonable determination of the
Board of Directors of the Company or the senior management thereof, or are on
terms at least as favorable as might reasonably have been obtained at such
time from an unaffiliated party.
Guarantee of the Notes. The Company will not permit any Restricted
Subsidiary to Guarantee any Indebtedness (other than (A) Indebtedness and
other obligations under the Credit Agreement, (B) Permitted Indebtedness of a
Restricted Subsidiary, (C) Indebtedness under any Currency Agreements or
Commodity Agreements in reliance on clause (vi) of the definition of Permitted
Indebtedness, (D) Hedging Obligations incurred in reliance on clause (iv) of
the definition of Permitted Indebtedness, or (E) Indebtedness incurred in
reliance on clause (x) of the definition of Permitted Indebtedness), unless
such Restricted Subsidiary enters into or has entered into a Guarantee of the
Notes in accordance with the terms of the Indenture (except if such Guarantee
is a Guarantee by a Foreign Subsidiary solely of the Indebtedness of another
Foreign Subsidiary).
Any such Guarantee of the Notes by a Restricted Subsidiary will be
subordinated to all Senior Debt of such Subsidiary, including any guarantee by
such Restricted Subsidiary of the Company's obligations under the Credit
Agreement, on substantially the same terms as the Notes are subordinated to
Senior Debt of the Company. Any such Guarantee by a Restricted Subsidiary will
be limited in amount to an amount not to exceed the maximum amount that can be
guaranteed by that Restricted Subsidiary without rendering such Guarantee
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally.
Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary
of the Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged, without any further action required
on the part of the Trustee or any Holder, upon: (i) release of such Restricted
Subsidiary from its liability in respect of the Indebtedness in connection
with which such Guarantee was executed and delivered pursuant to the preceding
paragraph (including any deemed release upon payment in full of all
obligations under such Indebtedness); or (ii) sale or other disposition of a
Restricted Subsidiary that is a Guarantor (other than to the Company or an
Affiliate of the Company) permitted by the Indenture, provided that the
proceeds of such sale or disposition are applied in accordance with the
provisions described under "--Limitation on Asset Sales."
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In addition, subject to the next paragraph, no Guarantor may (except in a
transaction pursuant to which its Guarantee is released pursuant to clause
(ii) of the prior sentence) consolidate or merge with or into (whether or not
such Guarantor is the surviving entity) another Person unless: (i) such
Guarantor is the surviving Person or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor and if such
Guarantor is not a Foreign Subsidiary) is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) expressly assumes all the obligations of
such Guarantor under the Notes and the Indenture, pursuant to a supplemental
indenture in form reasonably satisfactory to the Trustee; and (iii)
immediately after such transaction, no Default or Event of Default exists.
Except as set forth in the provisions entitled "Certain Covenants" and "--
Merger, Consolidation and Sale of Assets," nothing contained in the Indenture
shall prevent any consolidation or merger of a Guarantor with or into the
Company or a Wholly Owned Restricted Subsidiary that is a Guarantor or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety
or substantially as an entirety to the Company or a Wholly Owned Restricted
Subsidiary that is a Guarantor.
Limitation on Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist or remain in effect any Liens of any kind against or
upon any of its property or assets of the Company or any of its Restricted
Subsidiaries whether owned on the Issue Date or acquired after the Issue Date,
or any proceeds therefrom unless (i) in the case of Liens securing
Indebtedness that is expressly subordinate or junior in right of payment to
the Notes, the Notes are secured by a Lien on such property, assets or
proceeds that is senior in priority to such Liens and (ii) in all other cases,
the Notes are equally and ratably secured, except for (A) Liens existing as of
the Issue Date and any extensions, renewals or replacements thereof; (B) Liens
securing Senior Debt; (C) Liens securing the Notes and the guarantees; (D)
Liens of the Company or a Wholly Owned Restricted Subsidiary on assets of any
Restricted Subsidiary of the Company; (E) Liens securing Indebtedness which is
incurred to refinance Indebtedness which has been secured by a Lien permitted
under the Indenture and which has been incurred in accordance with the
provisions of the Indenture; provided, however, that such Liens do not extend
to or cover any property or assets of the Company or any of its Subsidiaries
not securing the Indebtedness so refinanced; and (F) Permitted Liens.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or
consensual restriction on the ability of any Restricted Subsidiary to (a) pay
dividends or make any other distributions to the Company or any of its
Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, (b) pay any
indebtedness owed to the Company or any of its Subsidiaries, (c) make loans or
advances or pay any indebtedness owed to the Company or any of its
Subsidiaries or (d) transfer any of its property or assets to the Company or
any of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (1) Existing Indebtedness as in effect on the date of
the Indenture, (2) the Indenture, the Notes and the Guarantees, (3) applicable
law, (4) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property or assets of
the Person, so acquired, (5) customary nonassignment provisions in contracts
entered into in the ordinary course of business, (6) Purchase Money
Obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (d) above on the
property so acquired, (7) any restriction or encumbrance contained in
contracts for sale of assets permitted by the Indenture in respect of the
assets being sold pursuant to such contracts, (8) Indebtedness or other
contractual requirements of a Receivables Subsidiary in connection with a
Qualified Receivables Transaction, provided that such restrictions apply only
to such Receivables Subsidiary, (9) restrictions on the transfer of assets
subject to any Lien permitted under the Indenture imposed by the holder of
such Lien, (10) Refinancing Indebtedness; provided, however, that the
provisions relating to such restrictions contained in such Refinancing
Indebtedness
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are not less favorable to the Company in any material respect as determined by
the Board of Directors of the Company than the provisions relating to such
restrictions contained in the agreements referred to in clause (a), (b), (c)
or (d) above.
Prohibition on Incurrence of Senior Subordinated Debt. Neither the Company
nor any Guarantor will incur or suffer to exist Indebtedness that is senior in
right of payment to the Notes or such Guarantor's Guarantee and subordinate in
right of payment to any Senior Debt of the Company or Guarantees by such
Guarantor.
Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Restricted Subsidiaries. Other than in connection with the issuance of
Preferred Stock issued in accordance with the Fixed Charge Coverage Ratio
under the "--Limitation on Additional Indebtedness and Issuance of Preferred
Stock" covenant and Permitted Subsidiary Preferred Stock, the Company (i) will
not, and will not cause or permit any Wholly Owned Restricted Subsidiary of
the Company to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Wholly Owned Restricted Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Restricted Subsidiary of the
Company) unless (a) such transfer, conveyance, sale, lease or other
disposition is of all of the Capital Stock of such Wholly Owned Restricted
Subsidiary and (b) the Net Cash Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the "--Limitation on
Asset Sales" covenant, and (ii) will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
Limitation on Conduct of Business. The Company and its Subsidiaries will not
engage in any businesses which are not the same, similar or related to or a
reasonable extension, development or expansion of, the businesses in which the
Company and its Subsidiaries are engaged on the Issue Date.
Reports to Holders. The Indenture will provide that the Company will deliver
to the Trustee within 15 days after the filing of the same with the
Commission, copies of the quarterly and annual reports and of the information,
documents and other reports, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's certified
independent accountants, if any, which the Company is required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act. The
Indenture will further provide that, notwithstanding that the Company may not
be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will provide the Trustee and Holders with such
annual reports and such information, documents and other reports specified in
Sections 13 and 15(d) of the Exchange Act. In addition, whether or not
required by the rules and regulations of the Commission, at any time after the
Company files the Exchange Offer Registration Statement with the Commission,
the Company will file a copy of all such information with the Commission for
public availability (unless the Commission will not accept such a filing) and
make such information available to investors who request it in writing. The
Company will also comply with the other provisions of TIA (S)314(a).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest, if any, on any Notes when the same
becomes due and payable and the default continues for a period of 30 days;
(ii) the failure to pay the principal on any Notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including, the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or Net Proceeds Offer) (whether or
not such payment shall be prohibited by the provisions of the Indenture);
(iii) a default in the observance or performance of any other covenant or
agreement contained in the Indenture which default continues for a period
of 30 days after the Company receives written notice specifying the default
(and demanding that such default be remedied) from the Trustee or the
Holders of at
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least 25% of the outstanding principal amount of the Notes (except in the
case of a default with respect to the "Merger, Consolidation and Sale of
Assets" covenant, which will constitute an Event of Default with such
notice requirement but without such passage of time requirement);
(iv) one or more judgments in an aggregate amount in excess of
$10,000,000 (to the extent not covered by third-party insurance as to which
the insurance company has acknowledged coverage) shall have been rendered
against the Company or any of its Significant Restricted Subsidiaries and
such judgments remain undischarged, unpaid or unstayed for a period of 60
days after such judgment or judgments become final and non-appealable;
(v) certain events of bankruptcy, insolvency or reorganization affecting
the Company or any of its Significant Restricted Subsidiaries;
(vi) (a) a default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or any of its Restricted Subsidiaries (other
than a Receivables Subsidiary) (or the payment of which is guaranteed by
the Company or any of its Restricted Subsidiaries (other than a Receivables
Subsidiary)), whether such Indebtedness now exists or is created after the
Issue Date, which default either (x) is caused by a failure to pay any such
Indebtedness at its stated final maturity and such failure continues for a
period of 20 days or more or (y) relates to an obligation other than the
obligation to pay such Indebtedness at its stated final maturity and
results in the holder or holders of such Indebtedness causing such
Indebtedness to become due prior to its stated final maturity (which
acceleration is not rescinded, annulled or otherwise cured within 20 days
of receipt by the Company or such Restricted Subsidiary of notice of any
such acceleration) and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at stated final
maturity or the maturity of which has been so accelerated, in each case
with respect to which the default continues for a period of 20 days,
aggregates $10,000,000 or more at any one time outstanding; and
(vii) any Guarantee by a Significant Restricted Subsidiary being held in
any judicial proceeding to be unenforceable or invalid or failure of any
Guarantee by a Significant Restricted Subsidiary to be in full force and
effect other than as permitted by the Indenture or the denial or
disaffirmance by any Guarantor that is a Significant Restricted Subsidiary
of its obligations under its Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately; provided, however, that so
long as the Credit Agreement shall be in effect, if an Event of Default shall
have occurred and be continuing (other than an Event of Default specified in
clause (v) above with respect to the Company), any such acceleration shall not
be effective until the earlier of (x) five business days following delivery of
a notice of acceleration specifying the respective Event of Default and
stating that it is a "notice of acceleration" to the Agent Bank under the
Credit Agreement (but only if such Event of Default is then continuing) and
(y) the acceleration of any Indebtedness under the Credit Agreement.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company, all
outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
The Indenture provides that, at any time after a declaration of acceleration
with respect to the Notes as described in the preceding paragraph, the Holders
of a majority in principal amount of the Notes may rescind and cancel such
declaration and its consequences (i) if the rescission would not conflict with
any judgment or decree, (ii) if all existing Events of Default have been cured
or waived except nonpayment of principal or interest, if any, that has become
due solely because of the acceleration, (iii) to the extent the payment of
such interest is lawful, interest on overdue installments of interest, if any,
and overdue principal that has become due
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otherwise than by such declaration of acceleration has been paid, (iv) if the
Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances and (v) in the event of
the cure or waiver of an Event of Default of the type described in clause
(iv), (v) and (vii) in the description above of Events of Default, the Trustee
shall have received an Officers' Certificate and an opinion of counsel that
such Event of Default has been cured or waived. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the aggregate principal
amount of or interest, if any, on any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the then outstanding Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company is required to provide an Officers'
Certificate to the Trustee promptly upon any such officer obtaining knowledge
of any Default or Event of Default (provided that such officers shall provide
such certification at least annually whether or not they know of any Default
or Event of Default) that has occurred and, if applicable, describe such
Default or Event of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors discharged with respect to
the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, except for: (i) the rights
of Holders to receive payments in respect of the principal, premium, if any,
and interest on the Notes when such payments are due; (ii) the Company's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments; (iii) the rights, powers,
trust, duties and immunities of the Trustee and the Company's obligations in
connection therewith; and (iv) the Legal Defeasance provisions of the
Indenture. In addition, the Company may, at its option and at any time, elect
to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, reorganization and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance: (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in U.S. dollars, non-callable U.S. Government Obligations,
or a combination thereof, in such amount as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Notes on the stated date
for payment thereof or on the applicable redemption date, as the case may be;
(ii) in the case of Legal Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance had
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not occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default with respect to the Indenture
resulting from the incurrence of Indebtedness all or a portion of which will
be used to defease the Notes concurrently with such incurrence) or insofar as
Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of deposit; (v) such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under the Indenture or any other
material agreement or instrument to which the Company is a party or by which
the Company is bound; (vi) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders over any other creditors of the
Company or others; (vii) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with; (viii) the Company shall have
delivered to the Trustee an opinion of counsel to the effect that (A) the
trust funds will not be subject to any rights of holder of Senior Debt,
including, without limitation, those arising under the Indenture and (B) after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; and (ix) certain other customary
conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes that have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for the principal,
premium, if any, and interest on the Notes to the date of deposit together
with irrevocable instructions from the Company directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case may
be; (ii) the Company has paid all other sums payable under the Indenture by
the Company; and (iii) the Company has delivered to the Trustee an Officers'
Certificate and an opinion of counsel stating that all conditions precedent
under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Guarantors and the Trustee, without the
consent of the Holders, may amend the Indenture for certain specified
purposes, including curing ambiguities, defects or inconsistencies, so long as
such change does not, in the opinion of the Trustee, adversely affect the
rights of any of the Holders in any material respect. In formulating its
opinion on such matters, the Trustee will be entitled to rely on such evidence
as it deems appropriate, including, without limitation, solely on an opinion
of counsel. Other modifications and amendments of the Indenture may be made
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes issued under the Indenture, except that, without the consent
of each Holder affected thereby, no amendment may: (i) reduce the amount of
Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change or have the effect of changing the time for payment of interest, if
any, including defaulted interest, on any Notes; (iii) reduce the principal of
or change or have the effect of changing the fixed maturity of any Notes, or
change the date on which any Notes may be subject to redemption or repurchase,
or reduce the redemption or repurchase price therefor; (iv) make any Notes
payable in money
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other than that stated in the Notes; (v) make any change in provisions of the
Indenture protecting the right of each Holder to receive payment of principal
and interest, if any, on such Note on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default; (vi) amend,
change or modify in any material respect the obligation of the Company to make
and consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto; (vii) modify or change any provision of the Indenture or the related
definitions affecting the subordination or ranking of the Notes or any
Guarantee in a manner that adversely affects the Holders; or (viii) release
any Guarantor from any of its obligations under its Guarantee or the Indenture
otherwise than in accordance with the terms of the Indenture.
Without the consent of at least 80% in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for Notes), no waiver or amendment to the Indenture may make
any change in the provisions described above under the caption "Change of
Control" if such change would adversely affect the rights of any Holder of
Notes. Notwithstanding the foregoing, without the consent of any Holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or
the Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of the Notes in the case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
TIA.
GOVERNING LAW
The Indenture provides that it, the Notes and the Guarantees will 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 law of another jurisdiction would be
required thereby.
THE TRUSTEE
State Street Bank and Trust Company is the Trustee under the Indenture and
has been appointed by the Company as Registrar and Paying Agent with respect
to the Notes.
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it by the Indenture and
use the same degree of care and skill in its exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own
affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to
obtain payments of claims in certain cases or to realize on certain property
received in respect of any such claim as security or otherwise. Subject to the
TIA, the Trustee will be permitted to engage in other transactions; provided
that if the Trustee acquires any conflicting interest as described in the TIA,
it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" of any Person means Indebtedness of another Person
and any of its Subsidiaries existing at the time such other Person becomes a
Subsidiary of the referent Person or at the time it merges or
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consolidates with the referent Person or any of the referent Person's
Subsidiaries or assumed by the referent Person or any Subsidiary of the
referent Person in connection with the acquisition of assets from such other
Person and in each case not incurred by the referent Person or any Subsidiary
of the referent Person or such other Person in connection with, or in
anticipation or contemplation of, such other Person becoming a Subsidiary of
the referent Person or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, and the terms
"controlling" and "controlled" have meanings correlative of the foregoing;
provided, however, that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control. Notwithstanding the
foregoing, no Person (other than the Company or any Restricted Subsidiary of
the Company) in whom a Receivables Subsidiary makes an Investment in
connection with a Qualified Receivables Transaction shall be deemed to be an
Affiliate of the Company or any of its Restricted Subsidiaries solely by
reason of such Investment.
"Agent Bank" means: Bankers Trust Company or any successor as agent under
the Credit Agreement.
"all or substantially all" shall have the meaning given such phrase in the
Revised Model Business Corporation Act.
"Asset Sale" means: (i) the sale, lease (other than pursuant to operating
leases of real or personal property entered into in the ordinary course of
business), conveyance or other disposition (collectively, "dispositions") of
any assets (including by way of a Sale/Leaseback Transaction) other than
dispositions of inventory in the ordinary course of business; (ii) the
issuance by any Restricted Subsidiary of Equity Interests of such Restricted
Subsidiary; and (iii) the disposition by the Company, in the case of either
clause (i), (ii) or (iii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $1,000,000
or (b) for net proceeds in excess of $1,000,000. Notwithstanding the
foregoing, the following will not be deemed to be Asset Sales: (i) a
disposition of assets by the Company or a Restricted Subsidiary to the Company
or a Wholly Owned Restricted Subsidiary; (ii) an issuance of (a) Equity
Interests by a Restricted Subsidiary to the Company or to a Wholly Owned
Restricted Subsidiary, (b) Preferred Stock issued in accordance with the Fixed
Charge Coverage Ratio under the "Limitation on Additional Indebtedness and
Issuance of Preferred Stock" covenant or (c) Permitted Subsidiary Preferred
Stock; (iii) a disposition consisting of a Permitted Investment or Restricted
Payment permitted by the covenant described above under the caption
"Restricted Payments;" (iv) the disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole
permitted by the covenant described above under the caption "--Merger,
Consolidation or Sale of Assets;" (v) the surrender or waiver of contract
rights or the settlement, release or surrender of contract, tort or other
claims of any kind; (vi) the grant in the ordinary course of business of any
non-exclusive license of patents, trademarks, registrations therefor and other
similar intellectual property; (vii) sales of accounts receivable and related
assets of the type specified in the definition of "Qualified Receivables
Transaction" to a Receivables Subsidiary for the fair market value thereof,
including cash in an amount at least equal to 75% of the book value thereof as
determined in accordance with GAAP; (viii) transfers of accounts receivable
and related assets of the type specified in the definition of "Qualified
Receivables Transaction" (or a fractional undivided interest therein) by a
Receivables Subsidiary in a Qualified Receivables Transaction; and (ix) the
sale or discount, in each case without recourse, of accounts receivable
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof. For the purposes of clause (viii), notes
received in exchange for the transfer of accounts receivable and related
assets shall be deemed cash if the Receivables Subsidiary or other payor is
required to repay said notes as soon as practicable from available cash
collections less amounts required to be established as reserves pursuant to
contractual agreements with entities that are not Affiliates of the Company
entered into as part of a Qualified Receivables Transaction.
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"Attributable Debt" in respect of a Sale and Leaseback Transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP or,
in the event that such rate of interest is not reasonably determinable,
discounted at the rate of interest borne by the Notes) of the obligation of
the lessee for net rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended).
"Bain" means Bain Capital, Inc., a Delaware corporation.
"Bain Funds" means Bain Capital Fund V, L.P., Bain Capital Fund V-B, L.P.,
Bain Capital V Mezzanine Fund, L.P., Bain Capital Fund IV, L.P., Bain Capital
Fund IV-B, L.P., BCIP Associates, and BCIP Trust Associates, L.P.
"Board of Directors" means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.
"Borrowing Base" means the sum of (i) 85% of the net book value (after
allowance for doubtful accounts) of accounts receivable of the Company and the
Guarantors arising in the ordinary course of business from the sale of
products sold by the Company and the Guarantors or the provision of services
by the Company and the Guarantors and (ii) 65% of the net book value (after
appropriate write-downs of obsolescence, quality problems and the like) of
inventories of the Company and the Guarantors held in the ordinary course of
business, in each case on a consolidated basis with Restricted Subsidiaries in
accordance with generally accepted accounting principles.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partner-ship or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligation at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means: (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof
or the District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$100,000,000; (v) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (i) through
(v).
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of Holdings
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or the Company to any Person or group (as such term is used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) other than the Principals or their
Related Parties; (ii) the adoption of a plan relating to the liquidation or
dissolution of Holdings or the Company; (iii) any Person or group (as defined
above), other than the Principals or their Related Parties, is or becomes the
"beneficial owner" (as defined in Rules 13d-2 and 13d-5 under the Exchange
Act, except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 25% of the total voting power of the Voting Stock of
the Company, including by way of merger, consolidation or otherwise; provided
that the Principals or their Related Parties "beneficially own" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the Voting Stock of
the Company than such other Person (for the purposes of this clause; (iii) any
Person shall be deemed to beneficially own any Voting Stock of a corporation
held by any other corporation (the "parent corporation"), if such Person
"beneficially owns" (with respect to any Person or group other than the
Principals or their Related Parties, as defined in clause (iii) above or, with
respect to the Principals or their Related Parties, as defined in the
provision to clause (iii) above), directly or indirectly, more than 50% of the
voting power of the Voting Stock of such parent corporation); and (iv) the
first day on which a majority of the members of the Board of Directors of
Holdings or the Company are not Continuing Directors.
"Commodity Agreement" means any commodity futures contract, commodity option
or other similar agreement or arrangement entered into by the Company or any
Subsidiary designed to protect the Company or any of its Subsidiaries against
fluctuations in the price of commodities actually used in the ordinary course
of business of the Company and its Subsidiaries.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period, plus (a) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an asset sale, to the extent such losses were deducted in computing
Consolidated Net Income, plus (b) provision for taxes based on income or
profits of such Person for such period, to the extent such provision for taxes
was deducted in computing Consolidated Net Income, plus (c) Consolidated
Interest Expense of such Person for such period, to the extent such amount was
deducted in computing Consolidated Net Income, plus (d) depreciation and
amortization (including amortization of goodwill and other intangibles and
amortization of deferred compensation in respect of non-cash compensation but
excluding amortization of prepaid cash expenses that were paid in a prior
period) of such Person for such period, to the extent such depreciation and
amortization were deducted in computing Consolidated Net Income, in each case,
for such period without duplication on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the aggregate consolidated interest, whether expensed or capitalized,
paid, accrued or scheduled to be paid or accrued, of such Person and its
Restricted Subsidiaries for such period (including: (i) amortization of
original issue discount and non-cash interest payments and accruals; (ii) the
interest portion of all deferred payment obligations, calculated in accordance
with the effective interest method; and (iii) the interest component of any
payments associated with Capitalized Lease Obligations and net payments (if
any) pursuant to Hedging Obligations, in each case, to the extent attributable
to such period, but excluding (x) commissions, discounts and other fees and
charges incurred with respect to letters of credit and bankers' acceptances
financing and (y) any interest expense on Indebtedness of another Person that
is Guaranteed by such Person or secured by a Lien on assets of such Person)
determined in accordance with GAAP. Consolidated Interest Expense of the
Company shall not include any prepayment premiums or amortization of original
issue discount or deferred financing costs, to the extent such amounts are
incurred as a result of the prepayment on the date of the Indenture of any
Indebtedness of the Company with the proceeds of the Notes.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that: (i) the Net Income of any Person that is not a Subsidiary or
that is
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accounted for by the equity method of accounting shall be included only to the
extent of the amount of cash dividends or cash distributions paid to the
referent Person or a Wholly Owned Subsidiary thereof that is a Guarantor or
Foreign Subsidiary or both; (ii) the Net Income of any Person that is a
Restricted Subsidiary (other than a Wholly Owned Restricted Subsidiary that is
a Guarantor or Foreign Subsidiary or both) shall be included only to the
extent of the amount of cash dividends or cash distributions paid to the
referent Person or a Wholly Owned Restricted Subsidiary thereof that is a
Guarantor; (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded; (iv) all extraordinary gains and extraordinary losses and
any unusual or non-recurring charges recorded or accrued in connection with
the issuance of the Notes (including without limitation the amounts described
in the last sentence of the definition of Consolidated Interest Expense) shall
be excluded; (v) the cumulative effect of a change in accounting principles
shall be excluded; and (vi) gains from Asset Sales (without regard to the $1.0
million limitation set forth in the definition thereof) or abandonments or
reserves relating thereto and the related tax effects according to GAAP shall
be excluded.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company, who: (i) was a member of such Board of
Directors on the date of the Indenture; (ii) was nominated for election or
elected to such Board of Directors with the affirmative vote of a majority of
the Continuing Directors who were members of such Board at the time of such
nomination or election; or (iii) was nominated for election or elected to such
Board of Directors by one or more of the Principals.
"Credit Agreement" means that certain Credit Agreement dated as of July 10,
1997, among the Company, the lenders party thereto from time to time in their
capacities as lenders thereunder and Bankers Trust Company, as agent (and any
successor agent thereunder), together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing, refunding or otherwise restructuring (including, without
limitation, increasing the amount of available borrowings thereunder or adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor
or replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Restricted Subsidiaries in the ordinary course of
business against fluctuation in the values of the currencies of the countries
(other than the United States) in which the Company or its Restricted
Subsidiaries conduct business.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.
"Designated Senior Debt" means (a) with respect to the Company, (i) the
Obligations of the Company with respect to the Senior Bank Debt and (ii) any
other Senior Debt of the Company permitted under the Indenture the principal
amount of which at original issuance is $25.0 million or more and is
specifically designated in the instrument evidencing such Senior Debt as
"Designated Senior Debt" by the Company and (b) with respect to any Guarantor,
(i) the Obligations of such Guarantor with respect to the Senior Bank Debt and
(ii) any other Senior Debt of such Guarantor permitted under the Indenture the
principal amount of which at original issuance is $25.0 million or more and is
specifically designated in the instrument evidencing such Senior Debt as
"Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means any Capital Stock 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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof (other than as a result of a Change of
Control), in whole or in part, on or prior to July 15, 2007.
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"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than the Senior Bank Debt) in existence on the date of the
Indenture, until such amounts are repaid.
"Fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom
is under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of
the Board of Directors of the Company delivered to the Trustee.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or if the Company or any
of its Subsidiaries issues or redeems any preferred stock, in each case
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date of the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Transaction Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
period. For purposes of making the computation referred to above, acquisitions
(including all mergers and consolidations), dispositions and discontinuance of
operations that have been made by the Company or any of its Subsidiaries
during the four-quarter reference period or subsequent to such reference
period and on or prior to the Transaction Date shall be calculated on a pro
forma basis assuming that all such acquisitions, dispositions and
discontinuance of operations had occurred on the first day of the four-quarter
reference period; provided, however, that Fixed Charges shall be reduced by
amounts attributable to operations that are so disposed of or discontinued
only to the extent that the obligations giving rise to such Fixed Charges
would no longer be obligations contributing to the Company's Fixed Charges
subsequent to the Transaction Date.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (a) Consolidated Interest Expense, (b) commissions,
discounts and other fees and charges incurred with respect to letters of
credit and bankers' acceptances financing, (c) any interest expense on
Indebtedness of another Person that is guaranteed by such Person or secured by
a Lien on assets of such Person, and (d) the product of (i) all cash dividend
payments (and non-cash dividend payments in the case of a Subsidiary of such
Person) on any series of preferred stock of such Person or any Subsidiary of
such Person, times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, determined,
in each case, on a consolidated basis and in accordance with GAAP.
"Foreign Subsidiary" means any subsidiary organized and incorporated in a
jurisdiction outside of the United States.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date. All
ratios and computations based on GAAP contained in the Indenture shall be
computed in conformity with GAAP applied on a consistent basis, except that
calculations made for purposes of determining compliance with the terms of the
covenants and with other provisions of the Indenture shall be made without
giving effect to (i) the deduction or amortization of any premiums, fees, and
expenses incurred in
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connection with the Eagle-Picher Acquisition, the Goodyear-Jackson Acquisition
and related financings or any other permitted incurrence of Indebtedness or
Refinancing Indebtedness and (ii) except as otherwise provided, the
amortization of any amounts required or permitted by Accounting Principles
Board Opinion Nos. 16 (including non-cash write-ups and non-cash charges
relating to inventory, fixed assets and in-process research and development,
in each case arising in connection with the Eagle-Picher Acquisition and the
Goodyear-Jackson Acquisition) and 17 (including non-cash charges relating to
intangibles and goodwill arising in connection with the Eagle-Picher
Acquisition and the Goodyear-Jackson Acquisition).
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor" means: (i) CE Automotive Trim Systems, Inc.; and (ii) each of
the Company's Restricted Subsidiaries located in the U.S. that in the future
executes a supplemental indenture in which such Restricted Subsidiary agrees
to be bound by the terms of the Indenture as a Guarantor; provided that any
Person constituting a Guarantor as described above shall cease to constitute a
Guarantor when its respective Guarantee is released in accordance with the
terms of the Indenture.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"Holdings" means Cambridge Industries Holdings, Inc., a Delaware
corporation.
"Holdings Services Agreement" means the Services Agreement between Holdings
and the Company as in effect on the Issue Date.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness
or other obligation or the recording, as required pursuant to GAAP or
otherwise, of any such Indebtedness or other obligation on the balance sheet
of such person (and "incurrence," "incurred," "incurable," and "incurring"
shall have meanings correlative to the foregoing); provided that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means with respect to any Person, without duplication: (i)
all Obligations of such Person for borrowed money; (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments; (iii) all Capitalized Lease Obligations of such Person, (iv) all
Obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all Obligations under any title
retention agreement (but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business); (v) all Obligations
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction; (vi) all Guarantees of such Person;
(vii) Hedging Obligations, except any such balance that constitutes an accrued
expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP; (viii) all Indebtedness of others secured by any Lien on
any asset or property (including, without limitation, leasehold interests and
any other tangible or intangible property) of such Person, the amount of such
Indebtedness for the purposes of this definition shall be limited to the
lesser of the amount of such Indebtedness secured by such Lien or the fair
market value of the assets or property securing such Lien; and (ix) all
Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any.
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"Industrial Revenue Obligations" means any debt obligation issued by a state
or local government or governmental authority to finance plants, equipment or
facilities that are made subject to a lease, or other transaction which
provides the credit support for such debt obligation, with the Company or any
Wholly Owned Restricted Subsidiary that is a Guarantor or a Foreign Subsidiary
or both.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans
(including Guarantees), advances or capital contributions (excluding
commission, travel, salary and other advances to officers and employees made
in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. For purposes of the covenant described above
under "Restricted Payment," (i) "Investment" in a Subsidiary shall include the
portion (proportionate to the Company's Equity Interest in such Subsidiary) of
the fair market value (as determined in good faith by the Board of Directors)
of such Subsidiary at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided that upon a redesignation of such 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 (as
determined in good faith by the Board of Directors) of the net assets of such
Subsidiary at the time of such redesignation; 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.
"Issue Date" means the date of original issuance of the Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents (including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company or any of its Restricted Subsidiaries
from such Asset Sale net of (a) reasonable out-of-pocket expenses and fees
relating to such Asset Sale (including, without limitation, brokerage, legal,
accounting and investment banking fees and sales commissions) and any
relocation expenses incurred as a result thereof, (b) taxes paid or payable
((1) including, without limitation, income taxes reasonably estimated to be
actually payable as a result of any disposition of property within two years
of the date of disposition and (2) after taking into account any reduction in
tax liability due to available tax credits or deductions and any tax sharing
arrangements) and (c) appropriate amounts to be provided by the Company as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale and the repayment
of Indebtedness secured by a Lien on the asset or assets subject to the Asset
Sale.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain or
loss, together with any related provision for taxes on such gain or loss,
realized in connection with (i) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions), or (ii) the
disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries, and (b) any extraordinary
gain or loss, together with any related provision for taxes on such
extraordinary gain or loss, (c) any one time charges relating to the GenCorp
Acquisition including, without
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limitation, any one-time charges relating to integration costs and adjustments
resulting in the write-up of inventory above cost, and (d) any write-off of
deferred financing fees or the incurrence of prepayment penalties or premiums
relating to the GenCorp Acquisition.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that shall comply
with applicable provisions of the Indenture.
"Permitted Business" means a business in which the Company and its
Subsidiaries was engaged on the date of the Indenture or a business that is
directly related or incidental thereto, including, without limitation, the
automotive component manufacturing business.
"Permitted Indebtedness" means without duplication each of the following:
(i) Existing Indebtedness (including Indebtedness of the Company and its
Restricted Subsidiaries under the Notes issued in connection with the
Offering) outstanding on the date of the Indenture;
(ii) Indebtedness of the Company or any of its Restricted Subsidiaries
that are Guarantors or Foreign Subsidiaries or both incurred pursuant to
the Credit Agreement in an aggregate principal amount at any time
outstanding not to exceed the greater of (a) $280.0 million or (b) the
Borrowing Base at such time; provided, however that the aggregate principal
amount of Indebtedness under clauses (a) and (b) shall be reduced dollar
for dollar for any Indebtedness outstanding under clause (viii) below and
to the extent Net Cash Proceeds relating to an Asset Sale is used to prepay
Indebtedness under this clause (ii) in accordance with the provisions
described under "Limitation on Asset Sales"; provided, further that the
aggregate principal amount of Indebtedness under clause (b) shall be
reduced dollar for dollar for any Indebtedness outstanding under clause
(viii) below only to the extent that the receivables transferred by the
Company or any of its Restricted Subsidiaries pursuant to the Qualified
Receivables Transaction giving rise to the Indebtedness incurred under
clause (viii) below are included in the Borrowing Base;
(iii) Obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
of the Company in the ordinary course of business;
(iv) Hedging Obligations that are incurred by the Company or any of its
Restricted Subsidiaries that are Guarantors or Foreign Subsidiaries or both
for the purpose of fixing or hedging interest rate risk with respect to any
Indebtedness that is permitted by the terms of the Indenture to be
outstanding;
(v) Intercompany Indebtedness incurred by the Company or any of its
Restricted Subsidiaries to the Company or any of its Restricted
Subsidiaries that are Guarantors or Foreign Subsidiaries or both, in each
case subject to no Lien (other than Liens securing the Credit Agreement)
held by a Person other than the Company or a Restricted Subsidiary or a
Guarantor or a Foreign Subsidiary or the holders of Senior Debt; provided
that if as of any date any Person other than the Company or a Restricted
Subsidiary or a Guarantor or a Foreign Subsidiary or the holders of Senior
Debt owns or holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness.
(vi) Indebtedness of the Company or any of its Restricted Subsidiaries
that are Guarantors or Foreign Subsidiaries or both attributable to any
Currency Agreement or Commodity Agreement; provided, however, that such
agreements are entered into to protect the Company from fluctuations in the
prices of currency exchange rates and commodities, respectively;
(vii) Acquired Indebtedness incurred pursuant to this clause (vii) by the
Company or any of its Restricted Subsidiaries that are Guarantors or
Foreign Subsidiaries or both, which does not exceed $15,000,000 at any time
outstanding;
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(viii) The incurrence by a Receivables Subsidiary of Indebtedness in a
Qualified Receivables Transaction that is without recourse to the Company
or to any Restricted Subsidiary of the Company or their assets (other than
such Receivables Subsidiary and its assets), and is not guaranteed by any
such Person; provided that any outstanding Indebtedness incurred under this
clause (viii) shall reduce the aggregate amount permitted to be incurred
under clause (ii) above to the extent set forth therein;
(ix) Guarantees by the Company's Restricted Subsidiaries of Indebtedness
permitted to be incurred under the Indenture; provided that such Restricted
Subsidiary complies with the "Guarantee of the Notes" covenant;
(x) Additional Indebtedness of the Company or any of its Restricted
Subsidiaries that are Guarantors or Foreign Subsidiaries or both incurred
pursuant to this clause (x), which together with the aggregate liquidation
value of outstanding Permitted Subsidiary Preferred Stock, does not exceed
$20,000,000 at any time outstanding (which amount may be, but need not be,
incurred in whole or in part under the Credit Agreement); and
(xi) The incurrence by the Company or any of its Restricted Subsidiaries
that are Guarantors or Foreign Subsidiaries or both of Indebtedness issued
in exchange for, or the proceeds of which are used to extend, refinance,
renew, replace, defease or refund Indebtedness permitted to be incurred or
remain outstanding under the Indenture in whole or in part; provided,
however, that (1) the principal amount of such Refinancing Indebtedness
shall not exceed the principal amount of Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded; (2) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; (3) if
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, the Refinancing
Indebtedness shall be subordinated in right of payment to the Notes or any
Guarantees on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (4) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is Indebtedness of the Company or a Guarantor, the Refinancing
Indebtedness shall be incurred by the Company or a Guarantor (any such
extension, refinancing, renewal, replacement, defeasance or refunding being
referred to as "Refinancing Indebtedness"); provided, further, that the
foregoing clauses (1), (2) and (3) shall not apply with respect to
Indebtedness under clause (ii) above or, to the extent incurred under the
Credit Agreement, Indebtedness under clauses (vii) and (x) above so long as
the aggregate principal amount of such Refinancing Indebtedness does not
exceed the amount of Indebtedness permitted under such clauses (ii), (vii)
and (x);
(xii) Indebtedness (including Capitalized Lease Obligations, Industrial
Revenue Obligations or Purchase Money Obligations) incurred by the Company
or any of its Restricted Subsidiaries or Permitted Subsidiary Preferred
Stock to finance the purchase, lease or improvement of property (real or
personal) or a business or equipment (whether through the direct purchase
of assets or the Capital Stock of any Person owning such assets or any
Indebtedness or Permitted Subsidiary Preferred Stock issued to a seller to
finance the purchase of property, a business or equipment in connection
therewith) in an aggregate principal amount not to exceed the greater of
$10,000,000 at any one time outstanding or 5% of Total Assets at the time
of any incurrence thereof (including any Refinancing Indebtedness with
respect thereto) (which amount may, but need not, be incurred in whole or
in part under the Credit Agreement); and
(xiii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price, earn out or other similar obligations, in
each case, incurred or assumed in connection with the disposition of any
business, assets or a Restricted Subsidiary of the Company, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Restricted Subsidiary for the purpose
of financing such acquisition; provided that the maximum assumable
liability in respect of all such Indebtedness shall at no time exceed the
gross proceeds actually received by the Company and its Restricted
Subsidiaries in connection with such disposition.
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"Permitted Investments" means: (a) any Investments in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any
Investments in Cash Equivalents; (c) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment: (i) such Person becomes a Wholly Owned Restricted Subsidiary of
the Company and a Guarantor or (ii) such Person is consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or
is liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the
Company that is a Guarantor; (d) Investments existing on the date of the
Indenture; (e) Investments in any Foreign Subsidiary in an aggregate amount
not to exceed $10,000,000 at any time outstanding; (f) any Investment in
Voplex Canada Inc. in an amount not to exceed $1,000,000; (g) any Investment
by the Company or a Wholly Owned Restricted Subsidiary of the Company in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary in any
other Person in connection with a Qualified Receivables Transaction; provided
that the foregoing Investment is in the form of a note that the Receivables
Subsidiary or other Person is required to repay as soon as practicable from
available cash collections less amounts required to be established as reserves
pursuant to contractual agreements with entities that are not Affiliates of
the Company entered into as part of a Qualified Receivables Transaction;
(h) loans and advances to employees and officers of the Company and its
Restricted Subsidiaries not in excess of $3,000,000 at any one time
outstanding; (i) accounts receivable created or acquired in the ordinary
course of business; (j) Hedging Obligations, Currency Agreements and Commodity
Agreements entered into in the ordinary course of the Company's or its
Restricted Subsidiaries' businesses and otherwise in compliance with the
Indenture; (k) Investments in Unrestricted Subsidiaries in an amount at any
one time outstanding not to exceed $5,000,000; (l) Guarantees (A) by the
Company of Indebtedness otherwise permitted to be incurred by Restricted
Subsidiaries of the Company under the Indenture or (B) permitted by the
"Guarantee of the Notes" covenant; (m) Investments received by the Company or
its Restricted Subsidiaries as consideration for asset sales, including Asset
Sales; provided in the case of an Asset Sale, such Asset Sale is effected in
compliance with the "Asset Sale" covenant; (n) Investments in securities of
trade creditors or customers received pursuant to any plan of reorganization
or similar arrangement upon the bankruptcy or insolvency of such trade
creditors or customers; (o) additional Investments having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (o) that are at that time outstanding, not to exceed 5% of Total Assets
at the time of such Investment (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent
changes in value); and (p) Investments the payment for which consists
exclusively of Qualified Capital Stock of the Company.
"Permitted Liens" means: (a) Liens in favor of the Company; (b) Liens
securing Senior Debt of the Company or of any Guarantor that was permitted to
be incurred pursuant to the Indenture; (c) Liens on property of a Person
existing at the time such Person is merged into or consolidated with the
Company or any Restricted Subsidiary of the Company, provided that such Liens
were in existence prior to the contemplation of such merger or consolidation
and do not extend to any assets other than those of the Person merged into or
consolidated with the Company or such Restricted Subsidiary; (d) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such acquisition; (e) Liens to secure surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (f) Liens existing on the date of the Indenture;
(g) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (h) Liens imposed by law, such as
mechanics', carriers', warehousemen's, materialmen's, and vendors' Liens,
incurred in good faith in the ordinary course of business with respect to
amounts not yet delinquent or being contested in good faith by appropriate
proceedings if a reserve or other appropriate proceedings if a reserve or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made therefor; (i) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor irregularities
of title incident thereto that do not, in the aggregate, materially detract
from the value of the property or the assets of the Company or impair the use
of such property in the operation of the Company's business; (j) judgment
Liens to the extent that such judgments do not cause or constitute a Default
or an Event of Default; and (k) Liens to secure the payment of all or a part
of the purchase price of
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property or assets acquired or constructed in the ordinary course of business
on or after the date of the Indenture, provided that (i) such property or
assets are used in the same or similar line of business as the Company was
engaged in on the date of the Indenture, (ii) at the time of incurrence of any
such Lien, the aggregate principal amount of the obligations secured by such
Lien shall not exceed the lesser of the cost or fair market value of the
assets or property (or portions thereof) so acquired or constructed, (iii)
each such Lien shall encumber only the assets or property (or portions
thereof) so acquired or constructed and shall attach to such property within
180 days of the purchase or construction thereof and (iv) any Indebtedness
secured by such Lien shall have been permitted to be incurred under the
"Limitation on Additional Indebtedness and Issuance of Preferred Stock"
covenant; (l) Liens of land-lords or of mortgagees of landlords arising by
operation of law; provided that the rentals payments secured thereby are not
yet due and payable; (m) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to obligations that
do not exceed $5,000,000 at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Subsidiary; (n) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (o) Liens securing
reimbursement obligations with respect to letters of credit which encumber
only documents and other property relating to such letters of credit and the
products and proceeds thereof; (p) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory, contractual or warranty
requirements; (q) Liens arising out of consignment or similar arrangements for
the sale of goods in the ordinary course of business; (r) any interest or
title of a lessor in property subject to any capital lease obligation or
operating lease; (s) any interest or title of a lessor in property subject to
any capital lease obligation or operating lease, (t) Liens on assets of a
Receivables Subsidiary incurred in connection with a Qualified Receivables
Transaction; (u) Liens securing Indebtedness under Currency Agreements; (v)
Liens securing Hedging Obligations which Hedging Obligations relate to
Indebtedness that is otherwise permitted under the Indenture; (w) leases or
subleases granted to others that do not materially interfere with the ordinary
course of business of the Company and its Restricted Subsidiaries; (x) Liens
arising from filing Uniform Commercial Code financing statements regarding
leases; and (y) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of custom duties in connection with the
importation of goods.
"Permitted Subsidiary Preferred Stock" means any series of Preferred Stock
of a domestic or foreign Restricted Subsidiary of the Company or Wholly Owned
Restricted Subsidiary that constitutes Qualified Capital Stock and has a fixed
dividend rate, the liquidation value of all series of which is issued pursuant
to clauses (x) and (xii) of the definition of Permitted Indebtedness.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Post-Petition Interest" means any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Principals" means Bain, the Bain Funds and Richard S. Crawford.
"pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of the Indenture, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's Board of Directors in consultation with its independent certified
public accountants.
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"Purchase Money Obligations" of any Person means any obligations of such
Person or any of its subsidiaries to any seller or any other person incurred
or assumed in connection with the purchase of real or personal property to be
used in the business of such person or any of its subsidiaries within 180 days
of such incurrence or assumption.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (i) a Receivables
Subsidiary (in the case of a transfer by the Company or any of its Restricted
Subsidiaries) and (ii) any other person (in the case of a transfer by a
Receivables Subsidiary), or may grant a security interest in, any accounts
receivable (whether now existing or arising in the future) of the Company or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of the
Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a)
no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which (i) is guaranteed by the Company or any Restricted
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness) pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction), (ii) is
recourse to or obligates the Company or any Restricted Subsidiary of the
Company in any way other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction or (iii) subjects any
property or asset of the Company or any Restricted Subsidiary of the Company,
directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to representations, warranties, covenants and
indemnities entered into in the ordinary course of business in connection with
a Qualified Receivables Transaction, (b) with which neither the Company nor
any Restricted Subsidiary of the Company has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company, other than fees
payable in the ordinary course of business in connection with servicing
accounts receivable and (c) with which neither the Company nor any Restricted
Subsidiary of the Company has any obligation to maintain or preserve such
Restricted Subsidiary's financial condition or cause such Restricted
Subsidiary to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"Related Party" with respect to any Principal means (i) any controlling
stockholder, general partner, majority owned Subsidiary, or spouse or
immediate family member (in the case of an individual) of such Principal or
(ii) (a) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding
80% or more of the Voting Stock of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (i) or (b) any
partnership the sole general partner of which is a Principal or one of the
Persons referred in clause (i).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person that
is not an Unrestricted Subsidiary.
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"Revolving Credit Facility" means the revolving credit portion of the Credit
Agreement.
"Senior Bank Debt" means all Obligations arising under the Credit Agreement.
"Senior Debt" means (a) with respect to the Company: (i) Senior Bank Debt of
the Company (including, without limitation, Post-Petition Interest with
respect thereto); (ii) Obligations of the Company with respect to Commodity
Agreements; (iii) Obligations of the Company with respect to Currency
Agreements; (iv) Hedging Obligations of the Company (including, without
limitation, Post-Petition Interest with respect thereto); and (v) any other
Indebtedness, including, without limitation, Post-Petition Interest with
respect thereto, incurred by the Company unless the instrument under which
such Indebtedness is incurred expressly provides that it is pari passu with or
subordinated in right of payment to the Notes, and (b) with respect to any
Guarantor: (i) Senior Bank Debt of such Guarantor; (ii) Obligations of such
Guarantor with respect to Commodity Agreements; (iii) Obligations of such
Guarantor with respect to Currency Agreements, (iv) Hedging Obligations of
such Guarantor (including, without limitation, Post-Petition Interest with
respect thereto); (v) any Guarantee by such Guarantor of any Senior Debt of
the Company; and (vi) any other Indebtedness, including, without limitation,
Post-Petition Interest with respect thereto, incurred by such Guarantor,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is pari passu with or subordinated in right of payment to the
Subsidiary Guarantee of such Guarantor. Notwithstanding anything to the
contrary in the foregoing, Senior Debt shall not include (v) any obligation of
the Company or any Guarantor to, in respect of or imposed by any
environmental, landfill, waste management or other regulatory governmental
agency, statute, law or court order, (w) any liability for federal, state,
local or other taxes owed or owing by the Company or any Guarantor, (x) any
Indebtedness of the Company or any Guarantor to any of the Company's
Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion
of any Indebtedness that is incurred in violation of the Indenture on or
before the date of the Indenture (but, as to any such obligation, no such
violation shall be deemed to exist for purposes of this clause (z) if the
holder(s) of such obligation or their representative and the Trustee shall
have received an officers' certificate of the Company to the effect that the
incurrence of such Indebtedness does not (or, in the case of revolving credit
Indebtedness, that the incurrence of the entire committed amount thereof at
the date on which the initial borrowing thereunder is made would not) violate
such provisions of the Indenture).
"Senior Representative" means the Agent Bank or any other representative
designated in writing to the Trustee or the holders of any class or issue of
Designated Senior Debt; provided that, in the absence of a representative of
the type described above, any holder or holders of a majority of the principal
amount outstanding of any class or issue of Designated Senior Debt may
collectively act as the Senior Representative for such class or issue.
"Significant Restricted Subsidiary" means any Restricted Subsidiary of the
Company constituting a Significant Subsidiary.
"Significant Subsidiary" means any Subsidiary of the Company that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"Tax Sharing Agreement" means the tax sharing agreement, dated November 17,
1995, between Holdings and the Company.
"Total Assets" means total consolidated assets of the Company and its
Restricted Subsidiaries, as set forth on the Company's most recent
consolidated balance sheet.
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"Unrestricted Subsidiary" means (A) any Wholly Owned Subsidiary of the
Company designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a Board resolution set forth in an Officers'
Certificate and delivered to the Trustee (i) that, at the time of designation,
(x) has total assets not exceeding $1,000 or (y) whose designation as such
would be permitted in accordance with the covenant entitled "Certain
Covenants--Restricted Payments," (ii) no portion of the Indebtedness or any
other obligations (contingent or otherwise) of which is (a) guaranteed by the
Company or any other Subsidiary (other than another Unrestricted Subsidiary)
of the Company, (b) is recourse to or obligates the Company or any other
Subsidiary (other than another Unrestricted Subsidiary) of the Company in any
way or (c) subjects any property or asset of the Company or any other
Subsidiary (other than another Unrestricted Subsidiary) of the Company,
directly or indirectly, contingently or otherwise, to the satisfaction
thereof, (iii) with which neither the Company nor any other Subsidiary of the
Company (other than another Unrestricted Subsidiary) has any contract,
agreement, arrangement or under-standing other than on terms no less favorable
to the Company or such other Subsidiary than those that might be obtained at
the time from persons who are not Affiliates of the Company and (iv) with
which neither the Company nor any other Subsidiary of the Company (other than
another Unrestricted Subsidiary) has any obligation (a) to subscribe for
additional shares of Capital Stock or other Equity Interests therein or (b) to
maintain or preserve such Subsidiary's financial condition or to cause such
Subsidiary to achieve certain levels of operating results and (B) any
Subsidiary of an Unrestricted Subsidiary.
"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 at the issuer's option.
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers, general
partners or trustees of any Person (irrespective of whether or not, at the
time, Capital Stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency) or, with respect
to a partnership (whether general or limited), any general partner interest in
such partnership.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the out-standing Capital Stock or other
ownership interests of which (other than directors qualifying shares,
Permitted Subsidiary Preferred Stock or Preferred Stock issued in accordance
with the Fixed Charge Coverage Ratio under the "Limitation on Additional
Indebtedness and issuance of Preferred Stock" covenant) shall at the time be
owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of
such Person.
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BOOK ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Notes are and will be
represented by one or more permanent global certificates in definitive, fully
registered form (the "Global Notes"). The Global Notes will be deposited on
the date of the consummation of the Exchange Offer with, or on behalf of, The
Depository Trust Company, New York, New York ("DTC") and registered in the
name of a nominee of DTC. The Global Note will be subject to certain
restrictions on transfer set forth therein and will bear the legend regarding
such restrictions set forth under the heading "Transfer Restrictions" herein.
Notes (i) originally purchased by or transferred to "foreign purchasers" (as
defined in "Transfer Restrictions") or (ii) held by QIBs or Accredited
Investors who are not QIBs who elect to take physical delivery of their
certificates instead of holding their interests through a Global Note (and
which are thus ineligible to trade through DTC) (collectively referred to
herein as the "Non-Global Purchasers") will be issued in registered form (the
"Certificated Security"). Upon the transfer to a QIB of any Certificated
Security initially issued to a Non-Global Purchaser, such Certificated
Security will, unless the transferee requests otherwise or the Global Note has
previously been exchanged in whole for Certificated Securities, be exchanged
for an interest in the Global Note. For a description of the restrictions on
the transfer of Certificated Securities and any interest in Global Notes, see
"Transfer Restrictions."
The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of Notes
of the individual beneficial interests represented by such global securities
to the respective accounts of persons who have accounts with such depositary
and (ii) ownership of beneficial interests in the Global Notes will be shown
on and the transfer of such ownership will be effected only through, records
maintained by DTC or its nominee (with respect to interests of participants)
and the records of participants (with respect to interests of persons other
than participants). Such accounts initially will be designated by or on behalf
of the Initial Purchaser and ownership of beneficial interests in the Global
Notes will be limited to persons who have accounts with DTC ("participants")
or persons who hold interests through participants. QIBs and Accredited
Investors may hold their interests in the Global Notes directly through DTC if
they are participants in such system, or indirectly through organizations that
are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under the Indenture. No beneficial owner of an interest in any of the Global
Notes will be able to transfer that interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture with respect
to the Notes.
Payments of the principal of, premium (if any) and interest (including
Additional Interest) on the Global Notes will be made to DTC or its nominee,
as the case may be, as the registered owner thereof. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest (including Additional Interest) on the
Global Notes, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the Global Notes as shown on the records of DTC or its nominee. The Company
also expects that payments by participants to owners of beneficial interests
in the Global Notes held through such participants will be governed by
standing instructions and customary practice, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
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Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. If a
holder requires physical delivery of a Certificated Security for any reason,
including to sell Notes to persons in states that require physical delivery of
the Notes, or to pledge such securities, such holder must transfer its
interest in the Global Notes, in accordance with the normal procedures of DTC
and with the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange
as described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Notes for Certificated Securities that it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Notes among participants of DTC, it is
under no obligation to perform such procedures and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Notes and a successor depositary is
not appointed by the Company within 90 days, Certificated Securities will be
issued in exchange for the Global Notes.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "Service") will not take a contrary
view, and no ruling from the Service has been or will be sought. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conditions set forth herein. Any such
changes or interpretations may or may not be retroactive and could affect the
tax consequences to holders. Certain holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. The Company
recommends that each holder consult such holder's own tax advisor as to the
particular tax consequences of exchanging such holder's Old Notes for New
Notes, including the applicability and effect of any state, local or foreign
tax laws.
The Company believes that the exchange of Old Notes for New Notes pursuant
to the Exchange Offer will not be treated as an "exchange" for federal income
tax purposes because the New Notes will not be considered to differ materially
in kind or extent from the Old Notes. Rather, the New Notes received by a
holder will be treated as a continuation of the Old Notes in the hands of such
holder. As a result, there will be no federal income tax consequences to
holders exchanging Old Notes for New Notes pursuant to the Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Notes received
in exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any Participating Broker-
Dealer for use in connection with any such resale (provided that the Company
receives notice from any Participating Broker-Dealer of its status as a
Participating Broker-Dealer within 30 days after the Expiration Date). In
addition, until , 199 (90 days after the commencement of the Exchange
Offer), all dealers effecting transactions in the New Notes, whether or not
participating in this distribution, may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the New Notes by
Participating Broker-Dealers. New Notes received by Participating Broker-
Dealers for their own accounts pursuant to the Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such New Notes. Any Participating Broker-Dealer that resells the New Notes
that were received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of such New Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such resale of New Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a Prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly, upon request and in no event more than five business days after such
request, send additional copies of this Prospectus and any
107
<PAGE>
amendment or supplement to this Prospectus to any Participating Broker-Dealer
that has provided the Company with notice of its status as a Participating
Broker-Dealer within 30 days of the Expiration Date.
LEGAL MATTERS
Certain legal matters relating to the issuance of the New Notes will be
passed upon for the Company by its counsel, Jaffe, Raitt, Heuer & Weiss,
Professional Corporation, Detroit, Michigan.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996
and the statement of sales less costs and expenses of the Centralia Plant and
Butler Polymet, Inc., for the ten month period ended July 31, 1994 included in
this Prospectus and related financial statement schedule of the Company
included elsewhere in the Registration Statement have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their reports appearing
herein and elsewhere in the Registration Statement, and have been so included
in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
The financial statements of GenCorp RPD as of November 30, 1995, and for the
years ended November 30, 1995 and 1994, included in this Prospectus, have been
so included in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The financial statements of The Goodyear Tire & Rubber Company--Jackson
Plant as of December 31, 1996 and 1995, and for each of the three years in the
period ended December 31, 1996, included in this Prospectus, have been so
included in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
AVAILABLE INFORMATION
As a result of the Exchange Offer Registration Statement being declared
effective by the Commission, the Company will become subject to the
informational requirements of the Exchange Act, and in accordance therewith
will be required to file periodic reports and other information with the
Commission. The obligation of the Company to file periodic reports and other
information with the Commission will be suspended if the New Notes are held of
record by fewer than 300 holders as of the beginning of any fiscal year of the
Company other than the fiscal year in which the Exchange Offer Registration
Statement is declared effective. The Company has agreed, pursuant to the
Indenture, to deliver to the Trustee within 15 days after the filing of the
same with the Commission, copies of the quarterly and annual reports and of
the information, documents and other reports, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants, if any, which the Company is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will also
provide the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. In addition, whether or not required by the rules and regulations of the
Commission, at any time after the Company files the Exchange Offer
Registration Statement with the Commission, the Company will file a copy of
all such information with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available
to investors who request it in writing. The Company will also comply with the
other provisions of TIA (S) 314(a).
The Company, a corporation organized under Delaware law, has its principal
executive offices at 555 Horace Brown Drive, Madison Heights, Michigan 48071;
its telephone number is (810) 616-0500.
108
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Cambridge Industries, Inc. and Subsidiaries Consolidated Financial
Statements............................................................... F-2
Independent Auditors' Report............................................ F-3
Consolidated Balance Sheets--June 30, 1997 (unaudited), December 31,
1996 and 1995.......................................................... F-4
Consolidated Statements of Operations--Six Months Ended June 30, 1997
and 1996 (unaudited) and the Years Ended December 31, 1996, 1995 and
1994................................................................... F-5
Consolidated Statements of Cash Flows--Six Months Ended June 30, 1997
and 1996 (unaudited) and the Years Ended December 31, 1996, 1995 and
1994................................................................... F-6
Notes to Financial Statements........................................... F-7
GenCorp Inc. Reinforced Plastics Division Financial Statements............ F-20
Report of Independent Accountants....................................... F-21
Balance Sheets as of February 29, 1996 (unaudited) and November 30,
1995................................................................... F-22
Statements of Operations--Three Months Ended February 29, 1996
(unaudited) and February 28, 1995 (unaudited) and the years ended
November 30, 1995 and 1994............................................. F-23
Statements of Cash Flows--Three Months Ended February 29, 1996
(unaudited) and February 28, 1995 (unaudited) and the years ended
November 30, 1995 and 1994............................................. F-24
Notes to Financial Statements........................................... F-25
Centralia Plant and Butler Polymet, Inc. Financial Statements............. F-34
Independent Auditors' Report............................................ F-35
Statement of Sales Less Costs and Expenses--Ten Months Ended July 31,
1994................................................................... F-36
Statement of Cash Flows--Ten Months Ended July 31, 1994................. F-37
Notes to Financial Statements........................................... F-38
The Goodyear Tire & Rubber Company--Jackson Plant Financial Statements.... F-42
Report of Independent Accountants....................................... F-43
Balance Sheets as of June 30, 1997 (Unaudited) and December 31, 1996 and
1995................................................................... F-44
Statements of Operations--Six Months Ended June 30, 1997 and 1996
(Unaudited) and Each of the Three Years in the Period Ended December
31, 1996............................................................... F-45
Statements of Cash Flows--Six Months Ended June 30, 1997 and 1996
(Unaudited) and Each of the Three Years in the Period Ended December
31, 1996............................................................... F-46
Notes to Financial Statements........................................... F-47
</TABLE>
F-1
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31,
1996 AND 1995, FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) AND
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996 AND
INDEPENDENT AUDITORS' REPORT
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Cambridge Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Cambridge
Industries, Inc. and subsidiaries (the "Company"), as of December 31, 1996 and
1995, and the related statements of operations and of cash flows for each of
the three years in the period ended December 31, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Cambridge Industries, Inc.
and subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Deloitte & Touche llp
Detroit, Michigan
March 28, 1997, (July 10, 1997 as to Note 18)
F-3
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ------------------
1997 1996 1995
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash......................................... $ 7,255 $ 11,942 $ 8,662
Receivables (Note 4)......................... 47,282 48,985 32,035
Inventories (Notes 5 and 17)................. 20,200 21,297 15,458
Reimbursable tooling costs................... 23,820 17,674 13,026
Income tax refundable (Note 12).............. 3,270 3,270 537
Deferred income taxes and other.............. 3,596 6,571 2,415
-------- -------- --------
Total current assets........................... 105,423 109,739 72,133
Property, plant and equipment, net (Note 6).... 131,509 133,324 84,858
Other assets (Note 7).......................... 18,467 19,167 18,124
-------- -------- --------
Total assets (Note 9).......................... $255,399 $262,230 $175,115
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt (Note 9)... $ 11,196 $ 9,080 $ 4,494
Accounts payable............................. 48,141 38,028 29,654
Accrued liabilities (Note 8)................. 19,903 25,102 12,441
-------- -------- --------
Total current liabilities...................... 79,240 72,210 46,589
Noncurrent liabilities:
Long-term debt (including related party
amounts of $16,480 and $54,952 at December
31, 1996 and 1995, respectively) (Notes 9
and 15)..................................... 209,762 224,112 177,133
Workers' compensation........................ 968 968 1,045
Postretirement health care benefits (Note
11)......................................... 16,360 15,164 10,353
Accrued commitments under acquired
contracts................................... 2,244
Deferred income taxes (Note 12).............. 9,673 9,673 3,834
-------- -------- --------
Total liabilities.............................. 316,003 324,371 238,954
Commitments and contingencies (Note 16)
Stockholder's equity (deficit) (Note 13):
Common stock, $.01 par value, 3,000 shares
authorized, 1,000 shares issued and
outstanding.................................
Paid-in capital.............................. 17,539 17,539 17,264
Unrealized foreign currency translation...... (85) (87) (124)
Minimum pension liability adjustment (Note
10)......................................... (277)
Accumulated deficit.......................... (78,058) (79,593) (80,702)
-------- -------- --------
Total stockholder's deficit.................... (60,604) (62,141) (63,839)
-------- -------- --------
Total liabilities and stockholder's equity
(deficit)..................................... $255,399 $262,230 $175,115
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED),
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales (Note 1)................ $186,631 $185,968 $346,026 $297,746 $190,944
Cost of sales................. 159,626 156,638 294,742 253,893 159,455
-------- -------- -------- -------- --------
Gross profit.................. 27,005 29,330 51,284 43,853 31,489
Selling, general and
administrative expenses...... 12,793 10,592 26,240 17,678 15,312
-------- -------- -------- -------- --------
Income from operations........ 14,212 18,738 25,044 26,175 16,177
Other expense (income):
Interest expense............ 11,781 11,053 23,190 12,388 6,161
Other, net.................. (24) 135 180 (746) (657)
-------- -------- -------- -------- --------
Income before income tax...... 2,455 7,550 1,674 14,533 10,673
Income tax expense (benefit)
(Note 12).................... 920 2,561 565 5,410 (1,450)
-------- -------- -------- -------- --------
Income before extraordinary
item......................... 1,535 4,989 1,109 9,123 12,123
Extraordinary loss (Net of
income tax benefit of $2,712)
(Note 9)..................... 4,426
-------- -------- -------- -------- --------
Net income.................... $ 1,535 $ 4,989 $ 1,109 $ 4,697 $ 12,123
======== ======== ======== ======== ========
Pro forma (Note 12):
Income tax provision........ $ 4,100
========
Net income.................. $ 6,573
========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED),
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ----------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Income before extraordinary
item....................... $ 1,535 $ 4,989 $ 1,109 $ 9,123 $ 12,123
Adjustments to reconcile net
income before extraordinary
item to net cash provided
by operating activities:
Depreciation and
amortization............. 10,956 10,160 21,319 16,715 8,952
Postretirement benefit
expenses, net of cash
payments................. 1,196 801 2,211 960 660
Deferred income tax
provision (benefit)...... 2,975 (263) 1,015 (1,100) (4,000)
Changes in assets and
liabilities, excluding
the effect of
acquisitions:
Receivables............. 1,703 (11,952) (16,950) 20,604 (27,512)
Inventories............. 1,678 103 (1,744) 1,065 (1,893)
Reimbursable tooling.... (5,220) (4,780) 2,710 3,352 (2,123)
Accounts payable and
accrued liabilities.... 3,972 5,849 (12,121) (17,213) 23,612
Other................... 1,079 (1,530) (1,699) 282 (307)
-------- -------- -------- -------- --------
Net cash provided by (used
in) operating activities... 19,874 3,377 (4,150) 33,788 9,512
Cash flows from investing
activities:
Acquisitions, net of cash
acquired................. (2,366) (18,160) (18,160) (75,217)
Purchase of property,
plant and equipment...... (8,642) (4,213) (9,630) (10,646) (3,972)
-------- -------- -------- -------- --------
Net cash used in investing
activities................. (11,008) (22,373) (27,790) (10,646) (79,189)
Cash flows from financing
activities:
Net borrowings
(repayments) from
revolving debt........... (9,000) 13,000 5,000 (2,316)
Proceeds from issuance of
long-term debt........... 29,998 73,178 176,620 123,000
Repayment of long-term
debt..................... (4,540) (2,428) (48,363) (130,450) (18,369)
Cost of debt and equity
financing................ (2,907) (2,907) (14,573) (4,171)
Distribution to
stockholder.............. (70,339) (29,817)
Contribution by
stockholder.............. 275 18,200 1,000
-------- -------- -------- -------- --------
Net cash provided by (used
in) financing activities... (13,540) 24,663 35,183 (15,542) 69,327
-------- -------- -------- -------- --------
Effect of foreign currency
rate fluctuations on cash.. (13) 35 37 (58) (76)
-------- -------- -------- -------- --------
Net increase (decrease) in
cash....................... (4,687) 5,702 3,280 7,542 (426)
Cash at beginning of
period..................... 11,942 8,662 8,662 1,120 1,546
-------- -------- -------- -------- --------
Cash at end of period....... $ 7,255 $ 14,364 $ 11,942 $ 8,662 $ 1,120
======== ======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED),
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. SIGNIFICANT ACCOUNTING POLICIES
General--Cambridge Industries, Inc. and its subsidiaries (the "Company") are
engaged primarily in the manufacture of plastic molded systems and
subassemblies for the North American transportation industry. The Company
operates facilities in the United States and Canada. The Company is wholly-
owned by Cambridge Industries Holdings, Inc. ("Holdings"), which has no
significant assets other than its investment in the Company.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting policies requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Consolidation--The accompanying consolidated financial statements include
the accounts and balances of Cambridge Industries, Inc. and its subsidiary.
All significant intercompany balances and transactions have been eliminated.
Cash and Cash Equivalents include bank deposits and short-term, highly
liquid investments with original maturities of 90 days or less when purchased.
Inventories are stated at the lower of cost or market, as determined under
the first-in, first-out method.
Reimbursable Tooling Costs are stated at amounts which management expects to
recover under customer agreements. Unrecoverable tooling costs are charged to
cost of sales when aggregate estimated total costs exceed the amounts deemed
collectible. Excess reimbursements on tooling projects are recognized when the
tooling project is substantially complete.
Property and Equipment--Property is stated at cost, and is depreciated under
the straight-line method over the estimated useful lives of such assets.
Estimated service lives are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Leasehold improvements................................................. 5-13
Buildings.............................................................. 5-40
Machinery and equipment................................................ 3-11
Corporate-owned tooling................................................ 3-5
Furniture and fixtures................................................. 2-11
</TABLE>
Significant renewals and betterments are capitalized, while maintenance and
repair expenditures are charged against operations.
Goodwill is amortized on a straight-line basis over 15-25 years.
Impairment--Property, equipment and goodwill are reviewed for impairment
whenever events or changes in circumstances indicate that their carrying
amounts may not be recoverable. In performing the review for recoverability,
the Company estimates the future cash flows expected to result from the use of
the assets and their eventual disposition. As of December 31, 1996 and 1995,
no significant impairment exists.
Accrued Commitments under Loss Contracts are recorded based on management's
estimate of the future profitability of contracts on a platform basis. The
Company records a reserve for loss contracts when management's estimate of
expected costs exceed the related estimated revenues.
F-7
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Workers' Compensation costs included in the consolidated financial
statements represent the estimated accrued cost, not reimbursable under
insurance contracts, of settling such claims. Accruals for certain workers'
compensation claims for which the Company is self-insured are determined from
the historical claims incurred experience using actuarial computations of the
estimated ultimate settlement cost, including claims incurred but not yet
reported.
Income Taxes--Prior to August 1994, the Company was a Subchapter S
Corporation, such that the income of the Company was included in the
shareholders' personal income tax returns, and no provision was recognized by
the Company. Beginning in August 1994, the Company changed to a Subchapter C
status, and a corporate provision has been determined under Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
The income tax benefit related to the Company's change in tax status was $1.5
million in 1994.
Financial Instruments included in the consolidated balance sheets are
recorded at cost and such amounts approximate fair value. All of the
receivables of the Company are due from a limited number of automotive and
truck manufacturers; consistent with practice in the industry, such
receivables are uncollateralized.
Segment Information--The Company operates in a single segment. Three of the
customers of the Company each accounted for over 10% of sales in 1996, 1995
and 1994. Sales to these customers as a group totaled approximately 68%, 73%
and 73% in 1996, 1995 and 1994, respectively. Sales to these customers
individually ranged from 10% to 32% during these periods.
Environmental Claims--The Company periodically evaluates the existence of
contingent obligations related to environmental claims and clean-up costs,
including claims related to Superfund sites where it may be identified as a
potentially responsible party. Accruals are established whenever such
obligations are considered probable, which would normally occur when a
specific claim is asserted and a preliminary investigation is performed. At
December 31, 1996, the Company's accrual for environmental claims totaled
approximately $235,000; the additional environmental claims considered
reasonably possible by the Company totaled approximately $1.0 million at
December 31, 1996.
Stock-Based Compensation--In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (SFAS) No.
123, "Accounting for Stock-Based Compensation," which defines a fair value
method of accounting for stock options and other equity instruments. As
permitted by SFAS No. 123, the Company continues to calculate compensation
expense using the intrinsic value method of APB No. 25, "Accounting for Stock
Issued to Employees".
Capitalization of Software Costs--The Company capitalizes external direct
costs of materials and services and payroll and payroll-related costs for
employees who are directly associated with software obtained or developed for
internal use. Capitalized costs totaled $200,000 in 1996 and, upon project
completion, will be amortized over a 3 year useful life.
Other--Income taxes paid totaled $1,032,000 and $5,546,000 in 1996 and 1995,
respectively. Interest payments totaled $20,828,000, $13,119,000 and
$3,658,000 in 1996, 1995 and 1994, respectively.
Reclassifications--Certain reclassifications have been made to the 1995 and
1994 financial statements to conform to the classifications used in 1996.
F-8
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. CORPORATE REORGANIZATION
Effective August 1, 1994, the stockholders of Wolf Engineering Company
("Wolf"), Voplex Company ("Voplex") and Voplex of Canada, Inc. ("Voplex
Canada") formed the Company and contributed the shares of such businesses or
merged such businesses into a wholly owned subsidiary of Cambridge Industries
Holdings, Inc. This transaction constituted the combining of interests under
common control and, consequently, was accounted for in a manner similar to a
pooling of interests; accordingly, separate company financial statements have
been presented herein as if they have been part of the Company since their
acquisition by the stockholders.
The revenues and net income of the previously separate companies for the
seven months ended July 31, 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
NET
REVENUES INCOME
-------- -------
<S> <C> <C>
Wolf...................................................... $13,287 $ 3,697
Voplex.................................................... 40,309 7,449
Voplex Canada............................................. 4,843 481
Consolidating and other adjustments....................... (1,951) (80)
------- -------
Total................................................... $56,488 $11,547
======= =======
</TABLE>
3. ACQUISITIONS
Effective March 1, 1996, the Company acquired certain assets and assumed
certain liabilities of the Reinforced Plastics Division of GenCorp, Inc.
("GenCorp RPD"). The transaction was accounted for as a purchase. The total
purchase price was $33.5 million, which consisted of $18.2 million of cash, a
note payable of $13.7 million and acquisition costs of $1.6 million. An
adjustment to the purchase price is currently the subject of ongoing
negotiation (Note 16); the allocation of the purchase price to the assets
acquired and liabilities assumed may change based on the final resolution of
this matter. The Company's results of operations include GenCorp RPD from
March 1, 1996.
The purchase price as allocated to the assets acquired and liabilities
assumed is presented below (in thousands):
<TABLE>
<S> <C>
Inventories........................................................ $ 4,095
Reimbursable tooling costs......................................... 7,358
Property, plant and equipment...................................... 59,952
Accounts payable................................................... (5,128)
Accrued commitments under acquired contracts....................... (25,191)
Accrued compensation and other liabilities......................... (5,004)
Other postretirement benefits...................................... (2,600)
--------
Net assets acquired................................................ $ 33,482
========
</TABLE>
Contemporaneously with the acquisition, the Company terminated certain
former employees of GenCorp RPD and, in accordance with Emerging Issues Task
Force Issue 95-3, "Recognition of Liabilities in Connection with a Purchase
Business Combination," accrued approximately $1,780,000 in termination costs,
substantially all of which were disbursed in 1996.
Unaudited pro forma sales and net loss for the Company, assuming the
acquisition of GenCorp RPD occurred on January 1, 1995, were approximately
$361,769,000 and ($541,000), respectively, for 1996 and approximately
$418,517,000 and ($11,375,000), respectively, for 1995.
F-9
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Effective August 1, 1994, the Company acquired substantially all the net
assets of the Plastic Products Business of Rockwell International Corporation
(the "Rockwell Business") including the stock of Butler Polymet, Inc. The
transaction was accounted for as a purchase. The total purchase price was
$76.5 million, which consisted of cash of $67.8 million, a note payable of
$5.0 million and acquisition costs of $3.7 million. The Company's results of
operations include the Rockwell Business from August 1, 1994.
The purchase price was allocated, as adjusted, to the assets acquired and
liabilities assumed, as follows (in thousands):
<TABLE>
<S> <C>
Receivables........................................................ $ 12,789
Inventories........................................................ 8,809
Reimbursable tooling costs......................................... 17,915
Property, plant and equipment...................................... 70,435
Goodwill........................................................... 960
Accounts payable................................................... (17,356)
Accrued compensation and other liabilities......................... (7,577)
Deferred income taxes.............................................. (6,150)
Other postretirement benefits...................................... (3,371)
--------
Net assets acquired................................................ $ 76,454
========
</TABLE>
Unaudited pro forma sales and net income for the Company, assuming the
acquisition occurred at January 1, 1994 were approximately $319,447,000 and
$16,223,000, respectively, for the year ended December 31, 1994.
4. RECEIVABLES
Receivables at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Trade accounts............................................. $51,777 $32,984
Other...................................................... 1,129 530
------- -------
Total.................................................... 52,906 33,514
Less allowance for doubtful accounts....................... (3,921) (1,479)
------- -------
Receivables, net........................................... $48,985 $32,035
======= =======
</TABLE>
5. INVENTORIES
Inventories at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Finished goods........................................... $ 6,023 $ 4,593
Work-in-process.......................................... 4,724 3,048
Raw materials............................................ 8,299 6,922
Supplies................................................. 3,401 1,505
------- -------
Total.................................................. 22,447 16,068
Less allowances for obsolescence and lower of cost or
market reserve.......................................... (1,150) (610)
------- -------
Inventories, net......................................... $21,297 $15,458
======= =======
</TABLE>
F-10
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment at December 31 is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Land and leasehold improvements.......................... $ 3,837 $ 2,442
Buildings................................................ 36,489 27,225
Machinery, equipment and tooling......................... 130,061 75,679
Furniture and fixtures................................... 4,597 2,215
Construction in progress................................. 2,572 2,303
-------- --------
Total.................................................. 177,556 109,864
Less accumulated depreciation............................ (44,232) (25,006)
-------- --------
Property, plant and equipment, net....................... $133,324 $ 84,858
======== ========
</TABLE>
7. OTHER ASSETS
Other assets at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred financing costs (less accumulated amortization of
$2,434 and $253)......................................... $13,899 $13,173
Goodwill (less accumulated amortization of $749 and
$546).................................................... 3,883 4,086
Intangible pension asset.................................. 351
Prepaid pension costs..................................... 600
Reimbursable tooling costs and other...................... 785 514
------- -------
Other assets.............................................. $19,167 $18,124
======= =======
</TABLE>
8. ACCRUED LIABILITIES
Accrued liabilities at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Payroll and employee benefit related........................ $ 8,760 $ 4,889
Accrued commitments under acquired contracts................ 8,910
Accrued interest............................................ 2,280 2,099
Accrued pension costs....................................... 733
Workers' compensation....................................... 1,674 1,374
Other....................................................... 3,478 3,346
------- -------
Other accrued liabilities................................... $25,102 $12,441
======= =======
</TABLE>
F-11
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
9. LONG-TERM DEBT
Long-term debt at December 31 consisted of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Revolving lines of credit.............................. $ 28,000 $ 15,000
Term loans............................................. 174,962 111,675
Notes payable.......................................... 43,325
Senior subordinated note payable....................... 13,750
Subordinated notes payable, net of unamortized discount
of $520 and $273...................................... 16,480 11,627
-------- --------
Total................................................ 233,192 181,627
Less current portion................................... (9,080) (4,494)
-------- --------
Long-term debt....................................... $224,112 $177,133
======== ========
</TABLE>
The revolving line of credit at December 31, 1996 and 1995 consists of
borrowings on a $35 million line of credit (which bears interest at a variable
interest rate of 9.4% and 10.3% at December 31, 1996 and 1995) and expires in
November 2000. Borrowings under the line are secured by substantially all the
assets of the Company. The revolving line of credit includes a commitment fee
of 1/2 of 1% of the average unused balance of the commitment.
The term loans are divided into four separate commitments ("A," "B," "C" and
"D") and are secured by all assets of the Company. Substantially all of the
term loans bear interest at a Eurodollar-based lending rate (5.63% at December
31, 1996) plus 2.75%, 3.25%, 3.75% and 4.00% for the A, B, C and D
commitments, respectively. Prior to February 1996, such term loans bore
interest at a prime-based lending rate (8.5% at December 31, 1995) plus 1.75%,
2.25%, 2.75% and 3.00%, respectively. Principal payments on such loans
commenced in March 1996, with initial payments ranging from $50,000 to
$860,000 per quarter. Such amounts escalate to quarterly payments of $4.6
million, $11.1 million, $8.2 million and $10.7 million for each of the
respective commitments, through final maturities which range from November
2000 through May 2004. Additional principal payments are required under the
term loan agreement if the Company has proceeds from asset sales or a stock
offering which exceeds $1,000,000, or if the Company generates excess cash
flows as defined by the loan agreement. Amounts outstanding under the term
loans at December 31 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Term Loan A................................................ $ 54,140 $ 6,675
Term Loan B................................................ 46,052 40,000
Term Loan C................................................ 51,794 45,000
Term Loan D................................................ 22,976 20,000
-------- --------
Total.................................................... $174,962 $111,675
======== ========
</TABLE>
The senior subordinated note payable represents amounts due from Holdings to
the former owner of GenCorp RPD. This note is due in full in March 2006 and
bears interest at 8% annually. The note requires mandatory repayment under
certain conditions, including an initial public offering or recapitalization,
certain changes in control, and significant sales of assets.
The subordinated notes payable represent amounts due from Holdings or the
Company to certain shareholders. These notes are due in full in November 2005
and bear interest at 12% annually.
F-12
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The notes payable of $43.325 million, due from Holdings to certain current
and former shareholders of Holdings, were repaid in January 1996.
The annual maturities of long-term debt at December 31, 1996 are as follows
(in thousands):
<TABLE>
<S> <C>
Year ending December 31:
1997.............................................................. $ 9,080
1998.............................................................. 13,312
1999.............................................................. 17,152
2000.............................................................. 47,476
2001.............................................................. 22,852
Thereafter........................................................ 123,320
--------
Total........................................................... $233,192
========
</TABLE>
The Company is also subject to certain debt covenants, which, among others,
prohibit the issuance of certain additional debt and the declaration of
dividends, limit capital expenditures to $22 million in 1996 and $16 million
annually thereafter, require increasing minimum earnings before interest,
taxes, depreciation and amortization, require an interest coverage and current
ratio (as defined) of at least 1.5:1.0 and 1.0:1.0, respectively, and which
require that the ratio of consolidated debt to consolidated earnings before
interest, taxes, and depreciation not exceed 5.7:1.0 for the quarter ended
December 31, 1996. Such covenants become more stringent through June 2004.
Management believes it is in compliance with these covenants at December 31,
1996.
As part of a refinancing that occurred in 1995, a prepayment penalty of $3.7
million was incurred, and approximately $3.4 million in deferred financing
costs were charged against operations. Such amounts were recorded as an
extraordinary loss, net of certain tax benefits of $2.7 million.
10. PENSION BENEFITS
The Company sponsors certain contributory and noncontributory 401(k)
retirement plans for substantially all of its employees, which allow employees
to contribute up to a specified percentage of compensation into tax deferred
accounts. Pension expense recognized by the Company, relating to amounts
contributed to these plans was $303,000, $213,000 and $177,000 during 1996,
1995 and 1994, respectively.
The Company has a noncontributory defined benefit pension plan covering
eligible employees of the Centralia, Illinois plant. Pension plan benefits are
based on participants' years of credited service. The Company's policy is to
fund the minimum actuarially computed annual contribution required under the
Employee Retirement Income Security Act of 1974. Plan assets generally consist
of mutual funds. The components of net periodic pension cost relating to the
defined benefit pension plan are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----- ---- ----
<S> <C> <C> <C>
Service cost on benefits earned during the year........... $ 830 $414 $173
Interest cost on projected benefit obligation............. 85 46 --
Actual gain on plan assets................................ (153) (12) --
Net amortization and deferral............................. 111 47 --
----- ---- ----
Net periodic pension cost................................. $ 873 $495 $173
===== ==== ====
</TABLE>
F-13
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The actuarial present value of benefit obligations and funded status for the
defined benefit pension plan is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation................................. $1,454 $1,296
Nonvested benefit obligation.............................. 472 151
------ ------
Accumulated and projected benefit obligation................ 1,926 1,447
Plan assets at fair value................................... 2,299 714
------ ------
Plan assets greater than (less than) projected benefit
obligation................................................. 373 (733)
Unrecognized prior service cost............................. 10 351
Unrecognized net loss....................................... 217 420
Additional minimum liability................................ (771)
------ ------
Accrued pension asset (obligation).......................... $ 600 $ (733)
====== ======
</TABLE>
The discount rates used in developing the projected benefit obligations were
7.25% and 6.75% at December 31, 1996 and 1995, respectively. The expected
long-term rate of return on plan assets was assumed to be 10% and 8.5% as of
December 31, 1996 and 1995, respectively.
11. POSTRETIREMENT HEALTH CARE BENEFITS
The Company provides postretirement health care and prescription drug
coverage benefits to a limited number of current retirees; certain active
hourly employees and their covered dependents may become eligible for these
benefits, although the Company does not necessarily have a legal obligation to
provide benefits to all such participants. The Company accounts for the
accrual of the postretirement benefit costs under the provisions of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
Postretirement benefits provided by the Company are unfunded.
The following table reconciles the status at December 31 of the accrued
postretirement benefit obligation (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Retirees................................................... $ 5,942 $ 2,246
Fully eligible active plan participants.................... 1,398 1,000
Other active plan participants............................. 12,740 10,543
------- -------
Accumulated postretirement benefit obligation.............. 20,080 13,789
Unamortized net loss....................................... 4,916 3,436
------- -------
Postretirement obligation included on the consolidated
balance sheet............................................. $15,164 $10,353
======= =======
</TABLE>
The net periodic postretirement benefit cost for the year consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ----
<S> <C> <C> <C>
Service cost............................................. $1,132 $ 518 $346
Interest cost............................................ 1,288 638 454
Amortization of unrecognized net loss.................... 190
------ ------ ----
Net periodic postretirement benefit cost................. $2,610 $1,156 $800
====== ====== ====
</TABLE>
F-14
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
For measurement purposes, the weighted average annual rate of increase
assumed in the per capita cost of covered health care benefits was 10.6% in
1996. The rate was assumed to decrease to 4.5% in 2004, and remain at that
level thereafter. The discount rate used to value the obligation was 7.25% and
6.75% at December 31, 1996 and 1995, respectively. A one percentage point
increase each year in the assumed health care cost trend rate would increase
the accumulated postretirement benefit obligation at December 31, 1996 by 16%
and the service and interest cost components of net periodic postretirement
benefit cost for 1996 by 13%.
12. INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." In August 1994, the Company changed its tax
status from Subchapter S to Subchapter C; prior to this date, the Company's
earnings were included in the taxable income of the Company's stockholders. If
the Company had operated as a Subchapter C Corporation during all of 1994, the
pro forma income tax provision would be approximately $4,100,000.
The income tax provision (benefit) for 1996, 1995 and 1994 (subsequent to
the Subchapter C election date), consists of the following components:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------- -------
<S> <C> <C> <C>
Current provision (benefit)....................... $ (450) $ 6,510 $ 2,550
Deferred provision (benefit)...................... 1,015 (1,100) (2,500)
Effect of change in taxable status................ (1,500)
------ ------- -------
Income tax expense (benefit)...................... $ 565 $ 5,410 $(1,450)
====== ======= =======
</TABLE>
A reconciliation of the Company's statutory and effective income tax rates
is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Applicable statutory rate................................... 34% 34% 34%
State income taxes.......................................... 3 5 3
Effect of income earned prior to change in tax status....... (36)
Effect of change in taxable status.......................... 14
Net operating loss utilization in foreign jurisdiction...... (2) (2)
Other....................................................... (3) 1
--- --- ---
Effective tax rate.......................................... 34% 37% 14%
=== === ===
</TABLE>
The tax effect of the components of the Company's future taxable and future
deductible temporary differences at December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------- ---------------------
DEFERRED DEFERRED DEFERRED DEFERRED
INCOME TAX INCOME TAX INCOME TAX INCOME TAX
ASSET LIABILITY ASSET LIABILITY
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Property, plant and equipment,
net........................... $16,656 $6,018
Accrued liabilities............ $ 7,079 $2,219
Postretirement health care
benefits...................... 3,783 2,532
Alternative minimum tax credit
carryforward.................. 2,162
Other.......................... 71 845 522 355
------- ------- ------ ------
Total........................ $13,095 $17,501 $5,273 $6,373
======= ======= ====== ======
</TABLE>
F-15
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
A deferred tax liability has not been established for the Company's Canadian
subsidiary because management does not anticipate the repatriation of such
earnings in the foreseeable future. The unrecognized deferred income tax
liability related to such subsidiary was approximately $850,000 and $700,000
at December 31, 1996 and 1995, respectively.
13. STOCKHOLDER'S EQUITY (DEFICIT)
The components of changes in the Company's stockholder's equity (deficit)
accounts are as follows (in thousands):
<TABLE>
<CAPTION>
COMMON UNREALIZED MINIMUM RETAINED
STOCK FOREIGN PENSION EARNINGS
$.01 PAR PAID-IN CURRENCY LIABILITY (ACCUMULATED
VALUE CAPITAL TRANSLATION ADJUSTMENTS DEFICIT) TOTAL
-------- ------- ----------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
January 1, 1994......... $ 600 $ (58) $ 1,245 $ 1,787
Contribution by
stockholder.......... 1,000 1,000
Net income............ 12,123 12,123
Translation
adjustments.......... 154 154
Distributions to
stockholders......... (29,817) (29,817)
------ ------- ----- ----- -------- --------
December 31, 1994....... 1,600 96 (16,449) (14,753)
Contribution by
stockholder.......... 17,264 17,264
Net income............ 4,697 4,697
Translation
adjustments.......... (220) (220)
Minimum pension
liability
adjustments.......... $(277) (277)
Distribution to
stockholder.......... (1,600) (68,950) (70,550)
------ ------- ----- ----- -------- --------
December 31, 1995....... 17,264 (124) (277) (80,702) (63,839)
Contribution by
stockholder.......... 275 275
Net income............ 1,109 1,109
Translation
adjustments.......... 37 37
Minimum pension
liability
adjustments.......... 277 277
------ ------- ----- ----- -------- --------
December 31, 1996....... $17,539 $ (87) $ $(79,593) $(62,141)
====== ======= ===== ===== ======== ========
</TABLE>
Each of the 1,000 shares of common stock outstanding of the Company is owned
by Holdings. The following summarizes the rights of the various classes of the
Holdings' preference and common stock:
Preference stock, which is non-voting, contains a liquidation premium equal
to $18,150 per share, plus a yield equal to 9.1% per year of such liquidation
amount, measured from December 1995. Such liquidation amount is payable upon
liquidation, sale of the Company, or upon the completion of an initial public
offering of Holdings' common stock.
Class P common stock is voting stock, which includes a liquidation
preference equal to $250 per share, if the Company's net sales exceed $505
million for any previous year, or $125 per share, if the Company's net sales
exceed $405 million for any previous year. Class P common stock has no
liquidation preference if neither of these conditions is achieved.
Class L common stock is voting stock, which includes a liquidation
preference equal to $1,307 per share, plus a 10% yield per year on such
liquidation amount measured from December 1995.
Class A common stock is voting stock, but contains no liquidation
preference.
F-16
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The rights and obligations of the holders of these classes of stock are
governed by a stockholders' agreement, which provides for the election of
directors and officers, a right of first refusal in the sale of shares, and
other provisions which allow particular groups of shareholders to require a
sale of the Company after March 31, 1998.
In 1996, warrants were issued to certain shareholders and lenders to acquire
2,160 shares of Holdings' Class A common stock at $3.30 per share, and 540
shares of Holdings' Class L common stock at $1,307 per share. Such warrants
can be exercised through November 2005.
In 1995, warrants were issued to certain lenders to acquire 2,672 shares of
Holdings' Class A common stock at par value, 4,723 shares of Holdings' Class A
common stock for $3.30 per share, and 1,181 shares of Holdings' Class L common
stock for $1,307 per share. Such warrants can be exercised through November
2005.
In 1994, the Company issued warrants to acquire up to 2,500,000 shares of
Holdings' common stock at $4 per share. The warrants were exercisable at any
time through August 2004; such warrants were repurchased by the Company in
1995.
14. STOCK-BASED COMPENSATION
The Company has stock option agreements with executive officers to purchase
Holdings' Class A common stock. Options granted and the related exercise
prices under the agreements are as follows:
<TABLE>
<CAPTION>
AVERAGE
OPTIONS EXERCISE
GRANTED PRICES
------- --------
<S> <C> <C>
Balance at December 31, 1994................................ --
Granted................................................... 15,845 $240
------
Balance at December 31, 1995................................ 15,845 240
Granted................................................... 70,257 74
------
Balance at December 31, 1996................................ 86,102 104
======
</TABLE>
In 1996, 63,557 options were granted with an exercise price of $3.30 per
share, 1,250 options were granted with an exercise price of $447 per share,
and 5,450 options were granted with exercise prices ranging from $807 to $972
per share. Of the total options issued, 8,750 of the options vest over a three
year period and the remaining options vest over a five year period; the
options can be exercised through October 2006.
In 1995, 7,923 options were granted with an exercise price of $3.30 per
share. Such options vest ratably over a three year period and can be exercised
through November 2005. The remaining stock options have exercise prices
ranging from $312 to $642 per share, become vested when the Company's fiscal
year earnings before interest and taxes exceed $32,000,000, and can be
exercised through the date of an initial public stock offering of the Company.
If the Company were to apply the fair value based method of accounting for
stock-based compensation, its pro forma net income would not be materially
different from the net income reported in 1996 and 1995. The primary
assumptions used in this determination include a risk-free interest rate of 6%
and an expected option life of five years.
At December 31, 1996, exercise prices on outstanding options ranged from
$3.30 to $972, and the average remaining contractual life was 5.6 years. There
was no compensation cost for stock-based compensation recognized in income
during 1996 or 1995.
F-17
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
15. RELATED PARTY TRANSACTIONS
In 1996, a $412,500 fee was paid to a shareholder and officer in connection
with the GenCorp Acquisition.
Certain management and advisory services are provided by an affiliate of
certain shareholders of Holdings, under an agreement, which requires an annual
fee of $950,000, plus certain other contingent fees. Total fees charged to the
Company by such affiliate during 1996 and 1995 were approximately $1,349,500
and $3,105,000, respectively.
During 1996, certain legal services were provided by an affiliate of a
director of the Company. Total fees charged to the Company by such affiliate
were approximately $1.6 million.
Prior to August 1994, the Company's sales force and certain management
services were provided by a company affiliated through common ownership which
charged a monthly sales commission and fees, which totaled $2,053,000 in 1994.
As discussed in Note 9, notes payable are due to certain current and former
shareholders of Holdings at December 31, 1996 and 1995.
16. COMMITMENTS AND CONTINGENCIES
The Company leases certain equipment and plant facilities under
noncancelable operating leases. Rental expense for the Company totaled
approximately $2,385,000, $1,568,000 and $1,349,000 during 1996, 1995 and
1994, respectively.
Total lease commitments at December 31, 1996 are summarized below based on
the expected year in which such commitments are due (in thousands):
<TABLE>
<S> <C>
Year ending December 31:
1997................................................................ $1,795
1998................................................................ 1,387
1999................................................................ 1,311
2000................................................................ 768
2001................................................................ 241
------
Total............................................................. $5,502
======
</TABLE>
The Company has letters of credit outstanding of $1,000,000 at December 31,
1996.
Subsequent to the closing of the acquisition of GenCorp RPD, the Company has
been unable to reach an agreement with the seller on the related purchase
price adjustment. The seller filed suit against the Company in June 1996, in
an effort to prevent the Company from submitting the dispute to arbitration.
Although the Company's right to seek arbitration was upheld, this matter is
still subject to negotiation by the parties. The outcome of this matter is
uncertain, however, the Company does not believe that the outcome of this
uncertainty will have a material adverse effect on the consolidated financial
position or results of operations of the Company.
The Company is also subject to other lawsuits and claims pending or asserted
with respect to matters in the ordinary course of business. The Company does
not believe that the outcome of these uncertainties will have a material
adverse effect on the consolidated financial position or results of operations
of the Company.
F-18
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
17. INTERIM DATA (UNAUDITED)
The accompanying balance sheet as of June 30, 1997 and the unaudited
consolidated statements of operations and cash flows for the six month periods
ended June 30, 1997 and 1996 include all adjustments, consisting of only
normal recurring adjustments, which in the opinion of management are necessary
for the fair presentation of the financial position, results of operations and
cash flows. The results of operations for any interim period are not
necessarily indicative of the results of operations for a full year.
Inventories are stated at lower of cost or market and consist of the following
at June 30, 1997:
<TABLE>
<S> <C>
Finished goods..................................................... $ 4,656
Work-in-process.................................................... 6,949
Raw materials...................................................... 6,209
Supplies........................................................... 3,467
-------
Total............................................................ $21,281
Less allowance for obsolescence and lower of cost or market........ $(1,081)
-------
Net............................................................ $20,200
=======
</TABLE>
******
18. SUBSEQUENT EVENTS
On July 10, 1997, the Company acquired certain net assets of the engineered
composite business of The Goodyear Tire & Rubber Company and the plastics
division of Eagle-Picher Industries, Inc. for approximately $37.6 and $32.2
million, respectively. In addition, the Company retired all outstanding debt
with the proceeds of the issuance of $100 million in Senior Subordinated Notes
and $207.5 million of term loans and a revolving line of credit under a new
Credit Agreement.
The $100 million Senior Subordinated Notes bear interest at 10.25% and
mature in 2007. The new Credit Agreement provides for maximum borrowings of
$280 million consisting of $205 million in term loans and $75 million under a
revolving facility. The term loans mature on the fifth and eighth anniversary
of the Credit Agreement and the revolving credit facility matures on the fifth
anniversary of the Credit Agreement. The interest rate on the Credit Agreement
is based on the Eurodollar rate plus the applicable Eurodollar margin and the
interest rate on the revolving credit facility is based on the Base rate plus
the applicable Base rate margin.
The Senior Subordinated Notes are guaranteed by CE Automotive Trim Systems,
Inc. ("CE"), a consolidated subsidiary of the Company, but are not guaranteed
by the Company's other consolidated subsidiary ("the Canadian Subsidiary").
The aggregate assets, net income and stockholder's equity of CE and the
Company are substantially equivalent to the assets, net income and
stockholder's equity of the Company and CE on a consolidated basis. The
following summarizes the assets, liabilities and stockholder's equity as of
December 31, 1996 and 1995 and sales, income from operations and net income of
the Canadian Subsidiary for each of the three years in the period ended
December 31, 1996. Note that the income from continuing operations and net
income do not include any allocations of corporate overhead or other similar
charges.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1996 1995
------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Assets....................................................... $6,482 $5,442
Liabilities.................................................. 1,243 1,072
Stockholder's equity......................................... 5,239 4,370
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Sales.......................................... $9,556 $9,102 $8,864
Income from operations......................... 1,682 977 510
Net income..................................... 832 1,106 542
</TABLE>
F-19
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
FINANCIAL STATEMENTS AS OF FEBRUARY 29, 1996 (UNAUDITED) AND
NOVEMBER 30, 1995, AND FOR THE THREE-MONTH PERIODS ENDED
FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 (UNAUDITED),
AND FOR THE YEARS ENDED NOVEMBER 30, 1995 AND 1994
F-20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholder of Cambridge Industries, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations and of cash flows present fairly, in all material respects, the
financial position of the Reinforced Plastics Division ("the Division") of
GenCorp Inc. at November 30, 1995, and the results of its operations and its
cash flows for the years ended November 30, 1995 and 1994, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of management of GenCorp Inc. and the Division; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Our engagement as auditors was subsequent to November 30, 1995. Therefore,
we were not present to observe physical inventories taken on or prior to that
date, the amounts of which entered into the determination of cost of sales for
the years ended November 30, 1995 and 1994. However, we observed physical
inventories subsequent to November 30, 1995 and performed testing of activity
from the physical inventory date to December 1, 1993.
The Division is a division of GenCorp Inc. and, as disclosed in Note 11 to
the financial statements, has extensive transactions and relationships with
other GenCorp Inc. entities. Because of these relationships, the terms of
these transactions may differ from those that would result from transactions
among wholly unrelated parties.
As discussed in Note 14, on March 1, 1996, certain net assets of the
Division were purchased by Cambridge Industries, Inc. and its affiliate. The
accompanying financial statements do not give effect to the purchase
transaction.
Price Waterhouse llp
Detroit, Michigan
April 24, 1996
F-21
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 29, NOVEMBER 30 ,
1996 1995
------------ -------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets
Cash............................................... $ 32 $ 404
Accounts receivable................................ 18,148 14,407
Inventories........................................ 4,093 3,774
Prepaid expenses and other current assets.......... 238 24
------- -------
Total current assets............................. 22,511 18,609
Property and equipment, net.......................... 69,213 68,249
Other assets......................................... 162 186
------- -------
$91,886 $87,044
======= =======
LIABILITIES AND GENCORP INVESTMENT
Current liabilities
Accounts payable................................... $ 5,128 $ 5,918
Accrued liabilities................................ 20,564 22,594
------- -------
Total current liabilities........................ 25,692 28,512
Noncurrent liabilities............................... 14,246 14,339
Commitments and contingencies (Note 13)
------- -------
Total liabilities................................ 39,938 42,851
GenCorp investment................................... 51,948 44,193
------- -------
$91,886 $87,044
======= =======
</TABLE>
See accompanying notes to financial statements.
F-22
<PAGE>
GENCORP INC.
REINFORCED PLASTIC DIVISION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS YEAR ENDED
ENDED ENDED NOVEMBER 30,
FEBRUARY 29, FEBRUARY 28, ------------------
1996 1995 1995 1994
------------- ------------- -------- --------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Sales......................... $23,615 $32,690 $120,771 $144,993
Cost of sales................. 26,042 31,085 115,286 133,790
------- ------- -------- --------
Gross profit (loss)......... (2,427) 1,605 5,485 11,203
Selling, general and
administrative expense....... 2,475 2,618 10,467 13,931
Provision for adverse sales
commitments.................. 27,191
Other (income), expense net... (137) (114) 137
Restructuring charges
Property and equipment...... 3,234
Other restructuring
charges.................... 661 706
------- ------- -------- --------
Loss before interest expense
and provision for income
taxes........................ (4,765) (899) (32,834) (6,805)
Interest expense.............. 996 1,186 4,440 4,462
Provision for income taxes....
------- ------- -------- --------
Net loss...................... $(5,761) $(2,085) $(37,274) $(11,267)
======= ======= ======== ========
</TABLE>
See accompanying notes to financial statements.
F-23
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS YEAR ENDED
ENDED ENDED NOVEMBER 30,
FEBRUARY 29, FEBRUARY 28, ------------------
1996 1995 1995 1994
------------- ------------- -------- --------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss...................... $ (5,761) $(2,085) $(37,274) $(11,267)
Adjustments to reconcile net
loss to net cash used for
operating activities:
Depreciation and
amortization............... 1,836 1,854 7,419 7,191
Loss on sale of property and
equipment.................. 392 167
Provision for adverse sales
commitments................ 27,191
Noncash restructuring
charges.................... 3,234
Changes in assets and
liabilities:
Accounts receivable....... (3,741) 2,042 2,082 1,310
Inventories............... (319) (358) (111) 149
Prepaid expenses and other
current assets........... (214) 156 172 (151)
Accounts payable.......... (790) (666) (927) (2,110)
Accrued liabilities....... (2,030) (1,743) (2,135) 144
Noncurrent liabilities.... (93) 82 (880) (21)
-------- ------- -------- --------
NET CASH USED FOR
OPERATING ACTIVITIES... (11,112) (718) (4,071) (1,354)
-------- ------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment and other assets... (2,776) (481) (4,461) (10,367)
Proceeds from sale of property
and equipment................ 292 683
-------- ------- -------- --------
NET CASH USED FOR
INVESTING ACTIVITIES... (2,776) (481) (4,169) (9,684)
-------- ------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in GenCorp
investment................... 13,516 645 8,069 11,592
-------- ------- -------- --------
NET INCREASE (DECREASE) IN
CASH......................... (372) (554) (171) 554
Cash at beginning of the
period....................... 404 575 575 21
-------- ------- -------- --------
Cash at end of the period..... $ 32 $ 21 $ 404 $ 575
======== ======= ======== ========
</TABLE>
See accompanying notes to financial statements.
F-24
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. THE DIVISION
The Reinforced Plastics Division (the Division), a division of GenCorp Inc.
(GenCorp), designs, manufactures and supplies automotive, light truck, heavy
truck and industrial components made of reinforced plastic. The Division
operates production facilities in Shelbyville, Indiana; Ionia, Michigan;
Rushville, Indiana; and shares a production facility in Marion, Indiana with
another GenCorp division. The Division's fiscal year ends on November 30.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These financial statements present the historical financial position,
results of operations and cash flows of the Division previously included in
the GenCorp consolidated financial statements. The Division's financial
information included herein is not necessarily indicative of the financial
position, results of operations and cash flows of the Division in the future,
or of the results which would have been reported if the Division had operated
as an unaffiliated enterprise.
Transactions between the Division and GenCorp (and its other divisions) are
herein referred to as "intercompany" or "related party" transactions.
Concentration of credit risk
Financial instruments which potentially expose the Division to
concentrations of credit risk consist primarily of accounts receivable. To
minimize this risk, ongoing credit evaluations of customers' financial
condition are performed, although collateral is not required. In addition, the
Division maintains reserves for potential credit losses and historically has
not experienced significant losses related to receivables from individual
customers.
The Division's customer base includes significant automobile, light truck
and heavy truck manufacturers primarily in the United States and Canada and is
therefore directly affected by the economic well-being of those industries.
During 1995 and 1994, sales to four customers accounted for approximately 95%
and 97%, respectively, of total sales as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
General Motors Corporation....................................... 68% 74%
Volvo............................................................ 13 10
Chrysler Corporation............................................. 9 7
Ford Motor Company............................................... 5 6
Others........................................................... 5 3
--- ---
100% 100%
=== ===
</TABLE>
Export sales, primarily to Canadian affiliates of these customers,
approximated $25,600 and $29,800 for the years ended November 30, 1995 and
1994, respectively.
Financial instruments
At November 30, 1995 and 1994, the carrying value of financial instruments,
comprising cash, accounts receivable and accounts payable, approximated their
fair values.
F-25
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Management estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Unbilled tooling
Unbilled tooling amounts represent net costs incurred on tooling projects
for which the Division expects to be reimbursed by customers. Ongoing
estimates of total costs to be incurred on each tooling project are made by
management and losses, if any, are recorded when known. Generally, tooling
revenue is recognized upon acceptance of the tooling by the customer. Tooling
revenue or losses are included in cost of sales.
Inventories
Productive inventories are stated at the lower of cost or market. Cost is
determined using the last in, first out (LIFO) method. Supply inventories are
stated at the lower of cost or market with cost being determined on a first
in, first out (FIFO) basis.
Property and equipment
Property and equipment are recorded at cost. Additions and improvements,
unless of relatively minor amounts, are capitalized. Expenditures for repairs
and maintenance are charged to expense as incurred. Property and equipment no
longer utilized in operations as a result of restructuring plans or other
changes in operations are reduced to net realizable or salvage value. (See
Note 12.) Upon disposal or retirement of property and equipment, the related
cost and accumulated depreciation are removed from the Division's accounts and
any gain or loss is included in results of operations. Property and equipment
are depreciated using the straight-line method for financial reporting
purposes and accelerated methods for tax purposes.
Other assets
Other assets comprise primarily of purchased computer software, net of
accumulated amortization. Computer software is amortized on the straight-line
basis over three years.
Income taxes
The Division is included in the consolidated U.S. federal income tax return
of GenCorp. In preparing its financial statements, the Division has determined
its tax provision on a separate return basis. Deferred income taxes are
provided on differences between the book and tax bases of assets and
liabilities at the statutory tax rates expected to be in effect when such
differences reverse. A valuation allowance on deferred tax assets is provided
if it is considered more likely than not that such deferred tax assets will
not be realized.
Revenue recognition
Sales and related cost of sales are recognized upon the shipment of
products. Sales are recorded net of estimated returns and allowances.
Adverse Sales Commitments
The Division periodically assesses the future profitability of its sales
commitments on a platform basis. The Division records a reserve for adverse
sales commitments when management's estimate of the costs of producing the
related products exceeds the related revenues over the estimated platform
life.
F-26
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Research, development and engineering expenses
Research, development and engineering expenses related to design and
development of new products and planning and design for new processes are
expensed as incurred.
Environmental expenditures
Environmental expenditures are expensed or capitalized depending upon their
future economic benefit. Expenditures which improve a property as compared
with the condition of the property when originally constructed or acquired and
which prevent future environmental contamination are capitalized. Expenditures
which return a property to its condition at the time of acquisition are
expensed. Liabilities related to these expenditures are recorded when it is
probable that obligations have been incurred and the amounts can be reasonably
estimated.
Interim financial data
The interim financial data are unaudited; however, in the opinion of
management, the interim data include all adjustments, consisting only of
normal recurring items, necessary for a fair statement of the results for the
interim periods.
3. ACCOUNTS RECEIVABLE
Accounts receivable comprised the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
1995
------------
<S> <C>
Customer accounts receivable.................................... $13,902
Raw material rebates receivable................................. 477
Unbilled tooling................................................ 1,342
Other........................................................... 373
Reserve for returns and credits................................. (1,687)
-------
$14,407
=======
</TABLE>
4. INVENTORIES
Inventories comprised the following:
<TABLE>
<CAPTION>
FEBRUARY 29, NOVEMBER 30,
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Raw materials...................................... $2,667 $2,351
Work-in-process.................................... 920 897
Finished goods..................................... 688 623
------ ------
Total productive inventories....................... 4,275 3,871
Less--LIFO reserve................................. (1,220) (1,216)
------ ------
Net productive inventories......................... 3,055 2,655
------ ------
Supplies inventory................................. 1,977 2,041
Less--Supplies obsolescence reserve................ (939) (922)
------ ------
Net supplies inventory............................. 1,038 1,119
------ ------
Net inventories.................................... $4,093 $3,774
====== ======
</TABLE>
F-27
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. PROPERTY AND EQUIPMENT
Property and equipment comprised the following:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE NOVEMBER 30,
(YEARS) 1995
------------ ------------
<S> <C> <C>
Land.............................................. -- $ 565
Buildings and building improvements............... 10-40 19,925
Machinery and equipment........................... 5-30 94,699
Furniture and fixtures............................ 3-15 4,455
Leasehold improvements............................ 1-20 993
Construction-in-progress.......................... 2,965
-------
123,602
Less--Accumulated depreciation and amortization... (55,353)
-------
$68,249
=======
</TABLE>
6. ACCRUED LIABILITIES
Accrued liabilities comprised the following:
<TABLE>
<CAPTION>
NOVEMBER 30 ,
1995
-------------
<S> <C>
Payroll and payroll taxes...................................... $ 628
Accrued vacation............................................... 1,955
State and local taxes.......................................... 920
Workers' compensation.......................................... 898
Restructuring reserve.......................................... 1,566
Self-insured medical claims.................................... 1,037
Environmental.................................................. 1,000
Reserve for adverse sales commitments.......................... 14,037
Other.......................................................... 553
-------
Total accrued liabilities...................................... $22,594
=======
</TABLE>
7. NONCURRENT LIABILITIES
Noncurrent liabilities comprised the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
1995
------------
<S> <C>
Reserve for adverse sales commitments........................... $13,154
Environmental................................................... 1,000
Other........................................................... 185
-------
Total noncurrent liabilities.................................... $14,339
=======
</TABLE>
During fiscal 1995, the Division recorded a provision for adverse sales
commitments of $27,191, related to the Division's commitment to provide
certain passenger car and heavy truck products and tooling to certain of its
customers. The Division expects to begin production on these programs during
fiscal 1996.
F-28
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. EMPLOYEE BENEFIT PLANS
Retirement plans
Substantially all salaried and hourly employees of the Division participate
in GenCorp defined benefit pension plans. For salaried employees, plan
benefits are generally based on years of service and the employee's
compensation. For hourly employees, plan benefits are generally based on years
of service and the benefit level established by the collective bargaining
agreement for each facility. For the purpose of these financial statements,
the Division is considered to have participated in multiemployer pension
plans.
Employers participating in multiemployer plans are required to recognize as
net periodic pension costs, total contributions for the period. The Division
recorded net periodic pension cost of $1,940 and $1,830 for the years ended
November 30, 1995 and 1994 respectively, related to its participation in the
GenCorp plans.
GenCorp also sponsors a number of defined contribution pension plans.
Participation in these plans is available to substantially all salaried
employees and to certain groups of hourly employees. GenCorp contributions to
these plans are based on either a percentage of employee contributions or on a
specified amount per hour based on the provisions of each plan. The cost to
the Division for providing benefits under the GenCorp defined contribution
plans was $660 and $560 for the years ended November 30, 1995 and 1994,
respectively.
Other postretirement benefits
GenCorp provides certain other postretirement health care and life insurance
benefits for certain retired employees, including the Division's eligible
retired employees. These retiree health care and life insurance plans provide
varied coverage by employee group. For the purpose of these financial
statements, the Division is considered to have participated in multiemployer
postretirement benefit plans.
Employers participating in multiemployer plans are required to recognize
total contributions for the period as net postretirement benefit costs. The
Division charged to expense $1,850 and $1,830 for the years ended November 30,
1995 and 1994, respectively, related to its participation in the GenCorp
postretirement healthcare and life insurance benefit plans.
9. OPERATING LEASES
The Company leases two facilities and certain manufacturing, computer and
transportation equipment under operating leases expiring on various dates
through 2000. Future minimum lease payments required under leases that have
noncancelable lease terms in excess of one year at November 30, 1995 are as
follows:
<TABLE>
<S> <C>
Fiscal 1996........................................................... $ 425
1997.............................................................. 420
1998.............................................................. 366
1999.............................................................. 173
2000.............................................................. 118
------
$1,502
======
</TABLE>
Rental expense charged to operations was approximately $820 and $530 for the
years ended November 30, 1995 and 1994, respectively.
F-29
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
10. INCOME TAXES
There was no current or deferred federal or state income tax provision for
the years ended November 30, 1995 and 1994. Temporary differences giving rise
to the Division's deferred tax assets and liabilities, and related valuation
allowances, comprised the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
1995
------------
<S> <C>
Deferred tax assets
Accounts receivable reserves.................................. $ 277
Restructuring reserves........................................ 630
Environmental reserves........................................ 804
Reserve for adverse sales commitments......................... 10,876
Other reserves not currently deductible....................... 1,641
Net operating loss carryforwards.............................. 49,354
-------
63,582
Deferred tax liabilities
Property and equipment........................................ (14,755)
-------
Net deferred tax asset before valuation allowance............. 48,827
Valuation allowance............................................. (48,827)
-------
Net deferred taxes............................................ $ --
=======
</TABLE>
The provision for income taxes differs from income taxes computed by
applying the U.S. statutory federal income tax rate as a result of the
following:
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
---------------
1995 1994
------ ------
<S> <C> <C>
Taxes computed at federal statutory rate................... (35.0)% (35.0)%
Increase in deferred tax valuation allowance............... 34.6 34.7
Other...................................................... 0.4 0.3
------ ------
-- % -- %
====== ======
</TABLE>
At November 30, 1995, for financial reporting purposes the Division had
federal and state net operating loss carryforwards of approximately $123,000
which expire from 2005 through 2010. The loss carryforwards have been utilized
by GenCorp in its consolidated federal and state tax returns and are therefore
not available for tax return purposes.
11. INTERCOMPANY TRANSACTIONS AND ALLOCATIONS
Cash management
The Division utilizes GenCorp centralized cash management services. Under
this arrangement, the Division's accounts receivable are collected and its
cash disbursements are funded by GenCorp on a daily basis. Net cash activity
between GenCorp and the Division is reflected in GenCorp's investment in the
Division.
Intercompany purchases
The Division purchases certain raw materials from other divisions of
GenCorp; such purchases approximated $2,100 and $2,700 for the years ended
November 30, 1995 and 1994, respectively. Intercompany payables related to
purchases between the Division and other GenCorp entities are included in
GenCorp's investment in the Division.
F-30
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Corporate services
GenCorp allocates certain corporate, general and administrative costs,
including legal, tax, accounting, human resources, employee benefits,
insurance, cash management, information systems and research and development
to the Division. Other corporate overhead costs are allocated among GenCorp's
operating units based upon each unit's percentage of total payroll, sales or
invested capital, depending on the type of cost. Allocated corporate overhead
totaled $5,100 and $3,400 for the years ended November 30, 1995 and 1994,
respectively, and is included in selling, general and administrative expenses
(SG&A) in the statements of operations.
GenCorp manages workers' compensation, employee medical, dental and life
insurance, postretirement benefits and pension plans on a consolidated basis.
GenCorp charges the Division for its share of such employee-related costs
based upon the Division's actual experience, or headcount, depending upon the
nature of the cost. Charges from GenCorp for employee-related costs aggregated
$8,700 and $10,700 for the years ended November 30, 1995 and 1994 and are
classified in cost of sales or SG&A in the statements of operations, depending
upon the nature of the cost.
GenCorp charges the Division intercompany interest on the GenCorp investment
balance, utilizing a short-term interest rate which averaged approximately
6.8% and 6.4% in 1995 and 1994, respectively. Interest charges approximated
$4,400 and $4,500 for the years ended November 30, 1995 and 1994,
respectively.
Management believes that the methods utilized to allocate costs to the
Division, as discussed above, are reasonable. However, the terms of
transactions between the Division and GenCorp, including allocated costs, may
differ from those that would result from transactions with unrelated parties.
GENCORP INVESTMENT
The GenCorp investment balance represents the cumulative intercompany
activity from transactions, charges and credits between the Division and
GenCorp (and its other divisions), as more fully described above. A summary of
changes in GenCorp investment follows.
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED NOVEMBER 30,
FEBRUARY 26, ----------------
1996 1995 1994
------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C>
Beginning GenCorp investment.................. $44,193 $73,398 $73,073
Net loss...................................... (5,761) (37,274) (11,267)
Intercompany activity......................... 13,516 8,069 11,592
------- ------- -------
Ending GenCorp investment..................... $51,948 $44,193 $73,398
======= ======= =======
</TABLE>
F-31
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
12. RESTRUCTURING
During 1995, 1994 and 1992, the Division initiated three separate
restructuring plans pursuant to which the Division planned to close the
Division's headquarters in Carmel, Indiana (1995 plan) consolidate the
Division's passenger vehicle business into one production facility (1994 plan)
and consolidate like product lines into similar production facilities (1992
plan). The following table shows the activity in the restructuring reserves
for the years ended November 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994 1992
RESTRUCTURING RESTRUCTURING RESTRUCTURING TOTAL
------------- ------------- ------------- -------
<S> <C> <C> <C> <C>
Balance at November 30,
1993...................... $-- $ -- $ 4,532 $ 4,532
Establishment of 1994 re-
serve..................... 2,846 2,846
Charges against reserve.... (2,392) (2,392)
Changes in estimates....... (2,140) (2,140)
----- ------- ------- -------
Balance at November 30,
1994...................... 2,846 2,846
Establishment of 1995 re-
serve..................... 700 700
Charges against reserve.... (454) (1,487) (1,941)
Changes in estimates....... (39) (39)
----- ------- ------- -------
Balance at November 30,
1995...................... $ 246 $ 1,320 $ -- $ 1,566
===== ======= ======= =======
</TABLE>
The charges against the reserve during the year ended November 30, 1994
primarily related to remaining costs of relocating product lines from Marion
and the demolition of certain buildings at the Marion location. The charges
against the reserve during the year ended November 30, 1995 related to the
demolition of certain buildings at the Marion and Ionia, Michigan facilities
and certain other exit costs related to the 1995 and 1994 restructuring plans.
The November 30, 1995 reserve balance primarily relates to demolition costs
which are expected to be incurred during 1996.
13. COMMITMENTS AND CONTINGENCIES
Environmental
The Division is subject to federal, state and local regulations which govern
environmental matters. The Division has recorded amounts which, in
management's best estimate, will be sufficient to provide for anticipated
costs of known environmental matters, which consist primarily of remediation
requirements at the Division's Ionia, Michigan facility.
The nature of environmental investigation and remediation activities often
makes it difficult to determine the timing and amount of any estimated future
costs that may be required for remedial measures. However, the Division
reviews these matters and accrues for costs associated with the remediation of
environmental pollution when it becomes probable that a liability has been
incurred and its proportionate share of the amount can be reasonably
estimated. The Division's balance sheet reflects accruals for environmental
remediation approximating $2,000 at November 30, 1995 and February 29, 1996
(unaudited).
The effect of resolution of environmental matters on results of operations
cannot be predicted due to the uncertainty concerning both the amount and
timing of future expenditures and future results of operations. However,
management believes, on the basis of presently-available information, that
resolution of these matters will not materially affect the financial condition
of the Division. The Division will continue its efforts to mitigate past and
future costs through pursuit of claims for insurance coverage and continued
investigation of new remediation alternatives and associated technologies.
F-32
<PAGE>
GENCORP INC.
REINFORCED PLASTICS DIVISION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
General
The Division is subject to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of business.
In the opinion of management, after reviewing the information which is
currently available with respect to such matters and consulting with counsel,
any liability which may ultimately be incurred with respect to these matters
will not materially affect the financial condition of the Division. The effect
of resolution of these matters on results of operations cannot be predicted
because any such effect depends on both future results of operations and the
amount and timing of the resolution of such matters.
14. SUBSEQUENT EVENT
On March 1, 1996, GenCorp sold certain assets and liabilities of the
Division to Cambridge Industries, Inc. and its affiliate, Cambridge Holdings,
Inc., (collectively, Cambridge) for approximately $31,900, subject to certain
adjustments. GenCorp received approximately $13,700 in senior subordinated
notes of Cambridge and approximately $18,200 in cash in payment of purchase
price.
As a result of the transaction, Cambridge (i) purchased substantially all
assets of the Division, excluding trade accounts receivable, the Ionia,
Michigan facility and the Marion, Indiana facility, (ii) assumed certain
liabilities, primarily trade accounts payable and payroll-related accruals,
and (iii) assumed the Division's obligations under its sales commitments.
Subsequent to the closing of the acquisition of the Division, Cambridge has
been unable to reach an agreement with GenCorp on the related purchase price
adjustment. The purchase agreement provides for arbitration of such disputes;
the matter has not yet been submitted to arbitration and continues to be
subject to negotiation by the parties.
The accompanying financial statements do not give effect to the purchase
transaction.
F-33
<PAGE>
CENTRALIA PLANT AND BUTLER POLYMET, INC.
FINANCIAL STATEMENTS FOR THE TEN MONTHS ENDED JULY 31, 1994
AND INDEPENDENT AUDITORS' REPORT
F-34
<PAGE>
INDEPENDENT AUDITORS' REPORT
Cambridge Industries, Inc.:
We have audited the accompanying statements of sales less costs and
expenses, and of cash flows of the Centralia Plant and Butler Polymet, Inc.
(the "Business"), formerly the plastic products business of another company,
for the ten-month period ended July 31, 1994. These financial statements are
the responsibility of the management of the Business. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying financial statements were prepared in connection with the
acquisition of the Business by Cambridge Industries, Inc. as discussed in Note
1 and are not intended to be a complete presentation of the results of
operations and cash flows of the Business.
In our opinion, such financial statements present fairly, in all material
respects, the sales less costs and expenses of the Business and its cash flows
for the ten-month period ended July 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note 4 to the financial statements, the Business changed its
method of accounting for postretirement benefits other than pensions effective
October 1, 1993 to conform with Statement of Financial Accounting Standards
No. 106.
Deloitte & Touche LLP
Detroit, Michigan
September 15, 1995
F-35
<PAGE>
CENTRALIA PLANT AND BUTLER POLYMET, INC.
STATEMENT OF SALES LESS COSTS AND EXPENSES
FOR THE TEN MONTHS ENDED JULY 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
SALES............................................................... $181,760
COSTS OF SALES...................................................... 165,945
--------
GROSS PROFIT........................................................ 15,815
OPERATING EXPENSES:
Engineering....................................................... 3,458
Marketing......................................................... 966
General and administrative........................................ 1,836
Corporate allocations............................................. 2,889
--------
Total operating expenses........................................ 9,149
--------
SALES LESS COSTS AND EXPENSES BEFORE FEDERAL INCOME TAX............. 6,666
PROVISION FOR FEDERAL INCOME TAX.................................... 2,333
--------
SALES LESS COSTS AND EXPENSES BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE............................................................. 4,333
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NET OF TAX BENEFIT OF
$2,053) (Note 4)................................................... (3,813)
--------
SALES LESS COSTS AND EXPENSES....................................... $ 520
========
</TABLE>
See notes to financial statements.
F-36
<PAGE>
CENTRALIA PLANT AND BUTLER POLYMET, INC.
STATEMENT OF CASH FLOWS
FOR THE TEN MONTHS ENDED JULY 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Sales less costs and expenses before cumulative effect of accounting
change.............................................................. $ 4,333
Adjustments to reflect cash provided by (used in) operations:
Depreciation and amortization...................................... 8,708
Amortization of intangible assets.................................. 482
Changes in assets and liabilities:
Accounts receivable................................................ 3,984
Inventories........................................................ (117)
Reimbursable tooling costs......................................... (7,358)
Accounts payable, accrued and other liabilities.................... (7,782)
-------
Net cash provided by operating activities.......................... 2,250
CASH FLOWS FROM INVESTING ACTIVITIES--Purchase of property and
equipment........................................................... (7,417)
-------
NET CASH FLOWS FROM ROCKWELL......................................... $(5,167)
=======
</TABLE>
See notes to financial statements.
F-37
<PAGE>
CENTRALIA PLANT AND BUTLER POLYMET, INC.
NOTES TO FINANCIAL STATEMENTS
TEN MONTHS ENDED JULY 31, 1994
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared for the purpose of
presenting the sales less costs and expenses and cash flows of the Centralia
Plant and Butler Polymet, Inc. (the "Business") of Rockwell International
Corporation ("Rockwell"), for the ten-month period ended July 31, 1994. The
related acquisition occurred pursuant to the Stock and Asset Sale Agreement
between Rockwell and Plastics Acquisition Corporation, a subsidiary of
Cambridge Industries, Inc. (the "Buyer"), dated April 28, 1994, as amended
August 1, 1994 (the "Agreement"). The acquisition, which was effective on
August 1, 1994 (the "Closing Date"), consisted of the plants and operations of
the Business located in Centralia, Illinois and the stock of Butler Polymet,
Inc. which operates plants in Lenoir and Newton, North Carolina. The effect of
all interplant transactions has been eliminated.
The statement of sales less costs and expenses presents the historical
operating performance of the Business. During all of the periods presented in
the accompanying financial statements, the Business operated as an integral
part of the Rockwell's overall operations. The financial statements include
various allocated costs and expenses and intercompany transactions, which are
not necessarily indicative of the costs and expenses, or transaction terms
that would have occurred, had the Business operated on a stand-alone basis.
However, all of the allocations and estimates reflected in the financial
statements are based on assumptions which management believes are reasonable.
Corporate allocations were based principally on the relative revenues of the
Business, as compared to the respective consolidated amounts of Rockwell and
other factors which estimate usage of particular corporate functions. It is
not considered practicable to estimate the amount of such costs as if the
Business operated on a stand-alone basis.
2. SIGNIFICANT ACCOUNTING POLICIES
General--The Business is engaged in the design, manufacture and sale of
plastic injection molding components for the automotive industry.
Inventories are stated at the lower of actual cost or market; approximately
43% of the inventory is costed on the last-in, first-out (LIFO) method, and
the remainder is costed on the first-in, first-out (FIFO) basis. If the FIFO
method had been used at each balance sheet date presented, the inventory
balance would have been $1.4 million higher at both July 31, 1994 and
September 30, 1993.
Reimbursable Tooling Costs are stated at amounts which management expects to
recover under customer agreements.
Property, Plant and Equipment--Property is stated at cost. Depreciation is
calculated using the straight-line method except for certain machinery and
equipment at Centralia which are depreciated using a method which adjusts
straight-line depreciation for variances in excess of $100,000 from normal
production levels, defined as the previous five-year average production
measured by standard direct labor hours. Such adjustments have the effect of
lengthening or shortening the period over which assets are depreciated. The
ranges of estimated useful lives used in computing depreciation are as
follows:
<TABLE>
<S> <C>
Land and leasehold improvements...................................... 5-13
Buildings............................................................ 5-50
Machinery, equipment and tooling..................................... 3-11
Office and data processing equipment................................. 2-11
</TABLE>
Significant renewals and betterments are capitalized and replaced units are
written off. Maintenance and repairs, as well as renewals of minor amounts,
are charged to expense.
F-38
<PAGE>
CENTRALIA PLANT AND BUTLER POLYMET, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Intangible Assets include goodwill and a covenant not to compete related to
the acquisition of a portion of the Business; such intangible assets are being
amortized on a straight-line basis over 25 and 5 years, respectively. The
Business evaluates at each balance sheet date the recoverability of its
intangible assets and records a reserve whenever such balances appear
unrecoverable.
Workers' Compensation, Automobile, Product and General Liability Costs
included in the financial statements represent the accrued cost, not
reimbursable under insurance contracts, of settling such claims. Accruals for
workers-compensation, for which the Business is self-insured, are determined
for each period presented from the historical claims incurred experience of
the Business using actuarial computations of the estimated ultimate settlement
cost of such claims including claims incurred but not yet reported. Such
actuarial estimates are discounted to their present value utilizing a rate of
6.5% at July 31, 1994 and 4.5% at September 30, 1993, management's estimate of
the risk free rate of return.
Financial Instruments included in the statement of net assets acquired are
recorded at amounts which approximate fair value. All of the receivables of
the Business are due from a limited number of domestic automotive and truck
manufacturers; consistent with practice in the industry, such receivables are
uncollateralized.
Income Taxes--The provision for income taxes of the Business has been
determined in accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes." Deferred income taxes consist
of the tax effects, for Butler Polymet, Inc., of temporary differences of
$1,570,000 and $1,868,000 at July 31, 1994 and September 30, 1993,
respectively, related to property, less the tax effects of temporary
differences of $470,000 and $388,000 at such respective dates, related to
other assets and liabilities. The Federal income tax provision for the
Business was an allocation of Rockwell's tax liability and was estimated based
upon the appropriate effective tax rate of Rockwell for the ten-month period
ended July 31, 1994. A tax benefit in 1994 was recognized related to the
cumulative effect of accounting change because a tax provision was incurred on
income before the cumulative effect adjustment in this period.
Segment Information--The Business operates in a single segment. Three of the
customers of the Business each accounted for over 10% of sales in each of the
periods presented. Sales to these customers as a group totaled approximately
71% of sales for the ten-month period ended July 31, 1994. Sales to these
customers individually ranged from 11% to 56% during the period.
3. PENSION BENEFITS
During the period, Rockwell maintained pension programs covering the
employees of the Business. Hourly employees and retirees of Centralia and
salaried retirees of Butler were covered under stand-alone pension plans
consisting of the Retirement Plan for Hourly-Rated Employees of the Centralia,
Illinois and Louisville, Kentucky Plants and the Butler Polymet, Inc.
Employees Retirement Plan (the "Plans"). Pension benefits for hourly employees
were based primarily on specified benefit amounts and years of service, while
salaried benefits were based on credited service and average earnings near
retirement. Plan assets consisted principally of United States government
obligations, fixed income investments and equity securities. Rockwell's policy
was to fund its pension obligations using long-term actuarial assumptions and
the entry-age normal actuarial method. Other employees and retirees
participated in Rockwell plans which also covered other divisions and
subsidiaries of the Rockwell.
F-39
<PAGE>
CENTRALIA PLANT AND BUTLER POLYMET, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The following table presents the components of the net periodic pension cost
recognized in the statement of sales less costs and expenses for the ten
months ended July 31, 1994 (in thousands of dollars):
<TABLE>
<S> <C>
Employees and retirees of the Plans:
Service costs................................................... $ 299
Interest cost................................................... 447
Actual return on assets......................................... (368)
Net amortization................................................ 251
------
Total......................................................... 629
Contribution to Rockwell plans for other employees................ 1,018
------
Net pension costs................................................. $1,647
======
</TABLE>
The Agreement provides that Rockwell retain the obligation for all prior
service pension benefits, as measured under the benefit formula in effect at
the Closing Date. However, the obligation for certain benefit adjustments
which took effect subsequent to the Closing Date, but which were included in
collective bargaining agreements assumed by the Buyer, is presented in the
statement of net assets acquired. Such obligation was estimated as the
actuarial present value of future expected benefit payments.
The measurement date utilized in determining the net periodic pension cost
was June 30. The assumed discount rate used to determine pension cost is 7.75%
for the ten months ended July 31, 1994 and the assumed long-term rate of
return on plan assets is 9%.
4. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Effective October 1, 1993, the Business adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and recognized a
one-time cumulative effect adjustment of $5,866,000, less a tax benefit of
$2,053,000. This cumulative effect adjustment included an obligation of
approximately $2,966,000 for hourly and salaried active employees, which was
assumed by the Buyer, and an obligation of approximately $2,900,000 for
retirees, which was retained by the Rockwell.
Employees of the Business are eligible to participate in medical and death
benefit programs during retirement. The hourly employees of the Business
participate in a stand-alone plan of the Business while salaried employees
participated in a Rockwell plan which also covers other divisions and
subsidiaries of Rockwell; both plans are unfunded.
The components of the net postretirement benefit cost recognized for the ten
months ended July 31, 1994 is as follows (in thousands):
<TABLE>
<S> <C>
Hourly employees and retirees:
Service cost...................................................... $ 99
Interest cost..................................................... 252
----
Total........................................................... 351
Contribution to Rockwell plan for salaried employees and retirees... 255
----
Total postretirement benefit cost................................... $606
====
</TABLE>
The above amounts were determined using a discount rate of 8.25% and 7.75%
at July 31, 1994 and October 1, 1993, respectively; the assumed health care
cost trend rate is 10% in 1994, decreasing linearly to 5.5% in 2015, and
remaining constant thereafter. A one percentage point increase in the assumed
health care cost trend
F-40
<PAGE>
CENTRALIA PLANT AND BUTLER POLYMET, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
rate would not significantly change the service and interest cost for hourly
employees for the ten months ended July 31, 1994.
5. COMMITMENTS AND CONTINGENCIES
Rental expense of the Business totaled $526,000 for the ten-month period
ended July 31, 1994. Total lease commitments at July 31, 1994 were $346,000,
which become due in the following periods ending September 30: 1994-$17,000;
1995-$288,000; 1996-$36,000; 1997-$5,000.
F-41
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
FINANCIAL STATEMENTS AS OF JUNE 30, 1997 (UNAUDITED),
DECEMBER 31, 1996 AND 1995 AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 1997
AND 1996 (UNAUDITED),
AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
F-42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of The Goodyear Tire & Rubber
Company
In our opinion, the accompanying balance sheets and the related statements
of operations and of cash flows present fairly, in all material respects, the
financial position of the Jackson Plant ("the Plant"), a business unit of The
Goodyear Tire & Rubber Company ("Goodyear"), at December 31, 1996 and 1995,
and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the management of Goodyear and the Plant, our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Our engagement as auditors for the Plant was subsequent to December 31,
1996. Therefore, we were not present to observe physical inventories taken on
or prior to that date, the amounts of which entered into the determination of
cost of sales for each of the three years in the period ended December 31,
1996. However, we observed physical inventories subsequent to December 31,
1996 and performed such other procedures as we deemed appropriate.
The Plant is a business unit of Goodyear and, as disclosed in Note 9 to the
financial statements, has extensive transactions and relationships with
Goodyear. Because of those relationships, the terms of these transactions may
differ from those that would result from transactions among wholly unrelated
parties.
As discussed in Note 11, on July 10, 1997, Goodyear sold certain net assets
of the Plant to Cambridge Industries, Inc. The accompanying financial
statements do not give effect to this transaction.
Price Waterhouse LLP
Cleveland, Ohio
March 27, 1997, except for the last paragraph
of Note 11, which is as of July 10, 1997
F-43
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------
1997 1996 1995
----------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 6 $ 14 $ 7
Accounts receivable.............................. 6,586 8,246 6,412
Inventories...................................... 2,741 2,289 1,833
Unbilled tooling................................. 8,487 7,605 14,467
Deferred income taxes............................ 464 414 361
Other current assets............................. 17 26 29
------- ------- -------
Total current assets............................... 18,301 18,594 23,109
Property and equipment, net........................ 26,174 26,039 20,338
------- ------- -------
$44,475 $44,633 $43,447
======= ======= =======
LIABILITIES AND GOODYEAR INVESTMENT
Current liabilities:
Accounts payable................................. $ 2,753 $ 4,214 $ 3,462
Accrued liabilities.............................. 2,861 1,680 1,805
------- ------- -------
Total current liabilities.......................... 5,614 5,894 5,267
Deferred income taxes.............................. 3,458 3,458 3,389
------- ------- -------
Total liabilities.................................. 9,072 9,352 8,656
Commitments and contingencies (Note 10)
Goodyear investment................................ 35,403 35,281 34,791
------- ------- -------
$44,475 $44,633 $43,447
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-44
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------- --------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales
Trade sales.................... $ 28,648 $ 21,433 $ 41,996 $ 38,437 $ 36,884
Intercompany sales............. 4,621 6,366 11,903 13,998 9,099
-------- -------- -------- -------- --------
33,269 27,799 53,899 52,435 45,983
Cost of sales.................... 28,373 24,213 46,864 44,185 39,310
-------- -------- -------- -------- --------
Gross profit..................... 4,896 3,586 7,035 8,250 6,673
Selling, general and
administrative expense.......... 1,176 1,066 2,169 2,145 2,117
Corporate franchise fee.......... 292 333 666 666 703
-------- -------- -------- -------- --------
Income before provision for
income taxes.................... 3,428 2,187 4,200 5,439 3,853
Provision for income taxes....... 1,371 875 1,694 2,208 1,546
-------- -------- -------- -------- --------
Net income....................... $ 2,057 $ 1,312 $ 2,506 $ 3,231 $ 2,307
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-45
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------ ----------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income.................. $ 2,057 $ 1,312 $ 2,506 $ 3,231 $ 2,307
Adjustments to reconcile net
income to net cash provided
by (used for) operating
activities:
Depreciation and
amortization............. 1,063 839 1,756 1,702 1,629
Loss on disposition of
property and equipment... 133 225 571 1,962
Changes in assets and
liabilities:
Accounts receivable..... 1,660 1,913 (1,834) 278 (1,377)
Inventories............. (452) 39 (456) 137 (196)
Unbilled tooling........ (882) (4,584) 6,862 (8,649) (2,806)
Prepaid expenses and
other current assets... 9 8 3 (6) 6
Accounts payable........ (1,461) 306 752 945 14
Accrued liabilities..... 1,181 658 (125) 299 (116)
Deferred income taxes... (50) 16 146 11
-------- -------- -------- -------- --------
Net cash provided by (used
for) operating activities.. 3,258 491 9,705 (1,346) 1,434
-------- -------- -------- -------- --------
Cash flows from investing
activities:
Purchases of property and
equipment................ (1,331) (2,338) (7,682) (3,539) (1,970)
-------- -------- -------- -------- --------
Net cash provided by (used
for) investing activities.. (1,331) (2,338) (7,682) (3,539) (1,970)
-------- -------- -------- -------- --------
Cash flows from financing
activities:
Increase (decrease) in
Goodyear investment...... (1,935) 1,848 (2,016) 4,885 537
-------- -------- -------- -------- --------
Net cash provided by (used
for) financing activities.. (1,935) 1,848 (2,016) 4,885 537
-------- -------- -------- -------- --------
Net (decrease) increase in
cash....................... (8) 1 7 1
Cash at beginning of the
period..................... 14 7 7 7 6
-------- -------- -------- -------- --------
Cash at end of the period... $ 6 $ 8 $ 14 $ 7 $ 7
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-46
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. THE PLANT
The Jackson Plant ("Jackson" or the "Plant") is located in Jackson, Ohio and
operates as a business unit of The Goodyear Tire & Rubber Company
("Goodyear"). The Plant manufactures compression and injection molded
thermoset sheet molded compound and reinforced thermoplastic products. These
products are sold to original equipment manufacturers ("OEMs") of passenger
cars, light trucks and heavy trucks.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation--These financial statements present the historical
financial position, results of operations and cash flows of the Plant
previously included in the Goodyear consolidated financial statements.
Jackson's financial information included herein is not necessarily indicative
of the financial position, results of operations and cash flows of the Plant
in the future, or of the results which would have been reported if the Plant
had operated as an unaffiliated enterprise.
Transactions between Jackson and Goodyear (and Goodyear's other business
units) are herein referred to as "intercompany" or "related party"
transactions.
If the Plant were operated as an independent, unaffiliated facility, it may
not be able to purchase raw material and other goods and services at price
levels historically enjoyed when purchasing as a part of Goodyear's worldwide
purchasing process.
Concentration of credit risk--Financial instruments which potentially expose
the Plant to a concentration of credit risk consist primarily of accounts
receivable. To minimize this risk, ongoing credit evaluations of customers'
financial condition are performed, although collateral is not required. The
Plant does not maintain reserves for credit losses and historically has not
experienced significant losses related to accounts receivable.
The majority of the Plant's sales are made to an OEM of automobiles, light
trucks and heavy trucks. During 1996, 1995 and 1994, direct and indirect sales
to this customer accounted for approximately 93%, 91%, and 86%, respectively,
of total sales; at December 31, 1996, approximately 93% of accounts receivable
were from this customer. The Plant may be impacted significantly by the
economic well being of its major customer as well as by the industry in which
the customer operates, or by the loss of its major customer.
Financial instruments--The carrying values of the Plant's financial
instruments, comprising cash, accounts receivable, accounts payable and
accrued liabilities, approximate their fair values.
Management estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Accounts receivable--During 1995, Goodyear had agreements to sell undivided
interests in designated pools of trade accounts receivable, including those of
the Plant. As of December 31, 1996, the Plant's trade accounts receivable were
no longer included in the designated pool.
Unbilled tooling--Unbilled tooling accounts represent actual costs incurred
on reimbursable tooling projects. Such costs have been accumulated in
accordance with, and include only those types of costs reimbursable under,
customer supplier practices. Reimbursement of the unbilled tooling amounts is
dependent on the Plant's future performance of obligations and the customer's
approval. The Plant has not provided an allowance for unrecoverable amounts as
of December 31, 1996 and 1995.
F-47
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Inventories--Inventories are stated at the lower of cost or market. Cost is
determined on a first in, first out (FIFO) basis.
Property and equipment--Property and equipment are recorded at cost.
Additions and improvements, unless of relatively minor amounts, are
capitalized. Expenditures for repairs and maintenance are charged to expense
as incurred. Upon disposal or retirement of property and equipment, the
related cost and accumulated depreciation are removed from the Plant's
accounts and any gain or loss is included in results of operations. Property
and equipment are depreciated using the straight-line method for financial
reporting purposes and accelerated methods for tax purposes.
Income taxes--The Plant is included in the consolidated U.S. federal income
tax return of Goodyear. In preparing its financial statements, the Plant has
determined its tax provision on a separate return basis. Deferred income taxes
are provided on differences between the book and tax bases of assets and
liabilities at the statutory tax rates expected to be in effect when such
differences reverse. A valuation allowance on deferred tax assets is provided
if it is considered more likely than not that such deferred tax assets will
not be realized.
Revenue recognition--Sales and related cost of sales are recognized upon the
shipment of products. Sales are recorded net of estimated returns and
allowances.
Research, development and engineering expenses--Research, development and
engineering expenses related to design and development of new products, and
planning and design for new processes, are expensed as incurred. Such amounts
approximated $1,431, $1,524 and $1,146 in 1996, 1995 and 1994, respectively.
Environmental expenditures--The Plant expenses environmental expenditures
related to existing conditions resulting from past or current operations and
from which no current or future benefit is discernible. Expenditures which
extend the life of the related property or mitigate or prevent future
environmental contamination are capitalized. The Plant records a liability for
remediation costs at the time when it is probable and can be reasonably
estimated. The Plant's estimated liability is reduced to reflect the
anticipated participation of other potentially responsible parties in those
instances where it is probable that such parties are legally responsible and
financially capable of paying their respective shares of the relevant costs.
The estimated liability of the Plant is not discounted or reduced for possible
recoveries from insurance carriers.
Interim financial data--The interim financial data are unaudited; however, in
the opinion of management, the interim data include all adjustments,
consisting only of normal recurring items, necessary for a fair statement of
the results for the interim periods.
3. INVENTORIES
Inventories comprised the following:
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------
1997 1996 1995
----------- ------ ------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials.................................... $ 590 $ 555 $ 378
Work-in-process.................................. 280 334 411
Finished goods................................... 1,214 708 320
------ ------ ------
Total productive inventories................... 2,084 1,597 1,109
Supplies inventory............................... 847 867 849
Less--Inventory reserve.......................... (190) (175) (125)
------ ------ ------
Net inventories.................................. $2,741 $2,289 $1,833
====== ====== ======
</TABLE>
F-48
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY AND EQUIPMENT
Property and equipment comprised the following:
<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIFE ------------------
(YEARS) 1996 1995
----------- -------- --------
<S> <C> <C> <C>
Land improvements............................. 15-40 $ 425 $ 425
Buildings and building improvements........... 30-40 6,590 6,441
Machinery, furniture and equipment............ 3-20 30,293 27,041
Construction-in-progress...................... 5,409 1,913
-------- --------
42,717 35,820
Less--Accumulated depreciation and
amortization................................. (16,678) (15,482)
-------- --------
$ 26,039 $ 20,338
======== ========
</TABLE>
A portion of the Plant building is the subject of a capital lease. The
building may be purchased for $200 plus the unamortized cost of any additions
pursuant to the lease option ($831 at December 31, 1996).
5. ACCRUED LIABILITIES
Accrued liabilities comprised the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1996 1995
------ ------
<S> <C> <C>
Payroll and payroll taxes........................................ $ 352 $ 221
Accrued vacation................................................. 601 550
Other............................................................ 727 1,034
------ ------
Total accrued liabilities........................................ $1,680 $1,805
====== ======
</TABLE>
6. EMPLOYEE BENEFIT PLANS
Certain liabilities including life insurance, dental, pensions, medical,
postretirement, postemployment and workers' compensation, among others, are
included on the corporate books of Goodyear.
Pension Plans
Substantially all salaried and hourly employees of the Plant participate in
defined benefit pension plans covering Goodyear employees. For salaried
employees, plan benefits are generally based on years of service and the
employee's compensation. For hourly employees, plan benefits are generally
based on years of service and the benefit level established by the collective
bargaining agreement. Solely for the purpose of these financial statements,
the Plant is considered to have participated in multiemployer pension plans.
Employers participating in multiemployer plans are required to recognize as
net periodic pension costs, total contributions for the period. The Plant
recorded net periodic pension cost of $781, $670 and $715 for the years ended
December 31, 1996, 1995 and 1994, respectively, related to its participation
in the Goodyear defined benefit pension plans.
Goodyear also sponsors a number of defined contribution pension plans.
Participation in these plans is available to substantially all salaried
employees. Goodyear contributions to these plans are based on a percentage
F-49
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
of employee contributions. The cost to the Plant of providing benefits under
the Goodyear defined contribution plans was $84, $87 and $76 for the years
ended December 31, 1996, 1995 and 1994, respectively.
Other postretirement benefits
Goodyear provides certain other postretirement health care and life
insurance benefits for certain retired employees, including the Plant's
eligible retired employees. These plans provide varied coverage by employee
group. Solely for the purpose of these financial statements, the Plant is
considered to have participated in multiemployer postretirement benefit plans.
Employers participating in multiemployer plans are required to recognize
total contributions for the period as net postretirement benefit costs. The
Plant charged to expense $2,342, $1,779 and $1,829 for the years ended
December 31, 1996, 1995 and 1994, respectively, related to its participation
in the Goodyear postretirement health care and life insurance benefit plans.
7. OPERATING LEASES
The Plant leases certain manufacturing and office equipment under operating
leases expiring on various dates through 2001. Future minimum lease payments
required under leases that have noncancelable lease terms in excess of one
year at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1997................................................................. $119
1998................................................................. 83
1999................................................................. 64
2000................................................................. 27
2001................................................................. 13
----
$306
====
</TABLE>
Rental expense charged to operations was approximately $120, $112 and $141
for the years ended December 31, 1996, 1995 and 1994, respectively.
8. INCOME TAXES
The provision for income taxes comprises:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Current tax expense
Federal.............................................. $ 1,304 $ 1,578 $ 1,192
State and local...................................... 374 484 343
------- ------- -------
1,678 2,062 1,535
Deferred tax expense................................... 16 146 11
------- ------- -------
Provision for income taxes............................. $ 1,694 $ 2,208 $ 1,546
======= ======= =======
</TABLE>
F-50
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The provision for income taxes differs from income taxes computed by
applying the U.S. statutory federal income tax rate as a result of the
following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Taxes computed at federal statutory rate (35%)......... $ 1,470 $ 1,904 $ 1,348
State taxes (net of federal benefit)................... 249 341 228
Other.................................................. (25) (37) (30)
------- ------- -------
Provision for income taxes......................... $ 1,694 $ 2,208 $ 1,546
======= ======= =======
Effective rate..................................... 40.3% 40.6% 40.1%
======= ======= =======
</TABLE>
Temporary differences giving rise to the Plant's deferred tax assets and
liabilities comprised the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets
Inventory reserves...................................... $ 70 $ 50
Accrued liabilities..................................... 344 311
------- -------
414 361
Deferred tax liabilities
Property and equipment.................................. (3,458) (3,389)
------- -------
Net deferred tax liability.............................. $(3,044) $(3,028)
======= =======
</TABLE>
9. INTERCOMPANY TRANSACTIONS AND ALLOCATIONS
Cash management--The Plant utilizes Goodyear centralized cash management
services. Under this arrangement, the Plant's accounts receivable are
collected and its cash disbursements are funded by Goodyear on a daily basis.
Net cash activity between Goodyear and the Plant is reflected in Goodyear's
investment in the Plant.
Corporate services--Goodyear allocates certain corporate and divisional
general and administrative costs to the various business units using an
effort-based approach. Such costs relate to such functions as sales and
marketing, accounting and finance, human resources, insurance and information
systems. Allocated costs of corporate services approximated $824 for the year
ended December 31, 1996 and $840 for each of the years ended December 31, 1995
and 1994 and are included in selling, general and administrative expenses in
the accompanying statements of operations.
Goodyear allocates certain corporate overhead, such as executive management,
advertising and investor relations, to its business units through the
corporate franchise fee, which is allocated based primarily on sales. This
allocation is presented separately in the accompanying statements of
operations.
Goodyear manages employee medical, dental, life insurance, pension,
postretirement and postemployment benefits on a consolidated basis. Goodyear
charges the Plant for its share of such employee-related costs based upon the
Plant's estimated experience or headcount, depending on the nature of the
cost. Charges from Goodyear for such costs aggregated $4,555, $3,970 and
$4,367 for the years ended December 31, 1996, 1995 and 1994, respectively, and
are included in cost of sales in the accompanying statements of operations.
F-51
<PAGE>
THE GOODYEAR TIRE & RUBBER COMPANY--JACKSON PLANT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Management believes that the methods utilized to allocate costs to the
Plant, as discussed above, are reasonable. However, the terms of transactions
between the Plant and Goodyear, including allocated costs, may differ from
those that would result from transactions with unrelated parties.
Intercompany sales--Gross profit (at standard cost of sales) on intercompany
sales approximated $2,457, $2,216 and $1,207 in 1996, 1995 and 1994,
respectively.
Goodyear investment--The Goodyear investment balance represents cumulative
intercompany activity from transactions, cost allocations, cash management and
other charges and credits between the Plant and Goodyear (and its other
business units), as more fully described above. A summary of changes in
Goodyear investment follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED JUNE 30, ------------------------
1997 1996 1995 1994
-------------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Beginning Goodyear investment...... $35,281 $34,791 $26,675 $23,831
Net income......................... 2,057 2,506 3,231 2,307
Intercompany activity.............. (1,935) (2,016) 4,885 537
------- ------- ------- -------
Ending Goodyear investment......... $35,403 $35,281 $34,791 $26,675
======= ======= ======= =======
</TABLE>
The financial statements do not reflect interest on Goodyear's investment in
the Plant.
10. COMMITMENTS AND CONTINGENCIES
Environmental--The Plant is subject to federal, state and local regulations
which govern environmental matters. The effect of resolution of environmental
matters on results of operations cannot be predicted due to the uncertainty
concerning both the amount and timing of future expenditures and future
results of operations. Management believes that the resolution of these
matters will not materially affect the financial position of the Plant. The
Plant will continue its efforts to mitigate past and future costs through
continued investigation of new remediation alternatives and associated
technologies.
General--The Plant is subject to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of business.
Management believes that the resolution of these matters will not materially
affect the financial position of the Plant.
11. SUBSEQUENT EVENTS
Subsequent to December 31, 1996, the heavy truck business of the Plant's
largest customer was acquired by one of the customer's competitors. The effect
of this consolidation in the heavy truck industry on the cash flows, results
of operations or financial position of the Plant, if any, is not known.
On July 10, 1997, Goodyear sold substantially all of the net assets of the
Plant, excluding trade accounts receivable but including certain
postretirement benefit obligations, to Cambridge Industries, Inc. for
approximately $37.6 million, subject to certain post-closing adjustments. The
financial statements do not give effect to this transaction.
F-52
<PAGE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THOSE
TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 14
Use of Proceeds........................................................... 21
Capitalization............................................................ 22
Unaudited Pro Forma Financial Data........................................ 23
Selected Historical Financial Data........................................ 32
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 34
Business.................................................................. 39
Management................................................................ 56
Security Ownership........................................................ 60
Certain Transactions...................................................... 62
Description of Credit Agreement........................................... 64
The Exchange Offer........................................................ 66
Description of Notes...................................................... 75
Book-Entry; Delivery and Form............................................. 105
Legal Matters............................................................. 108
Experts................................................................... 108
Available Information..................................................... 108
Index to Financial Statements............................................. F-1
Valuation and Qualifying Accounts......................................... S-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE COMMENCEMENT OF THE EXCHANGE OFFER), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
---------------
PROSPECTUS
---------------
$100,000,000
CAMBRIDGE INDUSTRIES, INC.
LOGO
OFFER TO EXCHANGE ITS SERIES B
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OF ITS OUTSTANDING
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
, 1997
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
General Corporation Law
The Company is incorporated under the laws of the State of Delaware. Section
145 ("Section 145") of the General Corporation Law of the State of Delaware,
as the same exists or may hereafter be amended (the "General Corporation
Law"), inter alia, provides that a Delaware corporation may indemnify any
persons who were, are or are threatened to be made, parties to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person is or was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's
best interests and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was illegal. A Delaware
corporation may indemnify any persons who are, were or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reasons of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit, provided
such person acted in good faith and in a manner he reasonably believed to be
in or not opposed to the corporations best interests, provided that no
indemnification is permitted without judicial approval if the officer,
director, employee or agent is adjudged to be liable to the corporation. Where
an officer, director, employee or agent is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, against any liability asserted against him and incurred by him
in any such capacity, arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
The Guarantor is incorporated under the laws of the State of Michigan. As
with Delaware, the Michigan Business Corporation Act authorizes a corporation,
under certain circumstances, to indemnify its directors and officers
(including to reimburse them for expenses incurred).
Certificate of Incorporation and By-Laws
Both the Company's and Guarantor's Certificate of Incorporation and Bylaws
generally provide for the indemnification of officers and directors to the
fullest extent permitted by law.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of Cambridge
Industries, Inc.
3.2 Amended and Restated Bylaws of Cambridge Industries, Inc.
3.3 Articles of Incorporation of CE Automotive Trim Systems, Inc.
3.4 Bylaws of CE Automotive Trim System, Inc.
4.1 Purchase Agreement, dated as of July 2, 1997, among Cambridge
Industries, Inc., CE Automotive Trim Systems, Inc., as Guarantor,
and BT Securities Corporation.
4.2 Indenture, dated as of July 10, 1997, among Cambridge Industries,
Inc., each of the Guarantors named therein and State Street Bank
& Trust Company, as Trustee.
4.3 Form of 10 1/4% Senior Subordinated Notes due 2007, Series A.
4.4 Form of 10 1/4% Senior Subordinated Notes due 2007, Series B.
4.5 Registration Rights Agreement, dated as of July 10, 1997, among
Cambridge Industries, Inc., the Guarantors and BT Securities
Corporation, as Initial Purchaser.
5.1 Opinion of Jaffe, Raitt, Heuer & Weiss, P.C.
10.1 Employment Agreement, dated as of November 17, 1995, between
Richard S. Crawford and Cambridge Industries, Inc.
10.2 Amendment to Employment Agreement, dated as of March 1, 1996,
between Richard S. Crawford and Cambridge Industries, Inc.
10.3 Employment Agreement, dated as of November 17, 1995, between
Richard E. Warnick and Cambridge Industries, Inc.
10.4 Employment Agreement, dated as of November 17, 1995, between John
D. Craft and Cambridge Industries, Inc.
10.5 Management Services Agreement, dated as of November 17, 1995 and
amended as of March 1, 1996, between Cambridge Industries, Inc.
and Bain Capital, Inc.
10.6 Warrant Agreement dated as of November 17, 1995 between Cambridge
Industries Holdings, Inc. and Bankers Trust Company.
10.7 Amendment to Warrant Agreement between Cambridge Industries
Holdings, Inc. and Bankers Trust Company, dated as of December
12, 1995.
10.8 Warrant Agreement dated as of December 14, 1995 among Bain Capital
V Mezzanine Fund, L.P., BCIP Trust Associates, L.P. and Cambridge
Industries Holdings, Inc.
10.9 Class A Warrant Certificate No. W-A1, Date of Issuance: December
14, 1995.
10.10 Class A Warrant Certificate No. W-A2, Date of Issuance: December
14, 1995.
10.11 Class L Warrant Certificate No. W-L1, Date of Issuance: December
14, 1995.
10.12 Class L Warrant Certificate No. W-L2, Date of Issuance: December
14, 1995.
10.13 Warrant Agreement, dated as of March 1, 1996, among Cambridge
Holdings Industries, Inc., Bein Capital V Mezzeine Fund, L.P.,
BCIP Trust Associates, L.P. and Crawford Investment Group, L.L.C.
10.14 Class A Warrant Certificate No. W-A3, Date of Issuance: March 1,
1996.
10.15 Class A Warrant Certificate No. W-A4, Date of Issuance: March 1,
1996.
10.16 Class A Warrant Certificate No. W-A5, Date of Issuance: March 1,
1996.
10.17 Class A Warrant Certificate No. W-A6, Date of Issuance: March 1,
1996.
10.18 Class A Warrant Certificate No. W-A7, Date of Issuance: March 1,
1996.
10.19 Class L Warrant Certificate No. W-L3, Date of Issuance: March 1,
1996.
10.20 Class L Warrant Certificate No. W-L4, Date of Issuance: March 1,
1996.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.21 Class L Warrant Certificate No. W-L5, Date of Issuance: March 1,
1996.
10.22 Class L Warrant Certificate No. W-L6, Date of Issuance: March 1,
1996.
10.23 Class L Warrant Certificate No. W-L7, Date of Issuance: March 1,
1996.
10.24 Asset Purchase Agreement, dated as of March 1, 1996, among
GenCorp. Inc., Cambridge Industries Holdings, Inc. and Cambridge
Industries, Inc.
10.25 Management Agreement with Donald I. Holton, dated as of October
15, 1996.
10.26 Holdings Services Agreement, dated as of July 1, 1997, between
Cambridge Industries, Inc. and Cambridge Industries Holdings,
Inc.
10.27 Credit Agreement, dated as of July 10, 1997, among Cambridge
Industries Holdings, Inc., Cambridge Industries, Inc., various
lending institutions, and Bankers Trust Company, as Agent.
10.28 Subsidiary Guaranty, dated as of July 10, 1997.
10.29 Pledge Agreement, dated as of July 10, 1997, among Cambridge
Industries Holdings, Inc., Cambridge Industries, Inc., various
lending institutions, and Bankers Trust Company, as Agent.
10.30 Security Agreement, dated as of July 10, 1997, among Cambridge
Industries Holdings, Inc., Cambridge Industries, Inc., various
lending institutions, and Bankers Trust Company, as Agent.
10.31 Asset Purchase Agreement, dated as of July 9, effective as of June
30, 1997, between Eagle-Picher Industries, Inc. and Cambridge
Industries, Inc.
10.32 Agreement, dated as of July 8, 1997, between Cambridge Industries,
Inc. and The Goodyear Tire & Rubber Company.
10.33 Stock Purchase Agreement, dated as of April 25, 1997 between Erpe
Ernst Pelz Vertriebs GmbH and Cambridge Industries, Inc.
10.34 Joint Venture Agreement, dated as of March 4, 1994, among
Cambridge Industries, Inc., Empe Ernst Pelz GmbH & Co. and Erpe
Ernst Pelz Vertriebs GmbH (the "Empe-Erpe JV Agreement").
10.35 Purchase Election, dated as of March 13, 1997 by Cambridge
Industries, Inc. in relation to the Empe-Erpe JV Agreement.
10.36 Acceptance of Empe-Erpe JV Agreement Purchase Election, dated as
of March 28, 1997.
10.37 Election to Terminate the Empe-Erpe JV Agreement, dated as of
February 6, 1997.
12.1 Statement Regarding Computation of Earnings to Fixed Charges.
21.1 List of All Subsidiaries.
23.1 Consent of Deloitte & Touche llp.
23.2 Consent of Price Waterhouse llp.
23.3 Consent of Jaffe, Raitt, Heuer & Weiss, Professional Corporation
(included in Exhibit 5.1, Opinion re: Legality).
24.1 Power of Attorney (included in Part II to the Registration
Statement).
25.1 Statement of Eligibility of Trustee on Form T-1.*
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Tender Instructions.*
</TABLE>
- - --------
* To be filed by amendment.
+ The Company agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the
Commission.
II-3
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULE:
The following financial statement schedule is included in this Registration
Statement:
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
All other schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions,
are inapplicable or not material, or the information called for thereby is
otherwise included in the financial statements and therefore have been
omitted.
ITEM 22. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial
bonafide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(5) (i) That the Prospectus is filed pursuant to paragraph (4) immediately
preceding, or (ii) that any prospectus that purports to meet the requirements
of Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrants pursuant to the provisions described
under Item 20 or otherwise, the registrants have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrants will, unless in the opinion of their counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CAMBRIDGE
INDUSTRIES, INC. AND CE AUTOMOTIVE TRIM SYSTEMS, INC. HAVE DULY CAUSED THIS
REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MADISON HEIGHTS, STATE
OF MICHIGAN, ON AUGUST 20, 1997.
Cambridge Industries, Inc.
/s/ Richard S. Crawford
By: _________________________________
RICHARD S. CRAWFORD
Chief Executive Officer
CE Automotive Trim Systems, Inc.
/s/ Richard S. Crawford
By: _________________________________
RICHARD S. CRAWFORD
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kevin J. Alder and John M. Colaianne and both
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to this registration statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
* * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
CAMBRIDGE INDUSTRIES, INC.
SIGNATURE CAPACITY DATES
--------- -------- -----
/s/ Richard S. Crawford Chairman of the August 20, 1997
- - ------------------------------------- Board and Chief
RICHARD S. CRAWFORD Executive Officer
(Principal
Executive Officer)
/s/ John M. Colaianne Secretary and Chief August 20, 1997
- - ------------------------------------- Financial Officer
JOHN M. COLAIANNE (Principal
Financial Officer)
/s/ C. Keith Chulumovich Treasurer and August 20, 1997
- - ------------------------------------- Corporate
C. KEITH CHULUMOVICH Controller
(Principal
Accounting Officer)
II-5
<PAGE>
SIGNATURE CAPACITY DATES
--------- -------- -----
/s/ Jerrold L. Glick Director August 20, 1997
- - -------------------------------------
JERROLD L. GLICK
/s/ Ira J. Jaffe Director August 20, 1997
- - -------------------------------------
IRA J. JAFFE
/s/ Robert C. Gay Director August 20, 1997
- - -------------------------------------
ROBERT C. GAY
/s/ Edward W. Conard Director August 20, 1997
- - -------------------------------------
EDWARD W. CONARD
/s/ Ronald P. Mika Director August 20, 1997
- - -------------------------------------
RONALD P. MIKA
CE AUTOMOTIVE TRIM SYSTEMS, INC.
SIGNATURE CAPACITY DATES
--------- -------- -----
/s/ Richard S. Crawford Chairman of the August 20, 1997
- - ------------------------------------- Board (Principal
RICHARD S. CRAWFORD Executive Officer)
and Director
Kevin J. Alder President and August 20, 1997
- - ------------------------------------- Director
KEVIN J. ALDER
/s/ John M. Colaianne Secretary and August 20, 1997
- - ------------------------------------- Treasurer
JOHN M. COLAIANNE (Principal
Financial Officer)
/s/ C. Keith Chulumovich Corporate Controller August 20, 1997
- - ------------------------------------- (Principal
C. KEITH CHULUMOVICH Accounting Officer)
II-6
<PAGE>
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-----------------
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE
BEGINNING OF AND TO OTHER WRITE- AT END OF
YEAR EXPENSES ACCOUNTS OFFS YEAR
------------ -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
For the year ended December 31,
1996.............................. $1,479 $3,355 $ -- $ (913) $3,921
1995.............................. $3,877 $2,964 $ -- $(5,362) $1,479
1994.............................. $ 330 $5,087 $ -- $(1,540) $3,877
Allowance for inventory obsolescence
and lower of cost or market reserve
For the years ended December 31,
1996.............................. $ 610 $ 315 $603 $ (378) $1,150
1995.............................. $ 630 $ 313 $ -- $ (333) $ 610
1994.............................. $ 35 $ 184 $490 $ (79) $ 630
Allowance for reimbursable tooling
For the year ended December 31,
1996.............................. $1,373 $ 27 $600 $ -- $2,000
1995.............................. $ -- $1,373 $ -- $ -- $1,373
1994.............................. $ -- $ -- $ -- $ -- $ --
</TABLE>
S-1
<PAGE>
GENCORP INC. REINFORCED PLASTICS DIVISION
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED NOVEMBER 30, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------
BALANCE AT CHARGED TO CHARGES BALANCE AT
BEGINNING COST AND TO OTHER END OF
DESCRIPTION OF YEAR EXPENSE ACCOUNTS WRITE-OFFS YEAR
----------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Supplies obsolescence reserve
For the year ended November 30,
1995.......................... $ 990 $ 30 $ -- $ (98) $ 922
1994.......................... 1,468 (478) 990
Valuation allowance on deferred tax
assets
For the year ended November 30,
1995.......................... 33,952 14,875 48,827
1994.......................... 29,465 4,487 33,952
</TABLE>
S-2
<PAGE>
- - --------------------------------------------------------------------------------
EXHIBIT 3.1
UNITED STATES OF AMERICA
[STATE OF MICHIGAN SEAL APPEARS HERE]
-----------------------------------------------------------
=======================================================
Michigan Department of Consumer and Industry Services
=======================================================
-----------------------------------------------------------
Lansing, Michigan
This is to Certify that the Annexed copy has been compared by me with the record
on file in this Department and that the same is a true copy thereof.
In testimony whereof, I have hereunto set my
hand and affixed the Seal of the Department,
in the City of Lansing, this 25th day of
July, 1997.
/s/ Craig B. Newell
, Acting Director
172 Corporation, Securities and Land Development Bureau
- - --------------------------------------------------------------------------------
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
- - --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- - --------------------------------------------------------------------------------
Date Received (FOR BUREAU USE ONLY)
- - ----------------------------- FILED
- - --------------------------------------------- JUL 19 1994
============================================
Name
Derek S. Adolf, Esquire Administrator
- - -------------------------------------------- MICHIGAN DEPARTMENT OF COMMERCE
Address Jaffe, Raitt, Heuer & Weiss, P.C. Corporation & Securities Bureau
One Woodward Avenue, Suite 2400
- - --------------------------------------------
City State Zip Code
Detroit MI 48226
============================================ EFFECTIVE DATE:
------------------------------------
Document will be returned to the name and
address you enter above
[6][1][1][-][5][4][5]
APPLICATION FOR CERTIFICATE OF AUTHORITY
TO TRANSACT BUSINESS OR CONDUCT AFFAIRS IN MICHIGAN
For use by Foreign Corporations
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Application:
-----------------------------------------------------------------------------
1. The name of the corporation is:
Cambridge Industries, Inc.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2. (Complete this item only if the corporate name in item 1 is not
available for use in Michigan.)
The assumed name of the corporation to be used in all its dealings with
the Bureau and in the transaction of its business or the conducting of
its affairs in Michigan is:
Cambridge Industries of Michigan, Inc.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
3. It is incorporated under the laws of Delaware . The
----------------------------
date of its incorporation is June 8, 1994 , and the period of
---------------------
its duration (corporate term) is perpetual .
-----------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
4. a. The address of the main business or headquarters office of the
corporation is:
5821 Miller Road Dearborn MI 48126
----------------------------------------------------------------------
(Street Address) (City) (State) (Zip Code)
b. The mailing address if different than above is:
----------------------------------------------------------------------
(Street Address) (City) (State) (Zip Code)
-----------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
5. The address of its registered office in Michigan is:
1455 Imlay City Road Lapeer , Michigan 48446
--------------------------------------------- -------------------
(Street Address) (City) (Zip Code)
The mailing address of the registered office in Michigan if different than
above is:
, Michigan
--------------------------------------------- -------------------
(Street Address) (City) (Zip Code)
The name of the resident agent at the registered office is: John Craft
----------------
The resident agent is an agent of the corporation upon whom process against
the corporation may be served.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
6. The specific business or affairs which the corporation is to transact or
conduct in Michigan is as follows:
The corporation intends to engage in the fabrication of plastic composite
parts, the dale of such parts primarily to the automotive industry and all
activities incidental thereto.
The corporation is authorized to transact such business in the jurisdiction
of its incorporation.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
7. (To be completed by profit corporations only)
The total authorized shares of the corporation are: 3,000
------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
8. If the application is a trust please specify any powers or privileges
possessed by the trust that are not possessed by an individual or a
partnership.
- - --------------------------------------------------------------------------------
Signed this 16th day of June , 19 94
-------- ------------ -------
By /s/ Richard S. Crawford
--------------------------------------------------
(Signature)
Richard S. Crawford President
----------------------------------------------------
(Type of Print Name) (Type of Print Title)
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY "CAMBRIDGE INDUSTRIES, INC." IS DULY INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE
EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE THIRTEENTH DAY OF
JULY, A.D. 1994.
[RECEIVED STAMP APPEARS HERE]
[FILED STAMP APPEARS HERE]
/s/ Edward J. Freel
[SEAL APPEARS HERE] ---------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7179312
DATE: 07-15-94
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of the 29th day of July, 1994, by and between VOPLEX CORPORATION, a
Michigan corporation ("Voplex"), CAMBRIDGE INDUSTRIES, INC., a Michigan
corporation ("Cambridge-MI"), PLASTICS ACQUISITION CORP., a Michigan corporation
("Plastics"), WOLF ENGINEERING CORPORATION, a Michigan corporation ("Wolf"), and
CAMBRIDGE INDUSTRIES, INC., a Delaware corporation ("Cambridge-DE"), pursuant to
and in accordance with the provisions of the Michigan Business Corporation Act
(the "Michigan Act") and the General Corporation Law of the State of Delaware
(the "Delaware Act").
Voplex, Cambridge-MI, Plastics, Wolf and Cambridge-DE hereby agree to and
do hereby effect the merger of Voplex, Cambridge-MI, Plastics and Wolf with and
into Cambridge-DE (the " Merger") upon the terms and conditions set forth
herein, effective as of the Effective Date (defined below):
1. CONSTITUENT CORPORATIONS
------------------------
a. The name and state of incorporation of each of the constituent
corporations involved in the Merger to be effected hereby are as follows:
<TABLE>
<CAPTION>
Name State of Incorporation
---- ----------------------
<S> <C>
Voplex Corporation Michigan
Cambridge Industries, Inc. Michigan
Plastics Acquisition Corp. Michigan
Wolf Engineering Corporation Michigan
Cambridge Industries of
Michigan, Inc. 611-545 Delaware
</TABLE>
b. The surviving corporation of the Merger (the "Surviving
Corporation") shall be Cambridge-DE.
c. The Michigan corporation identification numbers of Voplex,
Cambridge-MI, Plastics and Wolf are as follows:
<TABLE>
<CAPTION>
Name Michigan CID Number
---- -------------------
<S> <C>
Voplex Corporation 495-346
Cambridge Industries, Inc. 470-021
Plastics Acquisition Corp. 108-442
Wolf Engineering Corporation 248-130
</TABLE>
<PAGE>
2. CAPITAL STOCK
-------------
a. Voplex's authorized capital stock consists of 60,000 shares of common
stock, without par value, of which 2,500 shares are issued and outstanding. All
shares of Voplex's common stock are identical and have all of the rights,
preferences and limitations of shares of common stock stated in the Michigan
Act. All holders of Voplex's common stock are entitled to vote.
b. Cambridge-MI's authorized capital stock consists of 60,000 shares of
common stock, without par value, of which 10,000 shares are issued and
outstanding. All shares of Cambridge-MI's common stock are identical and have
all of the rights, preferences and limitations of shares of common stock stated
in the Michigan Act. All holders of Cambridge-MI's common stock are entitled to
vote.
c. Plastics' authorized capital stock consists of 60,000 shares of
common stock, without par value, of which 10,000 shares are issued and
outstanding. All shares of Plastics' common stock are identical and have all of
the rights, preferences and limitations of shares of common stock stated in the
Michigan Act. All holders of Plastics' common stock are entitled to vote.
d. Wolf's authorized capital stock consists of 36,000 shares of Class A
common stock, without par value, of which 10,000 shares are issued and
outstanding, and 24,000 shares of Class B common stock, without par value, of
which zero (0) shares are issued and outstanding. The shares of Wolf's Class A
common stock and the shares of its Class B common stock are identical and have
all of the rights, preferences and limitations of shares of common stock stated
in the Michigan Act, except that the holders of shares of Wolf's Class B common
stock do not have the right to vote on any matter except as otherwise provided
by law. Neither holders of shares of Wolf's Class A common stock nor holders of
shares of its Class B common stock are entitled to vote as a class.
e. Cambridge-DE's authorized capital stock consists of 3,000 shares of
common stock, $.01 par value, of which 1,000 shares are issued and outstanding.
All shares of Cambridge-DE's common stock are identical and have all of the
rights, preferences and limitations of shares of common stock stated in the
Delaware Act. All holders of Cambridge-DE's common stock are entitled to vote.
f. The number of authorized and outstanding shares of the capital stock
of Voplex, Cambridge-MI, Plastics, Wolf and Cambridge-DE, as set forth in
subparagraphs (a), (b), (c), (d) and (e) above, will not change prior to the
Effective Date.
3. TERMS AND EFFECT OF MERGER
--------------------------
a. On the Effective Date, Voplex, Cambridge-MI, Plastics, Wolf and
Cambridge-DE shall cease to exist separately, and Voplex, Cambridge-MI, Plastics
and Wolf shall be merged with and into Cambridge-DE in accordance with the
provisions of
-2-
<PAGE>
this Agreement and in accordance with the provisions of and with the effect
provided in the Michigan Act and the Delaware Act.
b. On the Effective Date, upon consummation of the Merger, all of
the outstanding shares of Cambridge-DE's capital stock will remain issued
and outstanding, and each of the outstanding shares of the capital stock of
Voplex, Cambridge-MI, Plastics and Wolf will be cancelled and returned and
will cease to exist without any payment being made or due in respect
thereof.
4. CERTIFICATE, BYLAWS, OFFICERS AND DIRECTORS
-------------------------------------------
The Certificate of Incorporation and Bylaws of Cambridge-DE in effect on
the Effective Date shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation. The officers and directors of Cambridge-DE on the
Effective Date shall be the officers and directors of the Surviving Corporation.
5. FILING OF AGREEMENT; EFFECTIVE DATE
-----------------------------------
a. To cause the merger to become effective, a copy of this
Agreement shall be filed (i) with the Michigan Department of Commerce,
Corporation and Securities Bureau, pursuant to and in accordance with the
Michigan Act, and (ii) with the Secretary of the State of Delaware pursuant
to and in accordance with the Delaware Act.
b. The effective date of the merger (the "Effective Date") shall
be the date on which the last of filings described in subparagraph (a)
above shall occur.
6. ADOPTION AND APPROVAL
---------------------
This Agreement has been adopted and approved, without a meeting, by the
written consent of all of the directors and all of the shareholders of Voplex,
Cambridge-MI, Plastics, Wolf and Cambridge-DE in accordance with the provisions
of the Michigan Act and the Delaware Act, as is appropriate.
7. COPIES OF THIS AGREEMENT
------------------------
An original, executed copy of this Agreement shall remain on file at
Cambridge-DE's principal place of business, the address of which is 5281 Miller
Road, Dearborn, Michigan 48126, and upon request and without cost, Cambridge-DE
shall furnish a copy thereof to any shareholder of Voplex, Cambridge-MI,
Plastics, Wolf and Cambridge-DE.
8. MERGER PERMITTED UNDER DELAWARE AND MICHIGAN LAW
------------------------------------------------
This Merger is permitted under, and has been effectuated in accordance
with, the laws of the State of Delaware and the State of Michigan.
[signatures begin on next page]
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
Voplex Corporation,
a Michigan corporation
By: /s/ Richard S. Crawford
-----------------------
Richard S. Crawford,
President
Attested by: /s/ John D. Craft
-----------------
John D. Craft,
Secretary
Wolf Engineering Corporation,
a Michigan corporation
By: /s/ Richard S. Crawford
-----------------------
Richard S. Crawford,
President
Attested by: /s/ John D. Craft
-----------------
John D. Craft,
Secretary
Cambridge Industries, Inc.,
a Delaware corporation
By: /s/ Richard S. Crawford
-----------------------
Richard S. Crawford,
President
Attested by: /s/ John D. Craft
-----------------
John D. Craft,
Secretary
Cambridge Industries, Inc.,
a Michigan corporation
By: /s/ Richard S. Crawford
-----------------------
Richard S. Crawford,
President
Attested by: /s/ John D. Craft
-----------------
John D. Craft,
Secretary
Plastics Acquisition Corp.,
a Michigan corporation
By: /s/ Richard S. Crawford
-----------------------
Richard S. Crawford,
President
Attested by: /s/ John D. Craft
-----------------
John D. Craft,
Secretary
[acknowledgements begin on next page]
-4-
<PAGE>
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
On this, the 21st day of July, 1994, before me appeared Richard S.
Crawford, the President of Voplex Corporation, a Michigan corporation, who
acknowledged that he executed the foregoing Agreement and Plan of Merger for and
on behalf of such corporation, that such Agreement and Plan of Merger is the act
and deed of such corporation and that the facts stated in such Agreement and
Plan of Merger are true.
[SIGNATURE APPEARS HERE]
-------------------------------------------
Print Name:
Notary Public, County, Michigan
--------------
My Commission Expires:
---------------------
KIMBERLY JARVIS
NOTARY PUBLIC, MONROE COUNTY, MI
ACTING IN WAYNE COUNTY
MY COMMISSION EXPIRES OCTOBER 22, 1998
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
On this, the 21st day of July, 1994, before me appeared Richard S.
Crawford, the President of Cambridge Industries, Inc., a Michigan corporation,
who acknowledged that he executed the foregoing Agreement and Plan of Merger for
and on behalf of such corporation, that such Agreement and Plan of Merger is the
act and deed of such corporation and that the facts stated in such Agreement and
Plan of Merger are true.
[SIGNATURE APPEARS HERE]
-------------------------------------------
Print Name:
Notary Public, County, Michigan
--------------
My Commission Expires:
---------------------
KIMBERLY JARVIS
NOTARY PUBLIC, MONROE COUNTY, MI
ACTING IN WAYNE COUNTY
MY COMMISSION EXPIRES OCTOBER 22, 1998
[acknowledgements continue on next page]
-5-
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
On this, the 21st day of July, 1994, before me appeared Richard S.
Crawford, the President of Plastics Acquisition Corporation, a Michigan
corporation, who acknowledged that he executed the foregoing Agreement and Plan
of Merger for and on behalf of such corporation, that such Agreement and Plan of
Merger is the act and deed of such corporation and that the facts stated in such
Agreement and Plan of Merger are true.
/s/ Kimberly Jarvis
---------------------------------------------
Print Name:
Notary Public, County, Michigan
-------------
My Commission Expires:
-----------------------
KIMBERLY JARVIS
NOTARY PUBLIC, MONROE COUNTY, MI
ACTING IN WAYNE COUNTY
MY COMMISSION EXPIRES OCTOBER 22, 1998
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
On this, the 21st day of July, 1994, before me appeared Richard S.
Crawford, the President of Wolf Engineering Corporation, a Michigan corporation,
who acknowledged that he executed the foregoing Agreement and Plan of Merger for
an on behalf of such corporation, that such Agreement and Plan of Merger is the
act and deed of such corporation and that the facts stated in such Agreement and
Plan of Merger are true.
/s/ Kimberly Jarvis
---------------------------------------------
Print Name:
Notary Public, County, Michigan
-------------
My Commission Expires:
-----------------------
KIMBERLY JARVIS
NOTARY PUBLIC, MONROE COUNTY, MI
ACTING IN WAYNE COUNTY
MY COMMISSION EXPIRES OCTOBER 22, 1998
[acknowledgements continue on next page]
-6-
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
-----------
On this, the 21st day of July , 1994, before me appeared Richard S.
------ ------
Crawford, the President of Cambridge Industries, Inc., a Delaware corporation,
who acknowledged that he executed the foregoing Agreement and Plan of Merger for
and on behalf of such corporation, that such Agreement and Plan of Merger is
the act and deed of such corporation and that the facts stated in such Agreement
and Plan of Merger are true.
/s/ Kimberly Jarvis
-------------------------------------------
Print Name:
Notary Public, ___________ County, Michigan
My Commission Expires: ____________________
KIMBERLY JARVIS
NOTARY PUBLIC, MONROE COUNTY, MI
ACTING IN WAYNE COUNTY
MY COMMISSION EXPIRES OCTOBER 22, 1996
[Secretaries' certifications begin on next page]
-7-
<PAGE>
Secretaries' Certifications:
I, John D. Craft, the Secretary of Voplex Corporation, a corporation organized
and existing under the laws of the State of Michigan, do hereby certify that
this Agreement and Plan of Merger has been duly adopted and approved, without a
meeting, by the written consent of all of the shareholders of such corporation
in accordance with such corporation's Articles of Incorporation and Bylaws and
the Michigan Business Corporation Act.
/s/ John D. Craft
-------------------------------
John D. Craft, Secretary
I, John D. Craft, the Secretary of Cambridge Industries, Inc., a corporation
organized and existing under the laws of the State of Michigan, do hereby
certify that this Agreement and Plan of Merger has been duly adopted and
approved, without a meeting, by the written consent of all of the shareholders
of such corporation in accordance with such corporation's Articles of
Incorporation and Bylaws and the Michigan Business Corporation Act.
/s/ John D. Craft
-------------------------------
John D. Craft, Secretary
I, John D. Craft, the Secretary of Plastics Acquisition Corp., a corporation
organized and existing under the laws of the State of Michigan, do hereby
certify that this Agreement and Plan of Merger has been duly adopted and
approved, without a meeting, by the written consent of all of the shareholders
of such corporation in accordance with such corporation's Articles of
Incorporation and Bylaws and the Michigan Business Corporation Act.
/s/ John D. Craft
-------------------------------
John D. Craft, Secretary
[Secretaries' certification continue on next page]
-8-
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
I, John D. Craft, the Secretary of Wolf Engineering Corporation, a corporation
organized and existing under the laws of the State of Michigan, do hereby
certify that this Agreement and Plan of Merger has been duly adopted and
approved, without a meeting, by the written consent of all of the shareholders
of such corporation in accordance with such corporation's Articles of
Incorporation and Bylaws and the Michigan Corporation Act.
/s/ John D. Craft
----------------------------------------
John D. Craft, Secretary
I, John D. Craft, the Secretary of Cambridge Industries, Inc., a corporation
organized and existing under the laws of the State of Delaware, do hereby
certify that this Agreement and Plan of Merger has been duly adopted and
approved, without a meeting, by the written consent of all of the shareholders
of such corporation in accordance with such corporation's Certificate of
Incorporation and Bylaws and the General Corporation Law of the State of
Delaware.
/s/ John D. Craft
----------------------------------------
John D. Craft, Secretary
Upon filing, return to:
Derek S. Adolf
Jaffe, Raitt, Heuer & Weiss,
Professional Corporation
One Woodward Avenue, Suite 2400
Detroit, Michigan 48226
(313) 961-8380
-9-
<PAGE>
- - --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE -- CORPORATION AND SECURITIES BUREAU
- - --------------------------------------------------------------------------------
(FOR BUREAU USE ONLY) Date Received
FILED JUL 29 1994
---------------------
JUL 29 1994
---------------------
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation and Securities Bureau ---------------------
- - --------------------------------------------------------------------------------
AMENDED APPLICATION FOR CERTIFICATE OF AUTHORITY
TO TRANSACT BUSINESS IN MICHIGAN
For use by Profit Foreign Corporations
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972, (profit
corporations), the undersigned corporations executes the following Amended
Application:
- - --------------------------------------------------------------------------------
1. a. The true name of the corporation as stated in its original, or last
amended, Application with this State is:
Cambridge Industries, Inc.
b. If the true name of the corporation has changed, its new name is:
and the name change was made in compliance with the laws of the
jurisdiction of its incorporation.
The effective date of the name change was the ______ day of ____________,
19 _____________.
- - --------------------------------------------------------------------------------
2. The corporation indentification number (CID) assigned by the Bureau is:
[611-545]
3. It is incorporated under the laws of Delaware___________________________.
4. The corporation was initially authorized to transact business in Michigan on
the 19th day of July, 1994.
5. The period of its duration (corporate term) is perpetual.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
6. a. The qualifying name filed when the corporation obtained the original
Certificate of Authority:
Cambridge Industries of Michigan, Inc.
b. If the qualifying name has changed, the new name is:
The corporation's true name, Cambridge Industries, Inc.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
7. a. The address of the main business or headquarters office of the
corporation is:
5281 Miller Road Dearborn Michigan 48126
-------------------------------------------------------------------------
(Street Address) (City) (State) (ZIP Code)
Note: The original Application mistakenly listed this address as 5821
Miller Rd.
b. The mailing address if different than above is:
-------------------------------------------------------------------------
(Street Address) (City) (State) (Zip Code)
- - --------------------------------------------------------------------------------
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
- - --------------------------------------------------------------------------------
8. The address of the registered office in Michigan is:
1455 Imlay City Road Lapeer , Michigan 48446
--------------------------------------------- ----------------
(Street Address) (City) (Zip Code)
and the name of the resident agent at the registered office is:
John Craft
The resident agent is an agent of the corporation upon whom process against
the corporation may be served.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
9. If the business the foreign corporation proposes to do in this State is to
be enlarged, limited, or otherwise changed, the specific business which the
--------
corporation is to transact in Michigan is as follows:
The corporation is authorized to transact such business in the jurisdiction
of its incorporation.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
10. The total authorized shares of the corporation, if changed:
Common Shares
---------------------------------------------------------------
Preferred Shares
------------------------------------------------------------
The effective date of the stock change was the day of ,19
--------- --------- --
- - --------------------------------------------------------------------------------
Signed this 24/th/ day of July , 1994
---------- ------------- --
By /s/ Richard S. Crawford
--------------------------------------------
(Signature)
Richard S. Crawford, President
--------------------------------------------
(Type or Print Name and Title)
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
State of Delaware
Office of the Secretary of State
-----------------------------------
FILED
AUGUST 30, 1994
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporate & Security Bureau
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE CERTIFICATE OF AGREEMENT OF MERGER, WHICH MERGES:
"CAMBRIDGE INDUSTRIES, INC.", A MICHIGAN CORPORATION, PLASTICS ACQUISITION
CORP.". A MICHIGAN CORPORATION, "VOPLEX CORPORATION", A MICHIGAN CORPORATION,
"WOLF ENGINEERING CORPORATION", A MICHIGAN CORPORATION, WITH AND INTO "CAMBRIDGE
INDUSTRIES, INC." UNDER THE NAME OF "CAMBRIDGE INDUSTRIES, INC.", A CORPORATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, WAS RECEIVED AND
FILED IN THIS OFFICE THE TWENTY-NINTH DAY OF JULY, A.D. 1994, AT 11:15 O'CLOCK
A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CORPORATION SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
Received
August 17, 1994
MICHIGAN DEPARTMENT OF COMMERCE
[SEAL APPEARS HERE] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7208634
2408891 8330
DATE: 08-11-94
944149134
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE CERTIFICATE OF OWNERSHIP, WHICH MERGES:
"BUTLER POLYMET, INC.", A DELAWARE CORPORATION, WITH AND INTO "CAMBRIDGE
INDUSTRIES, INC." UNDER THE NAME OF "CAMBRIDGE INDUSTRIES, INC.", A CORPORATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, WAS RECEIVED AND
FILED IN THIS OFFICE THE FIRST DAY OF AUGUST, A.D. 1994, AT 4:30 O'CLOCK P.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CORPORATION SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
[SEAL APPEARS HERE] /s/ Edward J. Freel
---------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2408891 8330 7208632
DATE:
944149134 08-11-94
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
- - --------------------------------------------------------------------------------
(C&S 2500F Rev. 12/95)
MICHIGAN ANNUAL REPORT
COMPLETE BOTH SIDES FOREIGN PROFIT CORPORATIONS
- - ------------------------ 1996
Identification Number
611545 FOR BUREAU USE ONLY
- - ------------------------ -------------------------
REQUIRED BY SECTION 911, PUBLIC ACTS OF 1972, FAILURE TO FILE THIS REPORT MAY
RESULT IN THE AUTOMATIC REVOCATION OF THE CORPORATION'S CERTIFICATE OF
AUTHORITY TO TRANSACT BUSINESS IN MICHIGAN
- - --------------------------------------------------------------------------------
This Report must be filed If the Resident Agent or Registered Office has
on or before May 15, 1996 changed, enter the corrections below and add
- - ------------------------------- $5.00 to the $15.00 filing fee. Make
remittance payable to the State of Michigan.
- - --------------------------------------------------------------------------------
1. Corporate Name
CAMBRIDGE INDUSTRIES, INC.
5281 MILLER ROAD
DEARBORN MI 48126 -----------------------------------------
1a. Main business office address if
changed. Remit an additional $10.00
if this item is completed.
As changed on 1995 Michigan Annual
Report filed 5-14-96
- - --------------------------------------------------------------------------------
2. Resident Agent 2a. Resident Agent if different than 2
JOHN CRAFT DON HOLTON
- - --------------------------------------------------------------------------------
3. Registered Office Address in 3A. Address of registered office if
Michigan - NO., STREET, CITY, ZIP different than 3 - NO., STREET,
CITY, ZIP
1455 IMLAY CITY ROAD As changed on the 1995 Michigan
LAPEER 48446 Annual Report filed 5-14-96
- - --------------------------------------------------------------------------------
The corporation states that the address FOR BUREAU USE ONLY
of its registered office and the address -------------------
of the business office of its resident FILED BY DEPARTMENT JUL 1 '96
agent are identical. Any changes were
authorized by resolution duly adopted
by its board of directors.
- - --------------------------------------------------------------------------------
4. Federal 5. The Act 6. Term of 7. State of
Employer Under Which Existence (if Incorporation
Number Incorporated not perpetual)
38-3188000 DE
- - --------------------------------------------------------------------------------
8. Date of 9. State the nature and type of business 10. Total Authorized
Admittance in which the corporation is engaged: Shares
07/19/1994
- - ---------------- Manufacture of plastic molded systems
Date of and subassemblies for the North 3,000.000
Incorporation American Transportation Industry.
- - --------------------------------------------------------------------------------
11. Single Business Tax Apportionment Percentage (Complete the enclosed
worksheet and remit any additional franchise fees due in addition to the
$15.00 filing fee for the report.)
Most recent 25.6984% for year ending 12/31/94
Previous attributable
shares 60,000.000 Previous period _______% for year ending _______
- - --------------------------------------------------------------------------------
12. Corporate Officers and Directors (Name, Street Address, City, State,
ZIP Code)
- - --------------------------------------------------------------------------------
Chairman of the Board:
Richard Crawford 555 Horace Brown Drive Madison Hts, MI 48071
- - --------------------------------------------------------------------------------
President / CEO
If Don Holton 555 Horace Brown Drive Madison Hts, MI 48071
different --------------------------------------------------------------------
than C.O.O.
President Tom Paisley 555 Horace Brown Drive Madison Hts, MI 48071
--------------------------------------------------------------------
Treasurer
Bruce Wilson 555 Horace Brown Drive Madison Hts, MI 48071
- - --------------------------------------------------------------------------------
Director
If --------------------------------------------------------------------
different Director
than
Officers --------------------------------------------------------------------
Director
MAY 16 1996
- - --------------------------------------------------------------------------------
REPORT MUST BE SIGNED IN INK. If the Resident Agent or Registered Office is
changed, this report must be SIGNED IN INK by either the President,
Vice-President, Chairperson, Vice-Chairperson, Secretary, or Assistant Secretary
of the corporation. Except, if only the registered office is changed, this
report may be signed by the Resident Agent.
- - --------------------------------------------------------------------------------
Signature of Authorized Officer or Agent Title Date
/s/ Richard Crawford CORP CONTROLLER 5-15-96
- - --------------------------------------------------------------------------------
Preparer's Name Daytime Telephone Number
Cambridge Industries, Inc.,; Accounting Department (810) 616-0500
- - --------------------------------------------------------------------------------
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
MICHIGAN ANNUAL REPORT 096E#6337 0530 ORG&FI $10.00
COMPLETE BOTH SIDES FOREIGN PROFIT CORPORATIONS
- - ----------------------
Identification Number 1995
096E#6337 0530 P-MAR $20.00
611545 FOR BUREAU USE ONLY
- - ---------------------- -----------------------------
REQUIRED BY SECTION 911, PUBLIC ACTS OF 1972, FAILURE TO FILE THIS REPORT MAY
RESULT IN THE AUTOMATIC REVOCATION OF THE CORPORATIONS CERTIFICATE OF AUTHORITY
TO TRANSACT BUSINESS IN MICHIGAN
- - --------------------------------------------------------------------------------
This Report must be filed on or before May 15, 1995 If the Resident Agent or
- - ---------------------------------------------------- Registered Office has
changed, enter the
corrections below and add
$5.00 to the $15.00 filing
fee. Make remittance
payable to the State of
Michigan.
- - --------------------------------------------------------------------------------
1. Corporate Name
CAMBRIDGE INDUSTRIES, INC.
5281 MILLER ROAD
DEARBORN MI 48126 ----------------------------
1a. Main business office
address if changed.
Remit an additional
$10.00 if this item is
completed.
555 HORACE BROWN DRIVE
MADISON HEIGHTS MI 48071
- - --------------------------------------------------------------------------------
2. Resident Agent 2a. Resident Agent if
different than 2
JOHN CRAFT
- - --------------------------------------------------------------------------------
3. Registered Office Address in Michigan - 3a. Address of registered
NO., STREET, CITY, ZIP office if different
than 3 - NO., STREET,
1455 IMLAY CITY ROAD CITY, ZIP
LAPEER 48446
555 HORACE BROWN DRIVE
MADISON HEIGHTS MI 48071
- - --------------------------------------------------------------------------------
The corporation states that the address of its FOR BUREAU USE ONLY
registered office and the address of the business -------------------
office of its resident agent are identical. Any
changes were authorized by resolution duly adopted FILED BY DEPARTMENT
by its board of directors. JUL 1 '96
- - --------------------------------------------------------------------------------
4. Federal Employer Number 5. The Act Under Which Incorporated
38-3188000
- - --------------------------------------------------------------------------------
6. Term of Existence (If not 7. State of Incorporation
perpetual)
DE
- - --------------------------------------------------------------------------------
8. Date of Admittance 9. State the nature and type of business
in which the corporation is engaged:
07/19/1994
- - -------------------------------------- Manufacture of plastic molded systems
Date of Incorporation and subassemblies for the North
American Transportation industry.
- - --------------------------------------------------------------------------------
10. Total Authorized Shares
3,000.000
- - --------------------------------------------------------------------------------
11. Single Business Tax Apportionment Percentage (Complete the enclosed
worksheet and remit any additional franchise fees due in addition to the
$15.00 filing fee for the report.)
Most recent 25.6984% for year ending 12-31-94
Previous attributable shares 60,000.000 Previous Period _____% for year
ending ________
- - --------------------------------------------------------------------------------
12. Corporate Officers and Directors (Name, Street Address, City, States, ZIP
Code)
- - --------------------------------------------------------------------------------
President
Richard Crawford 555 Horace Brown Drive Madison Hts MI 48071
- - --------------------------------------------------------------------------------
If COO: Richard Warnick 555 Horace Brown Drive Madison Hts MI 48071
different ----------------------------------------------------------------------
than
President CFO: John Craft 555 Horace Brown Drive Madison Hts MI 48071
----------------------------------------------------------------------
Treasurer
Bruce Wilson 555 Horace Brown Drive Madison Hts MI 48071
- - --------------------------------------------------------------------------------
Director
If -----------------------------------------------------------------------
different Director
than MAY 16 1996
Officers -----------------------------------------------------------------------
Director
- - --------------------------------------------------------------------------------
REPORT MUST BE SIGNED IN INK. If the Resident Agent or Registered Office is
changed, this report must be SIGNED IN INK by either the President,
Vice-President, Chairperson, Vice-Chairperson, Secretary, or Assistant
Secretary of the corporation. Except, if only the registered office is changed,
this report may be signed by the Resident Agent.
- - --------------------------------------------------------------------------------
Signature of Authorized Officer or Agent Title Date
[ILLEGIBLE SIGNATURE APPEARS HERE] CORP. CONTROLLER 5-14-96
- - --------------------------------------------------------------------------------
Preparer's Name Daytime Telephone Number
Cambridge Industries, Inc.; Accounting Department (810) 616-0500
- - --------------------------------------------------------------------------------
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
EXHIBIT 3.2
EFFECTIVE 11/17/95
AMENDED AND RESTATED
--------------------
BY-LAWS
-------
OF
--
CAMBRIDGE INDUSTRIES, INC.
--------------------------
A Delaware Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the
--------- -----------------
corporation in the State of Delaware shall be located at 32 Loockerman Square,
Suite L-100, Dover, Delaware, County of Kent. The name of the corporation's
registered agent at such address shall be The Prentice-Hall Corporation System,
Inc. The registered office and/or registered agent of the corporation may be
changed from time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at
--------- -------------
such other places, both within and without the State of Delaware, as the board
of directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
--------- --------------------------
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation: provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
--------- ----------------
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by at
least two members of the board of directors, the president or as provided in the
Certificate of Incorporation, and shall be called by the president upon the
written request of holders of shares entitled to cast not less than a majority
of the votes at the meeting, which written request shall state the purpose or
purposes of the meeting.
Section 3. Place of Meetings. The board of directors may designate
--------- -----------------
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted
--------- ------
to take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings,
<PAGE>
the purpose or purposes, of such meeting, shall be given to each stockholder
entitled to vote at such meeting not less than ten (10) nor more than sixty (60)
days before the date of the meeting. All such notices shall be delivered,
either personally or by mail, by or at the direction of the board of directors,
the president or the secretary, and if mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, postage prepaid, addressed
to the stockholder at his, her or its address as the same appears on the records
of the corporation. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
--------- -----------------
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
--------- ------
of capital stock having voting power, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders, except as
otherwise provided by statute or by the certificate of incorporation. If a
quorum is not present, the holders of a majority of the shares present in person
or represented by proxy at the meeting, and entitled to vote at the meeting, may
adjourn the meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
--------- ------------------
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation - may transact any business
which might have been transacted at the original meeting. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative
--------- -------------
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
--------- -------------
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of
Article VI hereof, every stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of common stock
held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
---------- -------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon
<PAGE>
after three years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or an interest in the corporation generally. Any proxy is suspended when the
person executing the proxy is present at a meeting of stockholders and elects to
vote, except that when such proxy is coupled with an interest and the fact of
the interest appears on the face of the proxy, the agent named in the proxy
shall have all voting and other rights referred to in the proxy, notwithstanding
the presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Action by Written Consent. Unless otherwise provided in the
---------- -------------------------
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the State of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken by
the stockholders at a meeting thereof.
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the corporation
--------- --------------
shall be managed by or under the direction of the board of directors.
Section 2. Number Election and Term of Office. The number of directors
--------- ----------------------------------
shall be established from time to time by the stockholders. The directors shall
be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote in the election of
directors. The directors shall be elected in this manner at the annual meeting
of the stockholders, except as provided in Section 4 of this Article III. Each
director elected shall hold office until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as
hereinafter provided.
-3-
<PAGE>
Section 3. Removal and Resignation. Any director or the entire board of
--------- -----------------------
directors may be removed at any time, with or without cause, by the
stockholders. Any director may resign at any time upon written notice to the
corporation.
Section 4. Vacancies. Vacancies and newly created directorships shall be
--------- ---------
filled by the stockholders. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected board
--------- ---------------
of directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
--------- -------------------------
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the president or at least two directors on at least 24 hours notice
to each director, either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum Required Vote and Adjournment. All of the members of the
--------- ------------------------------------
Board of Directors shall constitute a quorum for transaction of business unless
affirmatively waived by all members, in which case the majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. Notwithstanding any other
actions of the company which require the approval of the board of directors, the
vote of the board of directors shall be required to approve the following acts:
(a) any declaration or payment of dividends or distributions upon
the corporation's equity securities;
(b) any redemption, repurchase or other acquisition by the
corporation or its subsidiaries of any of the corporation's equity
securities (including, without limitation, warrants, options and other
rights to acquire equity securities);
(c) any merger, consolidation or other business combination of the
corporation or any of its subsidiaries with or into any person;
(d) any sale, lease, exchange, transfer or other disposition,
directly or indirectly, in a single transaction or series of related
transactions, of an interest in a joint venture for consideration in excess
of $1 million, of a wholly-owned subsidiary for consideration in excess of
$1 million, or of all or more than $1 million of fair market value of the
corporation's consolidated assets (other than sales of inventory in the
ordinary course of business consistent with past practice), to or with any
Person other than to or with a wholly-owned subsidiary of the corporation;
(e) the dissolution of the corporation or the adoption of a plan of
liquidation by the corporation;
(f) any amendment to or modification or repeal of any provision of
the certificate of incorporation or bylaws of the corporation or any
subsidiary of the corporation;
-4-
<PAGE>
(g) any acquisition of any business or assets involving an
aggregate consideration in excess of $1 million in a single transaction or
series of related transactions (other than capital expenditures in the
ordinary course of business which are covered under paragraph (1) below) by
the corporation or any of its subsidiaries (whether by purchase of assets,
purchase of stock, merger or otherwise) or any entry into a joint venture by
the corporation or any of its subsidiaries with any other Person or any
investment by the corporation or any of its subsidiaries in an Person
involving an aggregate consideration exceeding $1 million in a single
transaction or series of related transactions;
(h) any investment by the corporation or any of its subsidiaries in
an Person involving an aggregate consideration exceeding $1 million in a
single transaction or series of related transactions;
(i) any issuance or sale of the capital stock, or rights to acquire
shares of capital stock, of the corporation or any of its subsidiaries to any
person;
(j) any creation, incurrence, assumption or guaranty of
indebtedness for borrowed money outside of the ordinary course of business;
(k) settle any lawsuit, action or proceeding, except in the
ordinary course of business where the potential damages to the corporation or
any of its subsidiaries do not exceed $100,000; or
(l) any capital expenditures by the corporation or its subsidiaries
in the ordinary course of business if such capital expenditures are
cumulatively 25% in excess of the capital expenditures budget (on a
consolidated basis) of the corporation and its subsidiaries for any fiscal
year.
If a quorum shall not be present at any meeting of the board of directors, or if
the directors at the meeting otherwise so desire, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or until otherwise
reconvened.
Section 8. Committees. The board of directors may, by resolution passed by
--------- ----------
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Executive Staffing Committee. The Executive Staffing Committee
--------- ----------------------------
shall be comprised solely of the Bain Directors (as such term is defined in the
Stockholders Agreement, dated as of November 17, 1995 (the "Stockholders
Agreement"), by and among the corporation, Crawford Investment Group, L.L.C.
("Crawford"), a Michigan Limited Liability Company, each of the Persons listed
on Schedule I attached thereto and Bankers Trust Company, as amended). The
Executive Staffing Committee shall have the exclusive power to designate, in its
sole discretion, the person (or persons) who shall serve as the chief operating
officer and chief financial officer, respectively, of the corporation
(including, without limitation, the power to hire persons to fill such
-5-
<PAGE>
positions, to establish the compensation of such persons filling such position
and to remove persons from such positions) if and only if at any time (x)
Consolidated EBITDA (as defined in the Stockholders Agreement) for any fiscal
year is less than $38,000,000, (y) Consolidated EBITDA for any fiscal year is
less than 90% of Consolidated EBITDA projected for such fiscal year in the
projections delivered by the corporation's management to the Board (the "Plan")
for such fiscal year or (z) the Executive Staffing Committee reasonably believes
that actual Consolidated EBITDA for a fiscal year will be less than 90% of
Consolidated EBITDA projected for such fiscal year in the Plan for such fiscal
year or that Consolidated EBITDA for a fiscal year will be less than
$38,000,000; provided that, so long as Crawford and its Affiliates or Richard S.
--------
Crawford's Family Group (as defined in the Stockholders Agreement) hold at least
50% of the outstanding Management Shares (as defined in the Stockholders
Agreement), Richard S. Crawford shall have the right to approve any person so
designated by the Executive Staffing Committee, which approval shall not be
unreasonably denied, other than if such person is an employee of Bain Capital,
Inc. or of any affiliate of Bain Capital, Inc. and then such approval shall be
in his sole discretion.
Section 10. Committee Rules. Each committee of the board of directors
---------- ---------------
may fix its own rules of procedure and shall hold its meetings as provided
by such rules, except as may otherwise be provided by a resolution of the board
of directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 11. Communications Equipment. Members of the board of
---------- ------------------------
directors or any committee thereof may participate in and act at any meeting of
such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 12. Waiver of Notice and Presumption of Assent. Any member of
---------- ------------------------------------------
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 13. Action by Written Consent. Unless otherwise restricted by
---------- -------------------------
the certificate of incorporation, any action required or permitted to be taken
any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
-6-
<PAGE>
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected by
--------- ------
the board of directors and shall consist of a president, one or more vice
presidents, a secretary, a treasurer and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors. Any
number of officers may be held by the same person. In its discretion, the board
of directors may choose not to fill any office for any period as it may deem
advisable, except that the offices of president and secretary shall be filled as
expeditiously as possible.
Section 2. Election and Term and Office. The officers of the
--------- ----------------------------
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors. Each officer shall hold office until
a successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
--------- -------
directors may be removed by the board of directors whenever in its judgement the
best interest of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
--------- ---------
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed
--------- ------------
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. President. The president shall be the chief executive
--------- ---------
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he or she is present; subject to the powers of
the board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds,
mortgages, and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation. The president shall have such other powers and perform such
other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
Section 7. Vice-presidents. The vice-presidents shall perform such
--------- ---------------
other duties and have such other powers as the board of directors, the president
or these by-laws may, from time to time, prescribe.
Section 8. The Secretary and Assistant Secretaries. The secretary shall
--------- ---------------------------------------
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by laws; shall have such powers
and perform such duties as
-7-
<PAGE>
the board of directors, the president or these by-laws may, from time to time,
prescribe; and shall have custody of the corporate seal of the corporation. The
secretary, or an assistant secretary, shall have authority to affix the
corporate seal to any instrument requiring it and when so affixed, it may be
attested by his or her signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
or her signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors or president may, from time to time,
prescribe.
Section 9. The Treasurer and Assistant Treasurer. The treasurer shall
--------- -------------------------------------
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the president and the board of directors, at its regular meeting
or when the board of directors requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by
the board of directors, the treasurer shall give the corporation a bond (which
shall be rendered every six years) in such sums and with such surety or
sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of the office of the treasurer and for the
restoration to the corporation, in case of death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money, and other property
of whatever kind in the possession or under the control of the treasurer
belonging to the corporation. The assistant treasurer, or if there shall be
more than one, the assistant treasurers in the order determined by the board
of directors, shall in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors or the president may, from time to time, prescribe.
Section 10. Other Officers, Assistant Officers, and Agents. Officers,
---------- ----------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 11. Absence or Disability of Officers. In the case of the
---------- ---------------------------------
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
---------
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a party
--------- -------------------
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, is or was a
director or officer, of the corporation or is or was serving at the request of
the
-8-
<PAGE>
corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment) against all expense, liability and loss (including attorneys'
fees actually and reasonably incurred by such person in connection with such
proceeding) and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only if
such proceeding was authorized by the board of directors of the corporation.
The right to indemnification conferred in this Article V shall be a contract
right and, subject to Sections 2 and 5 hereof, shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition. The corporation may, by action of its
board of directors, provide indemnification to employees and agents of the
corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers.
--------- -------------------------------------------------------
Any indemnification of a director, officer, employee, fiduciary or agent of the
corporation under Section 1 of this Article V or advance of expenses under
Section 5 of this Article V shall be made promptly, and in any event within 30
days, upon the written request of the director, officer, employee, fiduciary or
agent. If a determination (as defined in the General Corporation Law of the
State of Delaware) by the corporation that the director, officer, employee,
fiduciary or agent is entitled to indemnification pursuant to this Article V is
required, and the corporation fails to respond within sixty days to a written
request for indemnity, the corporation shall be deemed to have approved the
request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article V shall be enforceable by the director,
officer, employee, fiduciary or agent in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be indemnified by the corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the corporation to indemnify the claimant for the amount claimed, but the
burden of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination
by the corporation (including its board of directors, independent legal counsel,
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and
--------- ---------------------
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire
-9-
<PAGE>
under any statute, provision of the certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain insurance
--------- ---------
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section
--------- --------
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition (unless otherwise determined
by the board of directors in the specific case) upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
--------- --------------------
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
--------- ---------------
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
--------- -----------------------
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or Other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
ARTICLE VI
----------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
--------- ----
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman, president, or a vice-president and the secretary or an assistant
secretary of the corporation, certifying the number of shares of a specific
class or series owned by such holder in the corporation. If such a certificate
is
-10-
<PAGE>
countersigned (1) by a transfer agent or an assistant transfer agent other than
the corporation or its employee or (2) by a registrar, other than the
corporation or its employee, the signature of any such chairman, president,
vice-president, secretary, or assistant secretary may be facsimiles. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation whether because of death, resignation or
otherwise before such certificate or certificates have been delivered by the
corporation, such certificate or certificates may nevertheless be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the corporation. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the books of the
corporation. Shares of stock of the corporation shall only be transferred on the
books of the corporation by the holder of record thereof or by such holder's
attorney duly authorized in writing, upon surrender to the corporation of the
certificate or certificates for such shares endorsed by the appropriate person
or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization, and other matters as the corporation may reasonably
require, and accompanied by all necessary stock transfer stamps. In that event,
is shall be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate or certificates, and record the
transaction on its books. The board of directors may appoint a bank or trust
company organized under the laws of the United States or any state thereof to
act as its transfer agent or registrar, or both in connection with the transfer
of any class or series of securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
--------- -----------------
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
direction may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, of his of her legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
--------- ---------------------------------------------
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjournment meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
--------- --------------------------------------------------
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record
-11-
<PAGE>
date is adopted by the board of directors. If no record date has been fixed by
the board of directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is required by statute, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and prior
action by the board of directors is required by statute, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
--------- ---------------------------------------
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
--------- -----------------------
corporatation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in
--------- -----------------------
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum of sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or
-12-
<PAGE>
maintaining any property of the corporation, or any other purpose and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
--------- ------------------------
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any
--------- ---------
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
--------- -----
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
--------- -----------
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
--------- --------------
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities
--------- --------------------------------------
in any other corporation held by the corporation shall be voted by the board of
directors, unless the board of directors specifically confers authority to vote
with respect thereto, which authority may be general or confined to specific
instances, upon the president or some other officer or person. Any person
authorized to vote securities shall have the power to appoint proxies, with
general power of substitution.
Section 8. Inspection of Books and Records. Any stockholder of
--------- -------------------------------
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean any purpose reasonably related
to such person's interest as a stockholder. In every instance where an attorney
or other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
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<PAGE>
Section 9. Section Headings. Section headings in these by-laws are
--------- ----------------
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision
---------- -----------------------
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall not
be given any effect to he extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VIII
------------
AMENDMENTS
------------
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
-14-
<PAGE>
EXHIBIT 3.3
ARTICLES OF INCORPORATION
OF
CE AUTOMOTIVE TRIM SYSTEMS, INC.
THESE ARTICLES OF INCORPORATION are signed by the incorporator
for the purpose of forming a profit corporation pursuant to the
provisions of Act 284, Public Acts of 1972, as amended, as follows:
ARTICLE I
- - --------------------------------------------------------------------------------
UNITED STATES OF AMERICA
[LOGO APPEARS HERE]
____________________________________________________________
MICHIGAN DEPARTMENT OF COMMERCE
____________________________________________________________
LANSING, MICHIGAN
This is to Certify that the Annexed copy has been compared by me with the record
on file in this Department and that the same is a true copy thereof.
In testimony whereof, I have hereunto set
my hand and affixed the Seal of the
Department, in the City of Lansing, this
1st day of November, 1995.
/s/ Carl L Tyson, Director
172 SEAL APPEARS ONLY ON ORIGINAL Corporation & Securities Bureau
- - --------------------------------------------------------------------------------
<PAGE>
ARTICLES OF INCORPORATION
OF
CE AUTOMOTIVE TRIM SYSTEMS, INC.
THESE ARTICLES OF INCORPORATION are signed by the incorporator for the
purpose of forming a profit corporation pursuant to the provisions of Act 284,
Public Acts of 1972, as amended, as follows:
ARTICLE I
The name of the corporation is CE Automotive Trim Systems Inc.
ARTICLE II
The purpose of purposes for which the corporation is organized is to engage
in any activity within the purposes for which corporations may be organized
under the Business Corporation Act of Michigan (the "Act").
ARTICLE III
The total authorized capital stock of the corporation is 50,000 shares of
Common Stock ("Common Stock"), of which 25,000 shares shall be designated as
Class A Common Stock ("Class A Stock") and 25,000 shares shall be designated as
Class B Common Stock ("Class B Stock").
A statement of the relative rights, preferences and limitations of the
Common Stock is as follows:
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
A. Except as otherwise provided in these Articles of Incorporation, each
outstanding share of Common Stock is entitled to one vote on all matters
submitted to the shareholders of the corporation and each outstanding share of
Common Stock shall have all the same rights and preferences as each other share
of Common Stock.
B. The holders of outstanding shares of Class A Stock and the holders of
outstanding shares of Class B Stock shall each vote separately as a class on any
matter submitted to the shareholders of the corporation.
C. The Board of Directors of the corporation shall consist of any even
number of directors not less than two (2) nor more than eight (8) as determined
from time to time by the shareholders of the Corporation. The holders of
outstanding shares of Class A Stock and the holders of outstanding shares of
Class B Stock, each voting separately as a class, shall be entitled to each an
equal number of directors.
D. Directors of the corporation may be removed, with or without cause,
only by the holders of outstanding shares of the class of Common Stock, voting
separately as a class, as shall have elected such Director.
E. Vacancies in the Board of Directors occurring by reason of death,
resignation, removal or any other reason, including a vacancy as a result of an
increase in the number of directors, may be filled only (i) by a majority of the
directors then in office elected by the holders of the class of Common Stock who
either elected the director whose death, resignation or removal created such
vacancy or who have the right to elect a director to fill such vacancy, whether
or not those directors constitute a quorum of the Board of Directors, or (ii) by
the holders of the class of Common Stock who elected the director whose death,
resignation or removal created the vacancy, or who have the right to elect a
director to fill such vacancy. It is intended that the holders of outstanding
shares of Class A Stock and the holders of outstanding shares of Class B Stock
shall at all times have an equal number of directors on the Board of Directors
of the corporation.
F. The holders of outstanding shares of Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors from time to
time, pro rata, and without distinction as to class.
G. In the event of any liquidation, dissolution or winding up of the
Corporation, the holders of outstanding shares of Common Stock will be entitled
to receive pro rata, without distinction as to class, all remaining
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<PAGE>
assets of the Corporation available for distribution to shareholders.
ARTICLE IV
The address and mailing address of the registered office is:
21 Kercheval, Suit 200
Grosse Pointe Farms, MI 48236
The name of the resident agent at the registered office is Richard S.
Crawford.
ARTICLE V
The name and address of the incorporator is as follows:
Name Residence or Business Address
---- -----------------------------
Richard S. Crawford 21 Kercheval, Suite 200
Grosse Pointe Farms, MI 48236
ARTICLE VI
The duration of the corporation is perpetual.
ARTICLE VII
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director. However, this provision does not eliminate or limit the
liability of a director for any of the following:
(a) any breach of the director's duty of loyalty to the corporation or
its shareholders;
(b) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law:
-3-
<PAGE>
(c) a violation of Section 551(1) of the Act; or
(d) a transaction from which the director derived an improper personal
benefit.
Any repeal, amendment or other modification of this Article VII shall not
increase the liability or alleged liability of any director of the corporation
then existing with respect to any state of facts then or theretofore existing or
any action, suit or proceeding theretofore or thereafter brought or threatened
based in whole or in part upon any such state of facts. If the Act is
subsequently amended to authorize corporate action further eliminating or
limiting personal liability of directors, then the liability of directors shall
be eliminated or limited to the fullest extent permitted by the Act as so
amended.
ARTICLE VIII
The corporation shall be dissolved and it shall not carry on business
thereafter except for the purpose of winding up its affairs as provided under
the Act at the request of a shareholder upon the termination of the Joint
Venture Agreement dated as of March 4, 1994 between Cambridge Industries, Inc.,
Erpe Ernst Pelz Vertriebs GmbH and Empe Ernst Pelz GmbH & Co. KG.
ARTICLE IX
When a compromise or arrangement or a plan of reorganization of this
corporation is proposed between this corporation and its creditors or any class
of them or between this corporation and its shareholders or any class of them, a
court of equity jurisdiction
-4-
<PAGE>
within the state, on application of this corporation or of a creditor or
shareholder thereof, or on application of a receiver appointed for the
corporation, may order a meeting of the creditors or class of creditors or of
the shareholders or class of shareholders to be affected by the proposed
compromise or arrangement or reorganization, to be summoned in such manner as
the court directs. If a majority in number representing 3/4 in value of the
creditors or class of creditors, or of the shareholders or class of shareholders
to be affected by the proposed compromise or arrangement or a reorganization,
agree to a compromise or arrangement or a reorganization of this corporation as
a consequence of the compromise or arrangement, the compromise or arrangement
and the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, or on
all the shareholders or class of shareholders and also on this corporation.
IN WITNESS WHEREOF, I, the incorporator, sign my name this 4th day of
March, 1994.
/s/ Richard S. Crawford
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Richard S. Crawford
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EXHIBIT 3.4
BYLAWS
OF
CE AUTOMOTIVE TRIM SYSTEMS, INC.
(the "Corporation")
ARTICLE 1
OFFICES
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Section 1. LOCATION. The principal office of the Corporation shall be
located in Madison Heights, Oakland County, Michigan.
Section 2. CHANGE. The Board of Directors (the "Board") may change the
principal office of the Corporation from time to time and may establish other
offices, either within or without the State of Michigan, as the business of the
Corporation may require.
ARTICLE II
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
---------------------------------------
Section 1. ANNUAL MEETING. The annual shareholders' meeting shall be held
at such time on such day as the Board shall annually determine, for the purposes
of electing directors, hearing reports of the affairs of the Corporation and
transacting any other business within the power of the shareholders. If the
election of directors shall not be held on the day designated herein for an
annual meeting, or at any adjournment thereof, the Board may cause the election
to be held at a special shareholders' meeting as soon thereafter as one may be
conveniently called and noticed for that purpose.
Section 2. SPECIAL MEETINGS. Special shareholders' meetings shall be
noticed by the Secretary whenever called by the President, Board or requested by
the shareholders holding not less than one-fifth (1/5) of any class of the
shares of capital stock of the Corporation outstanding and entitled to vote. The
request shall state the purpose or purposes for which the meeting is to be
called, and the business transacted at any such meeting shall be limited to the
purpose or purposes stated in the notice thereof.
Section 3. PLACE OF MEETING. The Board may specifically designate any
place either within or without the State of Michigan as the place of meeting for
any annual or special shareholders' meeting. If no such designation is made or
if a special meeting is called other than at the request of the Board, the place
of meeting shall be the registered office of the Corporation in the State of
Michigan.
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Section 4. WRITTEN NOTICE. Notice of any annual shareholders' meeting
shall specify in writing the place, day and hour thereof and shall be given by
the Secretary to each such shareholder entitled to vote thereat not less than
ten (10) nor more than sixty (60) days before each such meeting. Such written
notice shall constitute due, legal, and personal notice to each such shareholder
if it is given by:
(a) delivering it to such shareholder personally; or
(b) sending it to him by mail, telegraph, or other means of
written communication, charges prepaid, addressed to him at:
(i) his address as it appears on the stock transfer books
of the Corporation; or
(ii) such other address as he may have requested in writing
that the Corporation use for the purpose of giving such notice; or
(iii) at the registered office of the Corporation and by
publishing it at least once in some newspaper of general
circulation in the county in which that office is located if his
address does not appear on the stock transfer books of the
Corporation and he has not requested in writing that the
Corporation use any address for such notice.
If mailed, such notice shall be deemed given when deposited in the United States
Mail postage prepaid and addressed to the shareholder at any such address.
Except in extraordinary circumstances where express provision is made allowable
by statute, notice of any special shareholders' meeting shall be given in the
same manner as for annual shareholders' meetings.
Attendance of a person at a meeting of shareholders, in person or by proxy,
constitutes (i) a waiver of notice of the meeting, except when the shareholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened; and (ii) a waiver of objection to consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to considering
the matter when it is presented.
Section 5. ADJOURNED MEETINGS AND NOTICE THEREOF. Any annual or
special shareholders' meeting, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the shares, the holders
of which are either present in person or represented by proxy thereat; in the
absence of a quorum no other business may be transacted at such meeting.
A meeting may be adjourned to another time or place without giving notice
of the adjourned meeting if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken and at the
adjourned meeting only such business is transacted as might have been transacted
at the original meeting. Provided, however, that after the adjournment the
Board may fix a new record date for the adjourned meeting and a notice of the
adjourned meeting shall be given to each shareholder of record on the new record
date entitled to notice.
Section 6. VOTING. Unless a record date for voting purposes is fixed as
provided in Section 1 of Article V of these Bylaws, only those persons in whose
names shares entitled to vote stand and are registered on the stock transfer
books of the Corporation on the day three (3) days prior to any meeting of
shareholders shall be entitled to vote at such meeting. Such vote may be by
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voice or by ballot; however, all elections for directors must be by ballot upon
demand made by a shareholder at any election and before the voting begins.
Each shareholder of the Corporation shall, at every shareholders' meeting,
be entitled to one (1) vote in person or by proxy for each share of each class
of capital stock of the Corporation outstanding and entitled to vote and
registered in his name on the record date or the date set forth herein. Except
as otherwise provided in the Corporation's Articles of Incorporation, directors
shall be elected by a plurality of the votes cast at an election.
Except as otherwise provided by law, the Corporation's Articles of
Incorporation, or these Bylaws, every act or decision done or made by vote of
the shareholders entitled to exercise a majority of the voting power present in
person or by proxy at any shareholders' meeting shall be regarded as an act or
decision done or made with the approval of the shareholders.
Section 7. QUORUM. Unless otherwise provided in this Corporation's
Articles of Incorporation, the presence in person or by proxy of persons
entitled to vote a majority of the voting shares of the capital stock of the
Corporation that are outstanding and entitled to vote shall constitute a quorum
for the transaction of business at any meeting. The shareholders present at a
duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 8. CONSENT OF ABSENTEES. The transactions of any annual or
special shareholders' meeting, however called and noticed, shall be as valid as
though had at a meeting duly held after regular call and notice if a quorum is
present either in person or by proxy and if, either before or after the meeting,
each of the shareholders who was entitled to vote but was not present in person
or by proxy, signs a written waiver of notice and written consent to the holding
of such meeting or a written approval of the minutes thereof. All such waivers
and consents or approvals shall be filed with the corporate records or made a
part of the minutes of the meeting.
Section 9. ACTION WITHOUT MEETING.
(a) If the Articles of Incorporation so provide, any action
required or permitted under any provision of the Michigan Business
Corporation Act, to be taken at an annual or special meeting of
shareholders may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
is signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take the
action at a meeting at which all shares entitled to vote thereon were
present and voted. If less than unanimous written consent of the
shareholders shall be given for any action to be taken, the written consent
shall bear the date of signature of each shareholder who signs the consent
and shall be delivered to the Corporation within sixty (60) days after the
record date set forth in Section 6 of this Article II hereof. Prompt notice
of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to shareholders who have not
consented in writing.
(b) If the Articles of Incorporation do not provide as described in
subsection (a) hereof, any action which under any provision of the Michigan
Business Corporation Act is required or may be taken at a shareholders'
meeting may be taken without such a meeting if authorized by a writing
signed by all of the persons who would be entitled to vote upon such action
at such a meeting and filed with the Secretary of the Corporation. Such
consent shall have the same effect as a unanimous vote of shareholders.
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Section 10. PROXIES. Every person entitled to vote or execute consents or
dissents shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed at or before the meeting at which they are intended to be used
with the Secretary of the Corporation. Proxies shall be valid for the length of
time which the person executing it specifies, which in no case shall exceed
three (3) years from the date of its execution. Any proxy duly executed shall be
deemed not to have been revoked and to be in full force and effect and, in the
absence of any limitation to the contrary contained in the proxy, it shall
extend to all shareholders' meetings, unless and until an instrument revoking
said proxy or a duly executed proxy bearing a later date is filed with the
Secretary of the Corporation. A proxy shall be deemed sufficient if it appears
on its face to confer the requisite authority and is signed by the owner of the
stock to be voted; no witnesses to the execution of any proxy shall be required.
Notwithstanding that a valid proxy any be outstanding, except in the case of an
irrevocable proxy coupled with an interest which shall state that it is
irrevocable on its face, the power of the proxy holder or holders shall be
suspended if the person or persons executing such proxy shall be present at the
meeting and elect to vote in person.
Section 11. ORDER OF BUSINESS AT ANNUAL MEETING. The order of business
at the annual shareholders' meeting or at any adjourned annual shareholders'
meeting shall be as follows:
(a) Counting of shares and proxies present to determine if a
quorum exists;
(b) Reading of Notice and Proof of Mailing;
(c) Reading of Minutes of Previous Meeting or Meetings;
(d) Report of President;
(e) Report of Secretary;
(f) Report of Treasurer;
(g) Report of Board;
(h) Election of Directors;
(i) Transaction of such other business as may properly come before
the meeting; and
(j) Adjournment.
However, in the absence of any shareholder's objection, the presiding officer at
any such meeting may vary the order in his discretion.
Section 12. REMOVAL OF DIRECTORS. The shareholders may remove any member
of the Board at any special meeting called for that purpose or by consent in the
manner set forth in the Michigan Business Corporation Act, and the shareholders
may elect a director to fill the vacancy thus created at that meeting, at any
other meeting called for the purpose of filling that vacancy, or by consent.
Section 13. VOTING OF SHARES BY CERTAIN HOLDERS. Any other Corporation
that owns shares of stock of this Corporation outstanding and entitled to vote
may vote the same by the
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President of the shareholder corporation or proxy appointed by him, unless some
other person is appointed to vote such shares by resolution of the Board of the
shareholder corporation.
Shares held by an administrator, executor, guardian, conservator, receiver,
trustee, or other fiduciary may be voted by him, either in person or by proxy,
without a transfer of such shares into his name, provided the Corporation is
furnished satisfactory proof of the authority of such person to vote those
shares.
A shareholder whose shares are pledged shall be entitled to vote such
shares unless in the transfer the pledgor has expressly empowered the pledgee to
vote such shares and had the same indicated on the books of the Corporation, in
which case only the pledgee or his proxy may represent and vote such shares.
Shares of this Corporation's own stock held by it in a fiduciary capacity
shall not be voted, directly or indirectly, at any meeting or for any purpose
and shall not be counted in determining the total number of shares present for
quorum purposes.
Section 14. INSPECTORS OF ELECTION. Whenever any person entitled to vote
at any shareholders' meeting shall request the appointment of persons to inspect
any election, the Board, prior to the meeting, or the person presiding at such
meeting shall appoint not more than three (3) inspectors, who need not be
shareholders. If the right of any person to vote at such meeting shall be
challenged, the inspectors shall determine such right. The inspectors shall
receive and count the votes for any election or for the decision of any
questions and shall determine the result. Their certificate of any vote shall be
prima facie evidence thereof.
Section 15. SHAREHOLDER MEETING BY CONFERENCE TELEPHONE OR SIMILAR
EQUIPMENT. A shareholder may participate in a meeting of shareholders by a
conference telephone or similar communications equipment by which all persons
participating in the meeting may hear each other if all participants are advised
of the communications equipment and the names of the participants in the
conference are divulged to all participants. Participation in a meeting pursuant
to this section constitutes presence in person at the meeting.
ARTICLE III.
DIRECTORS AND MEETINGS OF THE BOARD OF DIRECTORS
------------------------------------------------
Section 1. POWERS. All of the powers of this Corporation not expressly
reserved to or conferred upon the shareholders by statute, the Articles of
Incorporation, or these Bylaws shall be vested in the Board which shall control
and manage its business and affairs.
Section 2. NUMBER OF DIRECTORS. The authorized number of directors of
the Corporation shall be two (2) until changed by a duly adopted amendment of
these Bylaws.
Section 3. ELECTION, TERM OF OFFICE AND QUALIFICATION OF DIRECTORS.
(a) Directors need not be shareholders of this Corporation. Except
as provided in subsection (b) below, the directors, other than those
serving on the first Board, shall be elected at each annual shareholders'
meeting or otherwise as provided in Article II, Section 1, above. Each
director shall hold office until he resigns, dies, is removed from office,
or his successor is duly elected and qualified, whichever occurs first.
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(b) The Articles of Incorporation or a bylaw adopted by the
shareholders may provide that in lieu of annual election of all directors
the directors be divided into two or three classes, each to be as nearly
equal in number as possible. The term of office of directors in the first
class shall expire at the first annual meeting of shareholders after their
election, that of the second class shall expire at the second annual
meeting after their election, and that of the third class, if any, shall
expire at the third annual meeting after their election. At each annual
meeting after such classification, a number of directors equal to the
number of the class whose term expires at the time of the meeting shall be
elected to hold office until the second succeeding annual meeting if there
are two classes, or until the third succeeding annual meeting if there are
three classes.
Section 4. VACANCIES. A vacancy in the Board shall be deemed to exist
if any of the following events occurs:
(a) Any director dies;
(b) The authorized number of directors is greater than the
number of directors on the Board; or
(c) At any shareholders' meeting at which one or more directors
are to be elected, the shareholders then fail to elect the full authorized
number of directors.
Vacancies in the Board may be temporarily filled by a majority of the remaining
directors, though less than a quorum, or be a sole remaining director making
such appointment, and each director so appointed shall hold office until his
successor is elected at an annual or special shareholders' meeting and is
qualified.
The shareholders may elect a director at any time to fill any vacancy
temporarily filled or not filled by the one or more remaining directors. If the
Board accepts the resignation of a director tendered to take effect at a future
time, the Board or the shareholders shall have the power to elect immediately a
successor to take office when such resignation is intended to become effective.
Section 5. PLACE OF MEETING. Regular Board meetings shall be held at
any place within or without the State of Michigan which has been designated from
time to time by resolution of a majority of the Board or by written consent of a
majority of the members of the Board given either before or after the meeting
and filed with the Secretary of the Corporation. In the absence of such
designation, regular meetings shall be held at the registered office of the
Corporation. Any special Board meeting may be held at any place designated with
the written consent of a majority of the directors; otherwise special Board
meetings shall be held at the registered office of the Corporation in the State
of Michigan.
Section 6. ORGANIZATION MEETING. Immediately following each annual
shareholders' meeting and each adjourned annual and special shareholders'
meeting held for the purpose of electing a new Board, the newly elected Board
may hold a regular meeting for the purpose of organization, election of
officers, and the transaction of other business. Notice of each such meeting
need not be given and is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Board meetings may be regularly
scheduled for dates, times and places as determined by the Board, and in such
case notice of such meetings need not be given and is hereby dispensed with.
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Section 8. SPECIAL MEETINGS AND NOTICE THEREOF. Special Board meetings
for any purpose or purposes, may be called at any time by any director or by the
President or, if he is absent or unable to act, by any Vice President. The
business transacted at any such meeting shall be limited to the purpose or
purposes stated in the notice thereof.
Written notice of the place, day, and hour of special Board meetings shall
be given to each director and constitute due, legal, and personal notice to him
if that notice is delivered personally to him or sent to him by mail, telegraph,
or other means of written communication, charges prepaid, addressed to him at
his address as it is shown upon the records or stock transfer books of the
Corporation or, if such address is not so shown on such records or is not
readily ascertainable, at the place in which the regular directors' meetings are
held. If delivered personally, such notice shall be so delivered at least
twenty-four (24) hours prior to the time of the holding of the meeting. If
mailed or telegraphed, such notice shall be deposited in the United States Mail
or delivered to the telegraph company in the place which the principal office of
the Corporation in the State of Michigan is located at least forty-eight (48)
hours prior to the time of holding the meeting; if mailed, such notice shall be
deemed given when deposited in the United States Mail postage prepaid and
addressed as set forth above.
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned Board meeting need not be given to absent directors if the
time and place be fixed at the meeting adjourned provided that the meeting is
not adjourned for more than thirty (30) days.
Section 10. WAIVER OF NOTICE. The attendance of a director at any Board
meeting shall constitute a waiver of notice of such meeting, except where a
director attends for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called, noticed, or convened.
The transactions of whatever kind or nature held at any Board meeting,
however called and noticed or wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice if a quorum is present and if,
either before or after the meeting, each of the directors not present signs a
written waiver of notice of the meeting and a written consent to holding such
meeting, or a written approval of the minutes thereof. All such waivers and
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
In addition, any action required or permitted to be taken by the Board
under the Michigan Business Corporation Act may be taken without a meeting, if
all members of the Board shall individually and collectively consent in writing
to such action. Such written consents shall be filed with the minutes of the
proceedings of the Board. Such action by written consent shall have the same
force and effect as a unanimous vote of such directors at a duly called,
noticed, and held Board meeting. Any certificate or other document filed under
any provision of the Michigan Business Corporation Act which relates to action
so taken shall state that the action was taken by unanimous written consent of
the Board without a meeting and that these Bylaws authorized the directors so to
act, and such statement shall be prima facie evidence of such authority.
Section 11. QUORUM. Except to adjourn the meeting as hereinafter
provided, a majority of the Board without regard to the authorized number of
directors shall be necessary to constitute a quorum for the transaction of
business. Every act or decision done or made by a majority of the directors
present at a meeting duly held at which a quorum is present shall be regarded as
the act of the Board unless a greater number be required by law, the Articles of
Incorporation, or these Bylaws.
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Section 12. ADJOURNMENT. A quorum may adjourn any Board meeting to meet
again at a stated place, date, and hour; however, in the absence of a quorum, a
majority of the directors present at any regular or special Board meeting may
adjourn from time to time until the time fixed for the next regular Board
meeting.
Section 13. FEES AND COMPENSATION. By resolution of the Board, the
directors may be paid their expenses, if any, of attendance at each Board
meeting and a fixed sum for attendance at each Board meeting or a stated salary
as director. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity as an officer,
agent, employee or otherwise and receiving a separate compensation therefor.
Section 14. PRESUMPTION OF ASSENT. A director who is present at any
Board meeting at which action on any corporate matter is taken shall be presumed
to have assented to any action taken by the Board at that meeting unless his
dissent shall be entered in the minutes of the meeting or he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or he shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action. A director who is absent from a meeting of
the board, or a committee thereof of which he is a member, at which any such
action is taken is presumed to have assented to the action unless he files his
dissent with the Secretary of the Corporation within a reasonable time after he
has knowledge of the action.
Section 15. EXECUTIVE COMMITTEES. The Board, by resolution passed by a
majority of the whole Board, may provide for an Executive Committee by
appointing two (2) or more members thereto, each of whom shall be a director and
who shall serve during the pleasure of the Board. Unless one of the members
shall have been designated as Chairman of the Board, the Executive Committee
shall elect a Chairman from its own members. Except as provided herein or
otherwise by resolution of the Board, the Executive Committee during the
intervals between Board meetings shall possess and may exercise all of the
powers of the Board in the management of the business and affairs of the
Corporation. The Executive Committee shall keep full and fair records and
accounts of its proceedings and transactions. All actions taken by the
Executive Committee shall be reported to the Board at its meeting next
succeeding such action and shall be subject to revision and alteration by the
Board, except that no rights of third persons created in reliance thereon shall
be affected by any such revision or alteration. Vacancies in the Executive
Committee shall be filled by the Board.
Subject to provisions of these Bylaws, the Executive Committee shall fix
its own rules of procedure and shall meet as provided by such rules, by
resolution of the Board, or at the call of the President or Secretary of the
Corporation or of any two (2) members of the committee. Unless otherwise
provided by such rules, the provisions of the Bylaws relating to the notice
required to be given to directors shall apply to all meetings of the Executive
Committee. A majority of the Executive Committee shall be necessary to
constitute a quorum.
Section 16. OTHER COMMITTEES. The Board may by resolution provide for
such other standing or special committees as it deems desirable and discontinue
the same at its pleasure. Each such committee shall have such powers and
perform such duties not inconsistent with law, as may be assigned to it by the
Board. If provision be made for any such committee, the members thereof shall
be appointed by the Board, shall consist of one or more members of the Board and
shall serve during the pleasure of the Board. Vacancies in such committees
shall be filled by the Board.
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ARTICLE IV.
OFFICERS
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Section 1. OFFICERS. The officers of the Corporation shall be a President,
a Secretary and a Treasurer. The Corporation may also have in the discretion of
the Board, a Chairman of the Board, one or more Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
as may be appointed in accordance with the provisions of Section 3 of this
Article IV. One person may hold two or more offices. In no case shall any
officer execute, acknowledge or verify any instrument in more than one capacity.
Section 2. ELECTION. The officers of the Corporation, except such officers
as may be appointed in accordance with the provisions of Sections 3 or 5 of this
Article IV, shall be chosen by the Board, and each shall hold his office until
he resigns, dies, is removed or otherwise disqualified to serve, or until his
successor is elected and qualified, whichever occurs first.
Section 3. SUBORDINATE OFFICERS AND AGENTS. The Board may appoint such
other officers and agents as the business of the Corporation may require, each
of whom shall hold office for such period, have such authority, and perform such
duties as may be provided in these Bylaws or as the Board may from time to time
determine.
Section 4. REMOVAL AND RESIGNATION. Any officer or agent may be removed by
a majority of the whole Board at the time in office at any regular or special
Board meeting.
Any officer may resign at any time by giving written notice to the Board,
the President, or the Secretary. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled in
the manner prescribed in these Bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all meetings of the
Board and shall exercise and perform such other powers and duties as may from
time to time be assigned to him by the Board or prescribed by these Bylaws.
Section 7. PRESIDENT. Subject to such powers and duties, if any, as may be
given to the Chairman of the Board by the Board or prescribed by these Bylaws,
the President shall be the chief executive officer of the Corporation and shall,
subject to the control of the Board, have general supervision, direction and
control of the business and affairs of the Corporation. He shall preside at all
shareholders' meetings and, in the absence of the Chairman of the Board or if
there be no such Chairman, at all Board meetings. He shall be ex officio a
member of all the standing committees, including the Executive Committee, if
any; shall have the general powers and duties of management usually vested in
the office of President of a corporation; shall see that all orders and
resolutions of the Board are carried into effect; and shall have such other
powers and duties as may be prescribed by the Board or these Bylaws.
Section 8. VICE PRESIDENTS. In the event of the President's absence or
disability, the Vice Presidents, if more than one, in order of their rank as
fixed by the Board or, if not ranked, the Vice President designated by the Board
shall perform all the duties of and shall be subject to all the
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restrictions upon the President. The Vice Presidents shall have such other
powers and authority and shall perform such other duties as from time to time
may be prescribed for them respectively by the Board or these Bylaws.
Section 9. SECRETARY. The Secretary shall attend all shareholders'
meetings and all Board meetings and shall keep or cause to be kept, in his
custody at the principal or registered office of the Corporation in the State of
Michigan or such other place as the Board may order, a book recording the
minutes of all Board and shareholders' meetings setting forth: the place, date,
and hour of holding; whether regular or special, and, if special, how
authorized; the notice thereof given; the names of those present at Board
meetings; the number of shares present or represented at shareholders' meetings;
and the proceedings thereof.
The Secretary shall keep or cause to be kept at the registered office of
the Corporation in the State of Michigan or at the office of the Corporation's
transfer agent, a share register or a duplicate share register or a list showing
the names of the shareholders and their addresses; the number and classes of
shares held by each; the number and date of certificates issued for the same;
and the number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall keep in safe custody the seal of the Corporation and,
when authorized by the Board, affix the same or cause the same to be affixed to
any instrument requiring it; when so affixed, the seal shall be attested by his
signature or by the signature of the Treasurer or the Assistant Secretary. The
Secretary shall perform such other duties and have such other authorities as are
delegated to him by the Board.
The Secretary shall give or cause to be given notice of all Board and
shareholders' meetings required by these Bylaws or by law.
Section 10. ASSISTANT SECRETARIES. In the event of the Secretary's absence
or disability, any Assistant Secretary shall act as Secretary in all respects.
The Assistant Secretaries shall exercise such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board, the President, the Secretary, or these Bylaws.
Section 11. TREASURER. The Treasurer shall, subject to the direction of the
Board, have the custody of the corporate funds and securities and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation.
The Treasurer shall deposit all monies and other valuables in the name and
to the credit of the Corporation with such depositaries as may be designated by
the Board; shall disburse the funds of the Corporation as may be ordered by the
Board; shall render to the President and the Board, whenever either requests it,
an account of all of his transactions as Treasurer and of the financial
condition of the Corporation; and shall have such other powers and authority
incident to the office of Treasurer and shall perform such other duties as may
be prescribed by the Board or these Bylaws.
Section 12. ASSISTANT TREASURERS. In the event of the Treasurer's absence
or disability, the Assistant Treasurer shall act as Treasurer in all respects.
The Assistant Treasurer shall exercise such other powers and perform such other
duties as from time to time may be prescribed for him by the Board, the
President, the Treasurer, or these Bylaws.
Section 13. SALARIES. The salaries of the officers shall be fixed from time
to time by the Board.
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ARTICLE V.
MISCELLANEOUS
-------------
Section 1. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of and to vote at a meeting of shareholders or
an adjournment of a meeting, the Board may fix a record date which shall not
precede the date on which the resolution fixing the record date is adopted by
the Board and which shall be not more than 60 nor less than 10 days preceding
the date of the meeting.
For the purpose of determining shareholders entitled to express consent to
or to dissent from a proposal without a meeting, the Board may fix a record
date, which shall not be more than 60 days before effectuation of the action
proposed to be taken.
For the purpose of determining shareholders entitled to receive payment of
a share dividend or distribution or allotment of a right, or for the purpose of
any other action, the Board may fix a record date which shall not precede the
date on which the resolution fixing the record date is adopted by the Board and
which shall not be more than 60 days preceding the date of the payment of the
share dividend or distribution or allotment of a right or other action.
Section 2. ANNUAL REPORT. The Corporation shall cause a financial
report of the Corporation for the preceding fiscal year to be made and
distributed to each shareholder thereof within four (4) months after the end of
the fiscal year. The report shall include the Corporation's statement of income,
its year-end balance sheet and, if prepared by the Corporation, its statement of
source and application of funds.
Section 3. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board. Such authority may be general or
confined to specific instances. No loan or advance to or overdraft or withdrawal
by an officer, director, or shareholder of the Corporation other than in the
ordinary and usual course of the business of the Corporation shall be made or
permitted unless each such transaction shall be approved by a vote of the
majority of the members of the whole Board after excluding from any
deliberations about such transaction any director involved in it. A full and
detailed statement of all such transactions and any payments shall be submitted
at the next annual shareholders' meeting, and the aggregate amount of such
transaction less any repayments shall be stated in the next annual report to
shareholders.
Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The
President or by a proxy appointed by him; or, in the absence of the President
and his proxy, the Treasurer or by a proxy appointed by him; or, in the absence
of both the President and the Treasurer and their proxies, the Secretary or by a
proxy appointed by him are authorized in that order to vote, represent, and
exercise on behalf of this Corporation all rights incident to any and all shares
of other Corporations standing in the name of this Corporation. The Board,
however, may by resolution appoint some other person to vote such shares.
Section 5. INDEMNIFICATION.
(a) The Corporation has the power to indemnify a person who was
or is a party or is threatened to be made a party to a threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal, other than
an action by or in the right of the Corporation, by reason of the fact that
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<PAGE>
he or she is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent or another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, whether for profit or
not, against expenses, including attorneys' fees, judgments, penalties, fines,
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with the action, suit, or proceeding, if the person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation or its shareholders, and with respect to a
criminal action or proceeding, if the person had no reasonable cause to believe
his or her conduct was unlawful. The termination of an action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Corporation or its
shareholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(b) The Corporation has the power to indemnify a person who was or is a
party to or is threatened to be made a party to a threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership, joint venture,
trust, or other enterprise, whether for profit or not, against expenses,
including actual and reasonable attorneys' fees, and amounts paid in settlement
incurred by the person in connection with the action or suit, if the person
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the Corporation or its shareholders.
However, indemnification shall not be made for a claim, issue, or matter in
which the person has been found liable to the Corporation unless and only to the
extent that the court in which the action or suit was brought has determined
upon application that, despite the adjudication of liability but in view of all
circumstances of the case, the person is fairly and reasonably entitled to
indemnification for the expenses which the court considers proper.
(c) Indemnification against expenses:
(1) To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of an
action, suit, or proceeding referred to above in subsections (a) or (b), or
in defense of a claim, issue, or matter in the action, suit, or proceeding,
he or she shall be indemnified against expenses, including actual and
reasonable attorneys' fees, incurred by him or her in connection with the
action, suit, or proceeding and an action, suit, or proceeding brought to
enforce the mandatory indemnification provided in this Subsection.
(2) An indemnification under subsections (a) and (b) above, unless
ordered by a court, shall be made by the Corporation only as authorized in
the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in subsections (a) and
(b) above. This determination shall be made in any of the following ways:
(i) By a majority vote of a quorum of the board consisting of
directors who were not parties to the action, suit, or proceeding.
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<PAGE>
(ii) If the quorum described in subdivision (i) is not
obtainable, then by a majority vote of a committee of directors
who are not parties to the action. The committee shall consist of
not less than two (2) disinterested directors.
(iii) By independent legal counsel in a written opinion.
(iv) By the shareholders.
(3) If a person is entitled to indemnification under subsection
(a) or (b) for a portion of expenses including attorneys' fees,
judgments, penalties, fines, and amounts paid in settlement, but not
for the total amount thereof, the Corporation may indemnify the person
for the portion of the expenses, judgments, penalties, fines, or
amounts paid in settlement for which the person is entitled to be
indemnified.
(d) Expenses incurred in defending a civil or criminal action, suit,
or proceeding described in subsections (a) or (b) above may be paid by the
Corporation in advance of the final disposition of the action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay the expenses if it is ultimately
determined that the person is not entitled to be indemnified by the
Corporation. The undertaking shall be by unlimited general obligation of
the person on whose behalf advances are made but need not be secured.
(e) Nonexclusivity:
(1) The indemnification of advancement of expenses provided
under subsections (a) to (d) is not exclusive of other rights to which
a person seeking indemnification or advancement of expenses may be
entitled under the articles of incorporation, bylaws, or a contractual
agreement. However, the total amount of expenses advanced or
indemnified from all sources combined shall not exceed the amount of
actual expenses incurred by the person seeking indemnification or
advancement of expenses.
(2) The indemnification provided for in subsections (a) to (e)
continues as to a person who ceases to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of the person.
(f) The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such capacity
or arising out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under subsections
(a) through (e).
(g) For purposes of subsections (a) through (f) above, "corporation"
includes all constituent corporations absorbed in a consolidation or merger
and the resulting or surviving corporation, so that a person who is or was
a director, officer, employee, or agent of the constituent corporation is
or was serving at the request of the constituent corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, or other
enterprise whether for profit or not shall stand in the same position under
the provisions of this Subsection with respect
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<PAGE>
to the resulting or surviving corporation as the person would if he or she
had served the resulting or surviving corporation in the same capacity.
(h) For the purposes of subsections (a) through (f) above, "other
enterprises" shall include employee benefit plans; "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and "serving at the request of the Corporation" shall include any
service as a director, officer, employee, or agent of the Corporation which
imposes duties on, or involves services by, the director, officer,
employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in
a manner he or she reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be
considered to have acted in a manner "not opposed to the best interests of
the Corporation or its shareholders" as referred to in subsections (a) and
(b) above.
Section 6. PERSONAL LIABILITY OF DIRECTORS. If the Articles of
Incorporation of the Corporation so provide, a director of the Corporation shall
not be personally liable to the Corporation or its shareholders for monetary
damages for a breach of the directors fiduciary duty to the extent that the
breach does not involve or constitute:
(a) A breach of the director's duty of loyalty to the Corporation
or its shareholders.
(b) Acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law.
(c) A violation of Section 551(1) of the Michigan Business
Corporation Act.
(d) A transaction from which the director derived an improper
personal benefit.
(e) other act or omission as to which the Michigan Business
Corporation Act does not permit a director's liability to be so limited.
ARTICLE VI.
EXECUTION OF INSTRUMENTS
------------------------
Section 1. BANK ACCOUNTS. Each bank account of the Corporation shall be
established and continued only by order of the Board.
Section 2. CHECKS, ETC. All checks, drafts, and orders for the payment
of money shall be signed in the name of the Corporation in such manner and by
such officers or agents as the Board shall from time to time designate for that
purpose. No check or other instrument for the payment of money to the
Corporation shall be endorsed otherwise than for deposit to the credit of the
Corporation. All checks of the Corporation shall be drawn to the order of the
payee.
Section 3. CONTRACTS, CONVEYANCES, ETC. When the execution of any
contract, conveyance or other instrument has been authorized without
specification of the executing officers, the President or any Vice President and
the Secretary or Treasurer may execute the same in the name and on behalf of
this Corporation and may affix the corporate seal thereto. The Board shall have
power to designate the officers and agents who shall have authority to execute
any instrument on behalf of the Corporation in more than one capacity.
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<PAGE>
Notwithstanding anything contained herein to the contrary, no officer,
agent or employee of this Corporation shall the authority to disburse monies or
other property to other persons, to obligate the Corporation to do or perform
any act, to make any payments of money or property, or to execute any of the
instruments described herein on behalf of this Corporation other than in the
ordinary course of business unless he shall have previously obtained the
approval of the Board and unless such approval or ratification shall appear in
the minutes of this Corporation.
ARTICLE VII.
RIGHT OF INSPECTION
-------------------
Section 1. INSPECTION OF BY-LAWS. The Corporation shall keep in its
registered or principal office the original or a copy of these Bylaws and the
Articles of Incorporation as amended or otherwise altered to date, certified by
the Secretary, which shall be open to inspection by all shareholders during
regular business hours.
Section 2. INSPECTION OF RECORDS. A person who is a shareholder of
record of the Corporation, upon at least ten (10) days written demand may
examine for any proper purpose in person or by agent or attorney, during usual
business hours, its minutes of shareholders' meetings and record of
shareholders' and make extracts therefrom, at the places where the said records
are kept.
ARTICLE VIII.
DIVIDENDS
---------
Section 1. DIVIDENDS OF CASH OR OTHER PROPERTY. The Board may, from time
to time, declare dividends on its outstanding shares to be paid in cash or other
property, other than the Corporation's shares, subject to the following:
(a) Such dividends may not be declared if, after giving effect to
the dividend, the Corporation would not be able to pay its debts as they
become due in the usual course of business, or the Corporation's total
assets would be less than the sum of the total liabilities.
Section 2. DIVIDENDS OF STOCK. The Board may, from time to time, declare
dividends on its outstanding shares to be paid in the Corporation's stock,
subject to the following:
(a) Shares of one class or series may not be issued as a share
dividend in respect of shares of another class or series unless a majority
of the votes entitled to be cast by the class or series to be issued
approve the issue, or there are no outstanding shares of the class or
series to be issued.
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<PAGE>
ARTICLE IX
CAPITAL STOCK
-------------
Section 1. ISSUANCE OF SHARES. The shares of capital stock of the
Corporation shall be issued by the Board in such amounts, at such times, for
such consideration, and on such terms and conditions as the Board shall deem
advisable, subject to the provisions of the Articles of Incorporation and these
Bylaws.
Section 2. CERTIFICATES FOR SHARES. The shares of the Corporation shall
be represented by certificates and every shareholder of this Corporation shall
be entitled to have a certificate. The certificate shall be signed by the
Chairman of the Board, President or a Vice President and may also be signed by
another officer of the Corporation; shall certify the number and class of shares
represented by such certificate; shall state, if such shares are not fully paid,
the amount paid; and may be sealed with the seal of the Corporation or a
facsimile thereof. The signatures of the officers of the Corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or an
employee of the Corporation. If an officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be an officer
before the certificate is issued, it may be issued by the Corporation with the
same effect as if he were the officer at the date of its issue.
Certificates of stock shall in all other respects be in such form as shall
be determined by the Board and shall be consecutively numbered or otherwise
identified.
If the Corporation is authorized to issued shares of more than one class,
every certificate of stock shall set forth on its face or back, or state on its
face or back that the Corporation will furnish to a shareholder upon request and
without charge, a full statement of the designation, relative rights,
preferences and limitations of the shares of each class authorized to be issued,
and if the Corporation is authorized to issue any class of shares in series, the
designation, relative rights, preferences, and limitations of each series so far
as the same have been prescribed and the authority of the Board to designate and
prescribe the relative rights, preferences, and limitations of other series.
Section 3. TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
or record thereof or by his legal representative who shall furnish satisfactory
evidence of his authority, file it with the Secretary of the Corporation, and
surrender for cancellation the certificate for such shares. All certificates
surrendered to the Corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except as otherwise provided in
Section 6 of this Article IX of these Bylaws. The Secretary of the Corporation
shall record each such transfer on the stock transfer books and shall record the
fact that a transfer is made for collateral security and not absolutely when
such is stated in the instrument of transfer.
Section 4. RECORD OWNER. The Corporation shall be entitled to treat the
person in whose name any share of stock is registered as the owner thereof for
the following purposes: recapitalization, consolidation, merger, reorganization,
sale of assets, liquidation or otherwise; for votes, approvals, and consents by
shareholders; for notices to shareholders; and for all other purposes whatever.
The Corporation shall not be bound to recognize any equitable or other claim to
or interest in such shares on the part of any other person, whether or not the
Corporation shall have notice thereof, except as expressly required by law or
these Bylaws.
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<PAGE>
Section 5. LIEN BY CORPORATION. The Corporation shall have a lien upon the
capital stock of the Corporation for debts due to the Corporation from the
owners thereof pursuant to such owner's subscription agreement for such capital
stock.
Section 6. LOST, MUTILATED, OR DESTROYED STOCK CERTIFICATES. Upon the
presentation to the Corporation of a proper affidavit attesting the loss,
destruction or mutilation of any certificate for shares of stock of the
Corporation, the Board may direct the issuance of a new certificate in lieu of
and to replace the certificate so alleged to be lost, destroyed or mutilated.
The Board may require as a condition precedent to the issuance of a new
certificate any or all of the following:
(a) Additional evidence of the loss, destruction or mutilation
claimed;
(b) Advertisement of the loss in such manner as the Board may
direct or approve;
(c) A bond or agreement of indemnity in such form and amount, with
or without such sureties as the Board may approve; or
(d) The order or approval of a court.
The Corporation may recognize the person in whose name the new certificate, or
any certificate thereafter issued as owner of the shares described therein for
all purposes until the owner of the original certificate or a transferee thereof
without notice and for value shall enjoin the Corporation and the holder of
any new certificate, or any certificate issued in exchange or substitution
therefor, from so acting.
Section 7. TRANSFER AGENT AND REGISTRAR. The Board may appoint a transfer
agent and/or a registrar of transfers and may require all certificates of shares
to bear the signature of such transfer agent and of such registrar of transfers,
or as the Board may otherwise direct.
Section 8. REGULATIONS. The Board shall have power and authority to make
all such rules and regulations as the Board shall deem expedient regulating the
issue, transfer, and registration of certificates for shares in this
Corporation.
Section 9. CANCELED CERTIFICATES. All certificates for shares exchanged or
surrendered to the Corporation for transfer or cancellation shall be marked
with the date of cancellation by the Secretary and shall be immediately fastened
to the stubs in the certificate books from which they were detached when issued.
Section 10. PAYMENT. Where stock is issued in exchange for a promissory
note, draft, obligation or promise of future services of the purchaser,
certificates thereof shall be delivered to the purchaser and the stock shall be
deemed to be fully paid and non-assessable, unless the Board, upon authorization
of the issuance of such stock, declares that such stock will not be deemed to be
fully paid and non-assessable until such time as the promissory note or draft is
paid, or obligation or promise performed.
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<PAGE>
ARTICLE X.
FISCAL YEAR
-----------
The Board shall determine the fiscal year of the Corporation.
ARTICLE XI.
SEAL
----
The Corporation may have a seal which shall have inscribed thereon the name
of the Corporation, the state of incorporation, and the words "Corporate
Seal." The seal may be used by causing it or a facsimile to be imprinted,
affixed, reproduced, or otherwise.
ARTICLE XII.
POLICY AS TO COMPENSATION OF EMPLOYEES
--------------------------------------
It is the policy of this Corporation to fairly and adequately compensate
its employees, to reimburse its employees only for expenses reasonably incurred
for and on behalf of this Corporation to further this Corporation's business, to
pay its employees reasonable rental for any property this Corporation may lease
from its employees and to pay only a fair and proper rate of interest on any
loans made by an employee to this Corporation. However, in recognition of the
fact that the Internal Revenue Code and the regulations issued thereunder
provide that the Internal Revenue Service has the power to determine that some
portion of compensation paid to an employee or some portion of interest or
rental payments made to an employee or some portion of expense reimbursement
paid to an employee is not deductible by the Corporation as a business expense
under the Internal Revenue Code, notwithstanding the fact that such
compensation, interest payment, rental payment and/or expense reimbursement is
based upon a good faith determination by the directors and the officers of the
Corporation as to the worth of an employee and/or the propriety of such interest
payment, rental payment and/or expense reimbursement, it is hereby declared that
any payment made to an employee of this Corporation such as salary, commission,
bonus, interest, rent or reimbursement of expenses incurred by him which is
disallowed in whole or in part as a deductible expense by the Internal Revenue
Service shall be reimbursed by such employee to this Corporation to the full
extent of such disallowance. Each employee shall agree to such reimbursement as
a condition of his employment. In lieu of payment by the employee, the Board
may, in its discretion, withhold an appropriate amount from the employee's
future compensation payments until the amount owed to this Corporation has been
recovered.
ARTICLE XIII.
AMENDMENTS
----------
These Bylaws may be added to, altered, amended, or repealed:
(a) By the vote of not less than a majority of the members of the
Board then in office at any regular or special meeting, if written notice
of the proposed addition, alteration, amendment, or repeal shall have been
given to each director at least five (5) days before the meeting, or waived
in writing; or
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<PAGE>
(b) By the shareholders at any annual or special meeting if notice of the
proposed addition, alteration, amendment, or repeal shall have been included in
the notice of such special meeting or waived in writing.
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<PAGE>
Exhibit 4.1
Cambridge Industries, Inc.
$100,000,000
10 1/4% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
------------------
July 2, 1997
BT SECURITIES CORPORATION
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Cambridge Industries, Inc., a Delaware corporation (the "Company"),
-------
and CE Automotive Trim Systems, Inc., a Michigan corporation (the "Guarantor"),
---------
each hereby confirms its agreement with you (the "Initial Purchaser"), as set
-----------------
forth below.
1. The Securities. Subject to the terms and conditions herein
--------------
contained, the Company proposes to issue and sell to the Initial Purchaser
$100,000,000 aggregate principal amount of its 10 1/4% Senior Subordinated Notes
due 2007 (with the Guarantees defined below, the "Notes"). The Notes will be
-----
guaranteed (the "Guarantees") by the Guarantor on a senior subordinated basis.
----------
The Notes are to be issued under an indenture (the "Indenture") to be dated as
---------
of July 10, 1997 by and between the Company and State Street Bank and Trust
Company of Connecticut, N.A., as Trustee (the "Trustee").
-------
Concurrently with the issuance of the Notes, the Company and its
subsidiaries will enter into a senior secured credit agreement (together with
all documents executed in connection therewith, the "Credit Agreement") dated
----------------
July 10, 1997, among the Company, Cambridge Industries Holdings, Inc.
("Holdings") and Bankers Trust Company, as agent, and certain financial
--------
institutions party thereto in the form of (a) a multiple tranche term loan
facility in the amount of $205.0 million and (b) a revolving credit facility in
the amount of $75.0 million, for working capital, letters of credit and other
general corporate purposes.
<PAGE>
-2-
The proceeds from the issuance of the Notes, together with the
borrowings under the Credit Agreement, will be used to (i) acquire all of the
capital stock of, or all or substantially all of the assets of, the Plastics
Division of Eagle-Picher Industries, Inc. (the "Eagle-Picher Acquisition") for a
------------------------
total purchase price of approximately $32.5 million, subject to post-closing
adjustments, (ii) acquire all of the capital stock of, or all or substantially
all of the assets of, the engineered composites business located in Jackson,
Ohio, of The Goodyear Tire and Rubber Company (the "Goodyear-Jackson
----------------
Acquisition") for a total purchase price of approximately $43.0 million, subject
to post-closing adjustments (the Eagle-Picher Acquisition with the Goodyear-
Jackson Acquisition, the "Acquisitions"), and (iii) refinance (the
------------
"Refinancing") the Company's existing credit agreement and the existing
-----------
mezzanine debt of Cambridge Industries Holdings, Inc. ("Holdings") and the
--------
Company.
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Act"), in
---
reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated June 19, 1997 (the "Preliminary
-----------
Memorandum") and a final offering memorandum dated July 2, 1997 (the "Final
-----
Memorandum"; the Preliminary Memorandum and the Final Memorandum each herein
- - ----------
being referred to as a "Memorandum") each setting forth or including a
----------
description of the terms of the Notes, the terms of the offering of the Notes, a
description of the Company and any material developments relating to the Company
occurring after the date of the most recent historical financial statements
included therein.
The Company understands that the Initial Purchaser proposes to make an
offering of the Notes only on the terms and in the manner set forth in the Final
Memorandum and Section 8 hereof as soon as the Initial Purchaser deems advisable
after this Agreement has been executed and delivered, to persons in the United
States whom the Initial Purchaser reasonably believes to be qualified
institutional buyers ("Qualified Institutional Buyers" or "QIBs") as defined in
------------------------------ ----
Rule 144A under the Act, as such rule may be amended from time to time ("Rule
----
144A"), in transactions under Rule 144A, to a limited number of other
- - ----
institutional "accredited investors" ("Accredited Investors") as defined in Rule
--------------------
501(a)(1), (2), (3) and (7) under Regulation D of the Act in private sales
exempt from registra-
<PAGE>
-3-
tion under the Act, and outside the United States to certain persons in reliance
on Regulation S under the Act.
The Initial Purchaser and its direct and indirect transferees of the
Notes will be entitled to the benefits of the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit A (the "Registration Rights
--------- -------------------
Agreement"), to be dated the Closing Date (as defined in Section 3 below),
- - ---------
pursuant to which the Company has agreed, among other things, to file a
registration statement (the "Registration Statement") with the Securities and
----------------------
Exchange Commission (the "Commission") registering the Notes or the Exchange
----------
Notes (as defined in the Registration Rights Agreement) under the Act.
2. Representations and Warranties. The Company and the Guarantor,
------------------------------
jointly and severally, represent and warrant to and agrees with the Initial
Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section
2(a) do not apply to statements or omissions made in reliance upon and in
conformity with information relating to the Initial Purchaser furnished to
the Company in writing by the Initial Purchaser expressly for use in the
Preliminary Memorandum, the Final Memorandum or any amendment or supplement
thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum;
all of the subsidiaries of the Company, including the Guarantor, are listed
in Schedule 1 attached hereto (each, a "Subsidiary" and collectively, the
---------- ----------
"Subsidiaries"); all of the outstanding shares of capital stock of the
-------------
Company and the Subsidiaries have been, and as of the Closing Date will be,
duly authorized and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights; all of
the outstanding shares of capital stock of the Company and the Subsidiaries
will be free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability (other than those imposed by the
<PAGE>
-4-
Act and the securities or "Blue Sky" laws of certain jurisdictions) or
voting; except as set forth in the Final Memorandum, there are no (i)
options, warrants or other rights to purchase from the Company or the
Subsidiaries, (ii) agreements or other obligations of the Company or the
Subsidiaries to issue or (iii) other rights to convert any obligation into,
or exchange any securities for, shares of capital stock of or ownership
interests in the Company or any of the Subsidiaries outstanding. Except for
the Subsidiaries or as disclosed in the Final Memorandum, the Company does
not own, directly or indirectly, any shares of capital stock or any other
equity or long-term debt securities or have any equity interest in any
firm, partnership, joint venture or other entity other than the entities
listed on Schedule 2.
----------
(c) Each of the Company and the Subsidiaries has been duly
incorporated, is validly existing and is in good standing as a corporation
under the laws of its respective jurisdiction of incorporation, with all
requisite corporate power and authority to own its properties and conduct
its business as now conducted and as described in the Final Memorandum;
each of the Company and the Subsidiaries is duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions where
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect
on the general affairs, management, business, condition (financial or
otherwise), prospects or results of operations of the Company and the
Subsidiaries, taken as a whole (any such event, a "Material Adverse
----------------
Effect").
(d) Each of the Company and the Guarantor has all requisite corporate
power and authority to execute, deliver and perform each of its obligations
under the Notes, the Exchange Notes and the Private Exchange Notes (as
defined in the Registration Rights Agreement). The Notes, the Exchange
Notes and the Private Exchange Notes have each been duly and validly
authorized by the Company and the Guarantor and, when executed by the
Company and authenticated by the Trustee in accordance with the provisions
of the Indenture and, in the case of the Notes, when delivered to and paid
for by the Initial Purchaser in accordance with the terms of this
Agreement, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company and
<PAGE>
-5-
the Guarantor, entitled to the benefits of the Indenture and enforceable
against the Company and the Guarantor in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(e) Each of the Company and the Guarantor has all requisite corporate
power and authority to execute, deliver and perform its obligations under
the Indenture. The Indenture meets the requirements for qualification
under the Trust Indenture Act of 1939, as amended (the "TIA"). The
---
Indenture has been duly and validly authorized by the Company and the
Guarantor and, when executed and delivered by the Company and the Guarantor
(assuming the due authorization, execution and delivery by the Trustee),
will constitute a valid and legally binding agreement of the Company and
the Guarantor, enforceable against the Company and the Guarantor in
accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(f) Each of the Company and the Guarantor has all requisite corporate
power and authority to execute, deliver and perform its obligations under
the Registration Rights Agreement. The Registration Rights Agreement has
been duly and validly authorized by the Company and the Guarantor and, when
executed and delivered by the Company and the Guarantor, will constitute a
valid and legally binding agreement of the Company and the Guarantor
enforceable against the Company and the Guarantor in accordance with its
terms, except that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws
and public policy considerations.
<PAGE>
-6-
(g) Each of the Company and the Guarantor has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby.
This Agreement and the transactions contemplated hereby have been duly and
validly authorized, executed and delivered by the Company and the
Guarantor.
(h) No consent, approval, authorization or order of any court,
governmental agency or body or third party is required for the performance
of this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except such as have been obtained and
such as may be required under state securities or "Blue Sky" laws in
connection with the purchase and resale of the Notes by the Initial
Purchaser. None of the Company or the Subsidiaries is (i) in violation of
its certificate of incorporation or bylaws (or similar organizational
document), (ii) in breach or violation of any statute, judgment, decree,
order, rule or regulation applicable to it or any of its respective
properties or assets, except for any such breach or violation that would
not, individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred that, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument to which it
is a party or to which it or its respective properties or assets is subject
(collectively, "Contracts"), except for any such breach, default, violation
---------
or event that would not, individually or in the aggregate, have a Material
Adverse Effect.
(i) The execution, delivery and performance by the Company of this
Agreement, the Indenture and the Registration Rights Agreement, the Credit
Agreement and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and sale of the Notes to the Initial Purchaser) and the
fulfillment of the terms hereof and thereof will not conflict with or
constitute or result in a breach of or a default under (or an event that
with notice or passage of time or both would constitute a default under) or
violation of any of (i) the terms or provisions of any Contract, except for
any such conflict, breach, violation,
<PAGE>
-7-
default or event that would not, individually or in the aggregate, have a
Material Adverse Effect, (ii) the certificate of incorporation or bylaws
(or similar organizational document) of the Company or any of the
Subsidiaries or (iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8
hereof) any statute, judgment, decree, order, rule or regulation applicable
to the Company or any of the Subsidiaries or any of their respective
properties or assets, except for any such conflict, breach or violation
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(j) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Amended and
Restated Credit Agreement. The Amended and Restated Credit Agreement has
been duly and validly authorized by the Company and, when executed and
delivered by the Company, will constitute a valid and legally binding
agreement of the Company enforceable against the Company in accordance with
its terms, except that the enforcement thereof may be subject to (a)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (b) general principles of equity and the discretion of
any court before which any proceeding therefor may be brought.
(k) The audited consolidated financial statements of the Company and
the Subsidiaries included in the Final Memorandum, taken as a whole,
present fairly in all material respects the financial position, results of
operations and cash flows of the Company and the Subsidiaries,
respectively, at the dates and for the periods to which they relate and
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise stated
therein. The summary and selected financial and statistical data in the
Final Memorandum present fairly, taken as a whole, in all material respects
the information shown therein and have been prepared and compiled on a
basis consistent with the audited financial statements included therein,
except as otherwise stated therein. Deloitte & Touche LLP (the
"Independent Accountant") is an independent public accounting firm within
-----------------------
the meaning of the Act and the rules and regulations promulgated
thereunder.
<PAGE>
-8-
(l) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (ii) have been
------------
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and (iii) have been properly
computed on the bases described therein; the assumptions used in the
preparation of the pro forma financial data and other pro forma financial
information included in the Final Memorandum are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(m) There is not pending or, to the knowledge of the Company,
threatened any action, suit, proceeding, inquiry or investigation to which
the Company or any of the Subsidiaries is a party, or to which the property
or assets of the Company or any of the Subsidiaries are subject, before or
brought by any court, arbitrator or governmental agency or body that, if
determined adversely to the Company or the Subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect or that
seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Notes to be sold hereunder or the
consummation of the other transactions described in the Final Memorandum.
(n) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all patents, trademarks, service
marks, trade names, copyrights and know-how necessary to conduct the
businesses now or proposed to be operated by it as described in the Final
Memorandum, and, except as described in the Final Memorandum, none of the
Company or the Subsidiaries has received any notice of infringement of or
conflict with (or knows of any such infringement of or conflict with)
asserted rights of others with respect to any patents, trademarks, service
marks, trade names, copyrights or know-how that, if such assertion of
infringement or conflict were sustained, would, individually or in the
aggregate, have a Material Adverse Effect.
(o) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has
<PAGE>
-9-
made all declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, presently required or necessary to own or lease, as
the case may be, and to operate its respective properties and to carry on
its respective businesses as now or proposed to be conducted as set forth
in the Final Memorandum ("Permits"), except where the failure to obtain
-------
such Permits would not, individually or in the aggregate, have a Material
Adverse Effect; each of the Company and the Subsidiaries has fulfilled and
performed all of its obligations with respect to such Permits and no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit; and none of the
Company or the Subsidiaries has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as
described in the Final Memorandum and except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(p) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described therein, (i) none of the
Company or the Subsidiaries has incurred any liabilities or obligations,
direct or contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary course of
business, which liabilities, obligations, transactions or contracts would,
individually or in the aggregate, be material to the general affairs,
management, business, condition (financial or otherwise), prospects or
results of operations of the Company and its Subsidiaries, taken as a whole
(a "Material Change"), (ii) none of the Company or the Subsidiaries has
---------------
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock and (iii) there shall not have been any change in the capital stock
or long-term indebtedness of the Company or the Subsidiaries that would,
individually or in the aggregate, be a Material Change.
(q) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as
due thereon; and other than tax deficiencies that
<PAGE>
-10-
the Company or any Subsidiary is contesting in good faith and for which the
Company or such Subsidiary has provided adequate reserves, there is no tax
deficiency that has been asserted against the Company or any of the
Subsidiaries that would have, individually or in the aggregate, a Material
Adverse Effect.
(r) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources that the Company believe to
be reliable and accurate.
(s) None of the Company, the Subsidiaries or any agent acting on their
behalf has taken or will take any action that might cause this Agreement or
the sale of the Notes to violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or as
the same may hereafter be in effect, on the Closing Date.
(t) Each of the Company and the Subsidiaries has good and marketable
title to all real property and good title to all personal property
described in the Final Memorandum as being owned by it and a valid
leasehold interest in the real and personal property described in the Final
Memorandum as being leased by it free and clear of all liens, charges,
encumbrances or restrictions, except as described in the Final Memorandum
or to the extent the failure to have such title or the existence of such
liens, charges, encumbrances or restrictions would not, individually or in
the aggregate, have a Material Adverse Effect. All leases, contracts and
agreements to which any of the Company or the Subsidiaries is a party or by
which any of them is bound are valid and enforceable against the Company or
such Subsidiary, are valid and enforceable against the other party or
parties thereto and are in full force and effect with only such exceptions
as would not, individually or in the aggregate, have a Material Adverse
Effect.
(u) There are no legal or governmental proceedings involving or
affecting the Company or the Subsidiaries or any of their respective
properties or assets that would be required to be described in a prospectus
pursuant to the Act that are not described in the Final Memorandum, nor are
there any material contracts or other documents that would be required to
be described in a prospectus pursuant to the Act that are not described in
the Final Memorandum.
<PAGE>
-11-
(v) Except as would not, individually or in the aggregate, have a
Material Adverse Effect (A) each of the Company and the Subsidiaries is in
compliance with and not subject to liability under applicable Environmental
Laws, (B) each of the Company and the Subsidiaries has made all filings and
provided all notices required under any applicable Environmental Law, has
and is in compliance with all Permits required under any applicable
Environmental Laws and each of them is in full force and effect, (C) there
is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice of violation, investigation, proceeding, notice or demand
letter or request for information pending or, to the knowledge of the
Company or any of the Subsidiaries, threatened against the Company or any
of the Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law
with respect to any assets, facility or property owned, operated, leased or
controlled by the Company or the Subsidiaries, (E) none of the Company or
the Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or
------
any comparable state law, (F) no property or facility of the Company or the
Subsidiaries is (i) listed or proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA or on any comparable list maintained by any
state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common law
and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public or
employee health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges, releases or
threatened releases of hazardous materials, into the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata), (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of hazardous materials and (iii) underground and above ground
storage tanks, and related piping, and emissions, discharges, releases or
threatened releases therefrom.
<PAGE>
-12-
(w) There is no strike, labor dispute, slowdown or work stoppage with
the employees of the Company or the Subsidiaries that is pending or, to the
knowledge of the Company or the Subsidiaries, threatened.
(x) Each of the Company and the Subsidiaries carries insurance in such
amounts and covering such risks as in its reasonable determination are
adequate for the conduct of its business and the value of its properties.
(y) None of the Company or the Subsidiaries has any liability for any
prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other
plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or the Subsidiaries makes
-----
or ever has made a contribution and in which any employee of the Company or
the Subsidiaries is or has ever been a participant. With respect to such
plans, the Company and the Subsidiaries are in compliance in all material
respects with all applicable provisions of ERISA.
(z) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
that provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(aa) None of the Company or the Subsidiaries will be an "investment
company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
(bb) The Notes, the Exchange Notes, the Indenture and the Registration
Rights Agreement will conform in all material respects to the descriptions
thereof in the Final Memorandum.
(cc) No holder of securities of the Company or any Subsidiary will be
entitled to have such securities regis-
<PAGE>
-13-
tered under the registration statements required to be filed by the Company
pursuant to the Registration Rights Agreement other than as expressly
permitted thereby.
(dd) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of each of the Company and the Subsidiaries (each on a
consolidated basis) will exceed the sum of its stated liabilities and
identified contingent liabilities; none of the Company or the Subsidiaries
(each on a consolidated basis) is, nor will any of the Company or the
Subsidiaries (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, (a) left with unreasonably small
capital with which to carry on its business as it is proposed to be
conducted, (b) unable to pay its debts (contingent or otherwise) as they
mature or (c) otherwise insolvent.
(ee) None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any "security" (as
defined in the Act) that is or could be integrated with the sale of the
Notes in a manner that would require the registration under the Act of the
Notes or (ii) engaged in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Notes or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
(ff) Assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof, it is not necessary in
connection with the offer, sale and delivery of the Notes to the Initial
Purchaser in the manner contemplated by this Agreement to register any of
the Notes under the Act or to qualify the Indenture under the TIA.
(gg) No securities of the Company or any Subsidiary are of the same
class (within the meaning of Rule 144A under the Act) as the Notes and
listed on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
<PAGE>
-14-
(hh) None of the Company or the Subsidiaries has taken, nor will any
of them take, directly or indirectly, any action designed to, or that might
be reasonably expected to, cause or result in stabilization or manipulation
of the price of the Notes.
(ii) To the extent executed, the Company will have delivered to the
Initial Purchaser true and correct copies of the purchase and sale
agreement, as amended (the "Goodyear Purchase and Sale Agreement"), dated
------------------------------------
on or prior to the Closing Date, between the Company, Holdings and
Goodyear-Jackson, and the purchase and sale agreement, as amended, between
the Company, Holdings and Eagle-Picher, on or prior to the Closing Date
(the "Eagle-Picher Purchase and Sale Agreement" and, together with the
----------------------------------------
Goodyear Purchase and Sale Agreement, the "Purchase and Sale Agreements"),
----------------------------
that have been executed and delivered prior to the date of this Agreement,
together with all related documents, instruments and agreements and all
schedules, exhibits, appendices and attachments thereto; there have been no
material amendments, alterations, modifications or waivers of any of the
provisions of the Purchase and Sale Agreements since the date of such
execution or from the form in which they have been most recently delivered
to the Initial Purchaser prior to the date of this Agreement; there exists
as of the date hereof and will exist on the Closing Date, after giving
effect to the transactions contemplated by this Agreement, no event or
condition which would constitute a default or an event of default (in each
case as defined in the Amended and Restated Credit Agreement); to the best
knowledge of the Company after due inquiry, each of the representations and
warranties of Goodyear-Jackson and Eagle-Picher contained in the Goodyear-
Jackson Purchase and Sale Agreement and the Eagle-Picher Purchase and Sale
Agreement, respectively, are true in all material respects on the date
hereof; the Company has no reasonable basis to believe that the
transactions contemplated by the Purchase and Sale Agreements will not be
consummated in accordance with their respective terms.
Any certificate signed by any officer of the Company or the Subsidiaries
and delivered to the Initial Purchaser or to counsel for the Initial Purchaser
shall be deemed a joint and several representation and warranty by the Company
and each of the Subsidiaries to the Initial Purchaser as to the matters covered
thereby.
<PAGE>
-15-
3. Purchase, Sale and Delivery of the Notes. On the basis of the
----------------------------------------
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser and the Initial Purchaser agrees to
purchase from the Company, the Notes at 97% of their principal amount. One or
more certificates in definitive form for the Notes that the Initial Purchaser
has agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchaser requests upon notice
to the Company at least 36 hours prior to the Closing Date, shall be delivered
by or on behalf of the Company to the Initial Purchaser, against payment by or
on behalf of the Initial Purchaser of the purchase price therefor by wire
transfer (immediately available funds), to such account or accounts as the
Company shall specify prior to the Closing Date, or by such means as the parties
hereto shall agree prior to the Closing Date. Such delivery of and payment for
the Notes shall be made at the offices of White & Case, 1155 Avenue of the
Americas, New York, New York at 9:00 A.M., New York time, on July 10, 1997, or
at such other place, time or date as the Initial Purchaser, on the one hand, and
the Company, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Company
------------
will make such certificate or certificates for the Notes available for checking
and packaging by the Initial Purchaser at the offices of BT Securities
Corporation in New York, New York, or at such other place as BT Securities
Corporation may designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes to
---------------------------------
make an offering of the Notes at the price and upon the terms set forth in the
Final Memorandum, as soon as practicable after this Agreement is entered into
and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company and the Guarantor. Each of the Company and
------------------------------------------
the Guarantor, jointly and severally, covenant and agree with the Initial
Purchaser that:
(a) The Company and the Guarantor will not amend or supplement the
Final Memorandum or any amendment or supplement thereto of which the
Initial Purchaser shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchaser shall not have given its
consent. The Company and the Guarantor will promptly, upon the reasonable
request of the Initial
<PAGE>
-16-
Purchaser or counsel for the Initial Purchaser, make any amendments or
supplements to the Preliminary Memorandum or the Final Memorandum that may
be necessary or advisable in connection with the resale of the Notes by the
Initial Purchaser.
(b) The Company and the Guarantor will cooperate with the Initial
Purchaser in arranging for the qualification of the Notes for offering and
sale under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchaser may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the Notes;
provided, however, that in connection therewith, the Company shall not be
-------- -------
required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject themselves to
taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by the
Initial Purchaser of the Notes or the Private Exchange Notes, any event
occurs or information becomes known as a result of which the Final
Memorandum as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Final Memorandum to comply with
applicable law, the Company and the Guarantor will promptly notify the
Initial Purchaser thereof and will prepare, at the expense of the Company
and the Guarantor, an amendment or supplement to the Final Memorandum that
corrects such statement or omission or effects such compliance.
(d) The Company and the Guarantor will, without charge, provide to the
Initial Purchaser and to counsel for the Initial Purchaser as many copies
of the Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchaser may reasonably request.
(e) The Company will apply the net proceeds from the sale of the Notes
as set forth under "Use of Proceeds" in the Final Memorandum.
<PAGE>
-17-
(f) For so long as the Notes remain outstanding, the Company and the
Guarantor will furnish to the Initial Purchaser copies of all reports and
other communications (financial or otherwise) furnished by the Company to
the Trustee, or the holders of the Notes and, as soon as available, copies
of any reports or financial statements furnished to or filed by the Company
with the Commission or any national securities exchange on which any class
of securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the Initial
Purchaser, as soon as it has been prepared, a copy of any unaudited interim
financial statements of the Company for any period subsequent to the period
covered by the most recent financial statements appearing in the Final
Memorandum.
(h) None of the Company, the Subsidiaries or any of their Affiliates
will sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any "security" (as defined in the Act) that could be
integrated with the sale of the Notes in a manner that would require the
registration under the Act of the Notes.
(i) The Company and the Guarantor will not, and will not permit any of
the Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Notes or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Notes remain outstanding, the Company
and the Guarantor will make available, upon request, to any seller of such
Notes the information specified in Rule 144A(d)(4) under the Act, unless
the Company is then subject to Section 13 or 15(d) of the Exchange Act.
(k) The Company will use their best efforts to (i) permit the Notes to
be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the Private
Offerings, Resales and Trading through Automated Linkages market (the
"Portal Market") and (ii) permit the Notes to be eligible for clearance and
--------------
settlement through The Depository Trust Company.
<PAGE>
-18-
6. Expenses. The Company and the Guarantor, jointly and severally, agree
--------
to pay all costs and expenses incident to the performance of its obligations
under this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 11 hereof,
including all costs and expenses incident to (i) the printing, word processing
or other production of documents with respect to the transactions contemplated
hereby, including any costs of printing the Preliminary Memorandum and the Final
Memorandum and any amendment or supplement thereto and any "Blue Sky" memoranda,
(ii) all arrangements relating to the delivery to the Initial Purchaser of
copies of the foregoing documents, (iii) the fees and disbursements of the
counsel, the accountants and any other experts or advisors retained by the
Company, (iv) preparation (including printing), issuance and delivery to the
Initial Purchaser of the Notes, (v) the qualification of the Notes under state
securities and "Blue Sky" laws, including filing fees and fees and disbursements
of counsel for the Initial Purchaser relating thereto, (vi) expenses in
connection with any meetings with prospective investors in the Notes, (vii) fees
and expenses of the Trustee including fees and expenses of counsel, (viii) all
expenses and listing fees incurred in connection with the application for
quotation of the Notes on the PORTAL Market and (ix) any fees charged by
investment rating agencies for the rating of the Notes. If the sale of the
Notes provided for herein is not consummated because any condition to the
obligations of the Initial Purchaser set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder (other
than solely by reason of a default by the Initial Purchaser of its obligations
hereunder after all conditions hereunder have been satisfied in accordance
herewith), the Company agrees to promptly reimburse the Initial Purchaser upon
demand for all out-of-pocket expenses (including fees, disbursements and charges
of Cahill Gordon & Reindel, counsel for the Initial Purchaser) that shall have
been incurred by the Initial Purchaser in connection with the proposed purchase
and sale of the Notes.
7. Conditions of the Initial Purchaser's Obligations. The obligation of
-------------------------------------------------
the Initial Purchaser to purchase and pay for the Notes shall, in its sole
discretion, be subject to the satisfaction or waiver of the following conditions
on or prior to the Closing Date:
<PAGE>
-19-
(a) On the Closing Date, the Initial Purchaser shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, from Jaffe, Raitt, Heuer & Weiss, counsel for the Company and
the Guarantor, in form and substance satisfactory to counsel for the
Initial Purchaser, to the effect that:
(i) Each of the Company and the Subsidiaries is duly
incorporated, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation and has all requisite
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Final Memorandum.
Each of the Company and the Subsidiaries is duly qualified as a
foreign corporation and in good standing in each jurisdiction where
the ownership or leasing of its properties or the conduct of its
business requires such qualification.
(ii) The Company has the capitalization set forth in the
Final Memorandum; all of the outstanding shares of capital stock of
the Company and the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights; except as set forth in
the Final Memorandum, all of the outstanding shares of capital stock
of the Subsidiaries are owned, directly or indirectly, by the Company,
free and clear of all perfected security interests and, to the
knowledge of such counsel, free and clear of all other liens,
encumbrances, equities and claims or restrictions on transferability
(other than those imposed by the Act and the securities or "Blue Sky"
laws of certain jurisdictions) or voting.
(iii) Except as set forth in the Final Memorandum (A) no
options, warrants or other rights to purchase from the Company or the
Subsidiaries shares of capital stock or ownership interests in the
Company or the Subsidiaries are outstanding, (B) no agreements or
other obligations of the Company or the Subsidiaries to issue, or
other rights to cause the Company or the Subsidiaries to convert, any
obligation into, or exchange any securities for, shares of capital
stock or ownership interests in the Company or the Subsidiaries are
outstanding and (C) no holder of securities of the Company or the
Subsidiaries is entitled to have such securities registered under a
registration
<PAGE>
-20-
statement filed by the Company pursuant to the Registration Rights
Agreement.
(iv) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture, the Notes, the Exchange Notes and the Private Exchange
Notes; the Indenture is in sufficient form for qualification under the
TIA; the Indenture has been duly and validly authorized by the Company
and, when duly executed and delivered by the Company (assuming the due
authorization, execution and delivery thereof by the Trustee), will
constitute the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(v) The Notes are in the form contemplated by the Indenture.
The Notes have each been duly and validly authorized by the Company
and when duly executed and delivered by the Company and paid for by
the Initial Purchaser in accordance with the terms of this Agreement
(assuming the due authorization, execution and delivery of the
Indenture by the Trustee and due authentication and delivery of the
Notes by the Trustee in accordance with the Indenture), will
constitute the 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 that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought.
(vi) The Exchange Notes and the Private Exchange Notes have
been duly and validly authorized by the Company, and when the Exchange
Notes and the Private Exchange Notes have been duly executed and
delivered by the Company in accordance with the terms of the
Registration Rights Agreement and the Indenture
<PAGE>
-21-
(assuming the due authorization, execution and delivery of the
Indenture by the Trustee and due authentication and delivery of the
Exchange Notes and the Private Exchange Notes by the Trustee in
accordance with the Indenture), will constitute the 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 that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(vii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement; the Registration Rights Agreement has
been duly and validly authorized by the Company and, when duly
executed and delivered by the Company (assuming due authorization,
execution and delivery thereof by the Initial Purchaser), will
constitute the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that (A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal and
state securities laws and public policy considerations.
(viii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby; this
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the
Company.
(ix) The Indenture, the Notes, the Exchange Notes, the
Registration Rights Agreement, the Amended and Restated Credit
Agreement and the Purchase and
<PAGE>
-22-
Sale Agreements conform in all material respects to the descriptions
thereof contained in the Final Memorandum.
(x) To the knowledge of such counsel no legal or
governmental proceedings are pending or, to the knowledge of such
counsel, threatened to which any of the Company or the Subsidiaries is
a party or to which the property or assets of the Company or the
Subsidiaries are subject that, if determined adversely to the Company
or the Subsidiaries, would result, individually or in the aggregate,
in a Material Adverse Effect, or that seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or
sale of the Notes to be sold hereunder or the consummation of the
other transactions described in the Final Memorandum under the caption
"Use of Proceeds."
(xi) None of the Company or the Subsidiaries is (i) in
violation of its certificate of incorporation or bylaws (or similar
organizational document), (ii) to the knowledge of such counsel, in
breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to it or its respective properties or assets,
except for any such breach or violation that would not, individually
or in the aggregate, have a Material Adverse Effect, or (iii) in
breach or default under (nor has any event occurred that, with notice
or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any Contract known to
such counsel, except for any such breach, default, violation or event
that would not, individually or in the aggregate, have a Material
Adverse Effect.
(xii) The execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement, the Purchase and Sale
Agreements and the Credit Agreement and the consummation of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Notes to the Initial
Purchaser) will not conflict with or constitute or result in a breach
or a default under (or an event that with notice or passage of time or
both would constitute a default under) or violation of any of (i) the
terms or provisions of any Contract known to such counsel, except for
any such conflict,
<PAGE>
-23-
breach, violation, default or event that would not, individually or in
the aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the
Company or any of the Subsidiaries or (iii) (assuming compliance with
all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial
Purchaser in Section 8 hereof) any statute, judgment, decree, order,
rule or regulation known to such counsel to be applicable to the
Company or the Subsidiaries or any of their respective properties or
assets, except for any such conflict, breach or violation that would
not, individually or in the aggregate, have a Material Adverse Effect.
(xiii) To the knowledge of such counsel, no consent,
approval, authorization or order of any governmental authority is
required for the issuance and sale by the Company of the Notes to the
Initial Purchaser or the other transactions contemplated hereby,
except such as may be required under Blue Sky laws, as to which such
counsel need express no opinion, and those that have previously been
obtained.
(xiv) To the knowledge of such counsel, each of the Company
and the Subsidiaries has obtained all Permits necessary to conduct the
businesses now or proposed to be conducted by it as described in the
Final Memorandum, the lack of which would, individually or in the
aggregate, have a Material Adverse Effect; each of the Company and the
Subsidiaries has fulfilled and performed all of its obligations with
respect to such Permits and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such Permit.
(xv) To the best of such counsel's knowledge, none of the
Company or the Subsidiaries has received any notice of infringement of
or conflict with asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-
how which, if such assertion of infringement or conflict were
sustained, would have a Material Adverse Effect.
<PAGE>
-24-
(xvi) None of the Company or the Subsidiaries is, or
immediately after the sale of the Notes to be sold hereunder and the
application of the proceeds from such sale (as described in the Final
Memorandum under the caption "Use of Proceeds") will be, an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(xvii) No registration under the Act of the Notes is required
in connection with the sale of the Notes to the Initial Purchaser as
contemplated by this Agreement and the Final Memorandum or in
connection with the initial resale of the Notes by the Initial
Purchaser in accordance with Section 8 of this Agreement, and prior to
the commencement of the Exchange Offer (as defined in the Registration
Rights Agreement) or the effectiveness of the Shelf Registration
Statement (as defined in the Registration Rights Agreement), the
Indenture is not required to be qualified under the TIA, in each case
assuming (i) that the purchasers who buy such Notes in the initial
resale thereof are qualified institutional buyers as defined in Rule
144A promulgated under the Act ("QIBs") or accredited investors as
defined in Rule 501(a) (1), (2), (3) or (7) promulgated under the Act
("Accredited Investors"), (ii) the accuracy of the Initial Purchaser's
representations in Section 8 and those of the Company contained in
this Agreement regarding the absence of a general solicitation in
connection with the sale of such Notes to the Initial Purchaser and
the initial resale thereof and (iii) the due performance by the
Initial Purchaser of the agreements set forth in Section 8 hereof.
(xviii) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Notes will violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
(xix) The Credit Agreement has been duly authorized,
executed and delivered by the Company and Holdings.
(xx) The Purchase and Sale Agreements have been duly
authorized, executed and delivered by the Company and Holdings, to the
extent a party thereto.
<PAGE>
-25-
At the time the foregoing opinion is delivered, Jaffe, Raitt, Heuer & Weiss
shall additionally state that it has participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company, representatives of the Initial Purchaser and
counsel for the Initial Purchaser, at which conferences the contents of the
Final Memorandum and related matters were discussed, and, although it has not
independently verified and is not passing upon and assumes no responsibility for
the accuracy, completeness or fairness of the statements contained in the Final
Memorandum (except to the extent specified in subsection 7(a)(ix)), no facts
have come to its attention that lead it to believe that the Final Memorandum, on
the date thereof or at the Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such firm need express no opinion with respect to the financial statements
and related notes thereto and the other financial, statistical and accounting
data included in the Final Memorandum). The opinion of Jaffe, Raitt, Heuer &
Weiss described in this Section shall be rendered to the Initial Purchaser at
the request of the Company and shall so state therein.
References to the Final Memorandum in this subsection (a) shall include any
amendment or supplement thereto prepared in accordance with the provisions of
this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchaser shall have received the
opinion, in form and substance satisfactory to the Initial Purchaser, dated as
of the Closing Date and addressed to the Initial Purchaser, of Cahill Gordon &
Reindel, counsel for the Initial Purchaser, with respect to certain legal
matters relating to this Agreement and such other related matters as the Initial
Purchaser may reasonably require. In rendering such opinion, Cahill Gordon &
Reindel shall have received and may rely upon such certificates and other
documents and information as it may reasonably request to pass upon such
matters.
(c) The Initial Purchaser shall have received from the Independent
Accountant a "comfort letter" dated the date hereof and the Closing Date, in
form and substance satisfactory to counsel for the Initial Purchaser.
<PAGE>
-26-
(d) The representations and warranties of the Company contained in
this Agreement shall be true and correct on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing Date; the
statements of the Company's officers made pursuant to any certificate
delivered in accordance with the provisions hereof shall be true and
correct on and as of the date made and on and as of the Closing Date; the
Company shall have performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to the Closing Date; and, except as described in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date hereof),
subsequent to the date of the most recent financial statements in such
Final Memorandum, there shall have been no event or development that,
individually or in the aggregate, has or would be reasonably likely to have
a Material Adverse Effect.
(e) The sale of the Notes hereunder shall not be enjoined (temporarily
or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), the conduct of the business and operations of the
Company or the Subsidiaries shall not have been interfered with by strike,
fire, flood, hurricane, accident or other calamity (whether or not insured)
or by any court or governmental action, order or decree, and, except as
otherwise stated therein, the properties of the Company or the Subsidiaries
shall not have sustained any loss or damage (whether or not insured) as a
result of any such occurrence, except any such interference, loss or damage
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(g) The Initial Purchaser shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of the Company by its
Chairman of the Board, President or any Senior Vice President and the Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Company contained in
this Agreement are true and correct as of the date hereof and as of
the Closing Date, and the Company has performed all covenants and
agreements and satisfied all conditions on its part
<PAGE>
-27-
to be performed or satisfied hereunder at or prior to the Closing
Date;
(ii) At the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or events have occurred, no information has become
known nor does any condition exist that, individually or in the
aggregate, would have a Material Adverse Effect; and
(iii) The sale of the Notes hereunder has not been enjoined
(temporarily or permanently).
(h) The Initial Purchaser shall have received a true and correct copy
of the Amended and Restated Credit Agreement, dated the Closing Date, and
there shall have been no material amendments, alterations, modifications or
waivers of any provisions of the Amended and Restated Credit Agreement;
there exists as of the date hereof and on and as of the Closing Date (after
giving effect to the transactions contemplated by this Agreement and the
application of the proceeds received by the Company from the sale of the
Notes) no condition that would constitute a Default or an Event of Default
(each as defined in the Amended and Restated Credit Agreement) under the
Amended and Restated Credit Agreement.
(i) The Company has no reasonable basis to believe that the
transactions contemplated by each of the Purchase and Sale Agreements will
not be consummated pursuant to their terms; to the best of the Company's
knowledge after due inquiry the representations and warranties of each of
Goodyear-Jackson and Eagle-Picher contained in the Goodyear-Jackson
Purchase and Sale Agreement and the Eagle-Picher Purchase and Sale
Agreement, respectively, are true in all material respects on and as of the
date hereof and on the Closing Date as if made on and as of the Closing
Date.
(j) On the Closing Date, the Initial Purchaser shall have received the
Registration Rights Agreement executed by the Company and such agreement
shall be in full force and effect at all times from and after the Closing
Date.
On or before the Closing Date, the Initial Purchaser and counsel for
the Initial Purchaser shall have received such
<PAGE>
-28-
further documents, opinions, certificates, letters and schedules or instruments
relating to the business, corporate, legal and financial affairs of the Company
and the Subsidiaries as they shall have heretofore reasonably requested from the
Company.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and counsel for the Initial Purchaser. The Company shall
furnish to the Initial Purchaser such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchaser shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. The Initial Purchaser
-------------------------------------------
represents and warrants (as to itself only) that it is a QIB. The Initial
Purchaser agrees with the Company (as to itself only) that (i) it has not and
will not solicit offers for, or offer or sell, the Notes by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act; and (ii) it has and will solicit offers for the
Notes only from, and will offer the Notes only to (A) in the case of offers
inside the United States, (x) persons whom the Initial Purchaser reasonably
believes to be QIBs 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 the Initial Purchaser that each such
account is a QIB 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 under
Rule 144A or (y) a limited number of other institutional investors reasonably
believed by the Initial Purchaser to be Accredited Investors that, prior to
their purchase of the Notes, deliver to the Initial Purchaser a letter
containing the representations and agreements set forth in Annex A to the Final
Memorandum and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
--------
however, that, in the case of this clause (B), in purchasing such Notes such
- - -------
persons are deemed to have represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum.
<PAGE>
-29-
9. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless the Initial Purchaser and the affiliates, directors,
officers, agents, representatives and employees of the Initial Purchaser or
their affiliates, and each person, if any, who controls any Initial Purchaser or
its affiliates within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to which the
Initial Purchaser or such other person may become subject under the Act, the
Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or
any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify the
Notes under the securities or "Blue Sky" laws thereof or filed with any
securities association or securities exchange (each an "Application"); or
-----------
(ii) the omission or alleged omission to state, in any Memorandum
or any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein
not misleading,
and will reimburse, as incurred, the Initial Purchaser and each such other
person for any legal or other expenses incurred by the Initial Purchaser or such
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
-------- -------
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Memorandum or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information concerning the Initial Purchaser furnished
to the Company by the Initial Purchaser specifically for use therein. This
indemnity agreement will be in addition to any liability that the Company may
otherwise have to the indemnified parties. The Company shall not be liable
under this Section 9 for any settlement of any claim
<PAGE>
-30-
or action effected without its prior written consent, which shall not be
unreasonably withheld.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company, its directors, officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in any Memorandum or any amendment or supplement thereto or any
Application, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Memorandum or any amendment or
supplement thereto or any Application, or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
concerning such Initial Purchaser, furnished to the Company by the Initial
Purchaser specifically for use therein; and subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will
be in addition to any liability that the Initial Purchaser may otherwise have to
the indemnified parties. The Initial Purchaser shall not be liable under this
Section 9 for any settlement of any claim or action effected without its
consent, which shall not be unreasonably withheld. The Company shall, without
the prior written consent of the Initial Purchaser, effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
Initial Purchaser is or could have been a party, or indemnity could have been
sought hereunder by the Initial Purchaser, unless such settlement (A) includes
an unconditional written release of the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of the Initial Purchaser.
<PAGE>
-31-
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 9, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof
in writing; but the omission to so notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
- - -------- -------
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in
<PAGE>
-32-
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Initial Purchaser in the case of paragraph (a) of this Section
9 or the Company in the case of paragraph (b) of this Section 9, representing
the indemnified parties under such paragraph (a) or paragraph (b), as the case
may be, who are parties to such action or actions) or (ii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld), unless such
indemnified party waived in writing its rights under this Section 9, in which
case the indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Notes or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, not only such relative benefits but also
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Company on the one hand and the Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by the Initial Purchaser. The relative fault of the
parties 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
<PAGE>
-33-
omission to state a material fact relates to information supplied by the Company
on the one hand, or the Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Initial Purchaser agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), the Initial Purchaser
shall not be obligated to make contributions hereunder that in the aggregate
exceed the total discounts, commissions and other compensation received by the
Initial Purchaser under this Agreement, less the aggregate amount of any damages
that the Initial Purchaser has otherwise been required to pay by reason of the
untrue or alleged untrue statements or the omissions or alleged omissions to
state a material fact, and no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchaser, and each director of the Company, each officer of the Company
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
10. Survival Clause. The respective representations, warranties,
---------------
agreements, covenants, indemnities and other statements of the Company, its
officers and the Initial Purchaser set forth in this Agreement or made by or on
behalf of them pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, the Initial Purchaser or any controlling person
referred to in Section 9 hereof and (ii) delivery of and payment for the Notes.
The respective agreements, covenants, indemnities and other statements set forth
in Sections 6, 9 and 15 hereof shall remain in full force and effect, regardless
of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
-----------
discretion of the Initial Purchaser by notice
<PAGE>
-34-
to the Company given prior to the Closing Date in the event that the Company
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have sustained
any loss or interference with respect to its businesses or properties
from fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any strike, labor dispute, slow down or
work stoppage or any legal or governmental proceeding, which loss or
interference, in the sole judgment of the Initial Purchaser, has had or
has a Material Adverse Effect, or there shall have been, in the sole
judgment of the Initial Purchaser, any event or development that,
individually or in the aggregate, has or could be reasonably likely to
have a Material Adverse Effect (including without limitation a change
in control of the Company), except in each case as described in the
Final Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency or (C) any material change in the financial
markets of the United States which, in the case of (A) or (B) above and
in the sole judgment of the Initial Purchaser, makes it impracticable
or inadvisable to proceed with the offering or the delivery of the
Notes as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
<PAGE>
-35-
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The statements
---------------------------------------------
set forth in the last paragraph on the front cover page and the last two
sentences of the third paragraph under the heading "Private Placement" in the
Final Memorandum (to the extent such statements relate to the Initial Purchaser)
constitute the only information furnished by the Initial Purchaser to the
Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Initial Purchaser, shall be mailed or delivered to BT Securities
Corporation, 130 Liberty Street, New York, New York 10006, Attention: Corporate
Finance Department; if sent to the Company, shall be mailed or delivered to the
Company at Cambridge Industries, Inc., 555 Horace Brown Drive, Madison Heights,
Michigan 48071, Attention: Richard Crawford; with a copy to Jaffe, Raitt, Heuer
& Weiss, One Woodward Avenue, Suite 2400, Detroit, Michigan 48226, Attention:
Peter Sugar, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one business
day after being timely delivered to a next-day courier.
14. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Initial Purchaser, the Company and its respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 9 of this Agreement shall also be for the
benefit of any person or persons who control the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchaser contained in Section 9 of this Agreement
shall also be for the benefit of the directors of the Company, its officers and
any person or persons who control the Company within the meaning of Section 15
of the Act or
<PAGE>
-36-
Section 20 of the Exchange Act. No purchaser of Notes from the Initial Purchaser
will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
--------------
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement by and among the
Company and the Initial Purchaser.
Very truly yours,
CAMBRIDGE INDUSTRIES, INC.,
as Issuer
By: /signature appears here/
-----------------------------------------
Name:
Title:
CE AUTOMOTIVE TRIM SYTEMS, INC.,
as Guarantor
By: /signature appears here/
-----------------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
BT SECURITIES CORPORATION
By: /signature appears here/
-------------------------------
Name:
Title:
<PAGE>
Exhibit 4.2
===============================================================================
INDENTURE
Dated as of July 10, 1997
Among
CAMBRIDGE INDUSTRIES, INC., as Issuer,
each of the Guarantors named herein
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
------------------
up to $130,000,000
10 1/4% Senior Subordinated Notes due 2007, Series A
10 1/4% Senior Subordinated Notes due 2007, Series B
===============================================================================
<PAGE>
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.
(a)(5)............................................. 7.08; 7.10
(b)................................................ 7.08; 7.10; 13.02
(c)................................................ N.A.
311(a)................................................ 7.11
(b)................................................ 7.11
(c)................................................ N.A.
312(a)................................................ 2.05
(b)................................................ 13.04
(c)................................................ 13.04
313(a)................................................ 7.06
(b)(1)............................................. N.A.
(b)(2)............................................. 7.06
(c)................................................ 7.06; 13.02
(d)................................................ 7.06
314(a)................................................ 4.06; 4.08; 13.02
(b)................................................ N.A.
(c)(1)............................................. 13.05
(c)(2)............................................. 13.05
(c)(3)............................................. N.A.
(d)................................................ N.A.
(e)................................................ 13.06
(f)................................................ N.A.
315(a)................................................ 7.01(b)
(b)................................................ 7.05; 13.02
(c)................................................ 7.01(a)
(d)................................................ 7.01(c)
(e)................................................ 6.11
316(a)(last sentence)................................. 2.09
(a)(1)(A).......................................... 6.05
(a)(1)(B).......................................... 6.04
(a)(2)............................................. N.A.
(b)................................................ 6.07
317(a)(1)............................................. 6.08
(a)(2)............................................. 6.09
(b)................................................ 2.04
318(a)................................................ 13.01
(c)................................................ 13.01
</TABLE>
- - --------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
SECTION 1.01. Definitions...................................................................1
SECTION 1.02. Incorporation by Reference of TIA............................................37
SECTION 1.03. Rules of Construction........................................................37
ARTICLE TW
THE NOTES
SECTION 2.01. Form and Dating..............................................................38
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.....................39
SECTION 2.03. Registrar and Paying Agent...................................................40
SECTION 2.04. Paying Agent To Hold Assets in Trust.........................................41
SECTION 2.05. Holder Lists.................................................................41
SECTION 2.06. Transfer and Exchange........................................................42
SECTION 2.07. Replacement Notes............................................................42
SECTION 2.08. Outstanding Notes............................................................43
SECTION 2.09. Treasury Notes...............................................................43
SECTION 2.10. Temporary Notes..............................................................44
SECTION 2.11. Cancellation.................................................................44
SECTION 2.12. Defaulted Interest...........................................................44
SECTION 2.13. CUSIP Numbers................................................................45
SECTION 2.14. Deposit of Moneys............................................................45
SECTION 2.15. Book-Entry Provisions for Global Notes.......................................46
SECTION 2.16. Special Transfer Provisions..................................................47
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee...........................................................50
SECTION 3.02. Selection of Notes To Be Redeemed............................................51
SECTION 3.03. Notice of Redemption.........................................................51
SECTION 3.04. Effect of Notice of Redemption...............................................52
SECTION 3.05. Deposit of Redemption Price..................................................53
SECTION 3.06. Notes Redeemed in Part.......................................................53
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
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ARTICLE FOUR
COVENANTS
<S> <C> <C>
SECTION 4.01. Payment of Notes...............................................................................53
SECTION 4.02. Maintenance of Office or Agency................................................................54
SECTION 4.03. Corporate Existence............................................................................54
SECTION 4.04. Payment of Taxes and Other Claims..............................................................54
SECTION 4.05. Maintenance of Properties and Insurance........................................................55
SECTION 4.06. Compliance Certificate; Notice of Default......................................................55
SECTION 4.07. Compliance with Laws...........................................................................56
SECTION 4.08. Reports to Holders.............................................................................57
SECTION 4.09. Waiver of Stay, Extension or Usury Laws........................................................57
SECTION 4.10. Limitation on Restricted Payments..............................................................58
SECTION 4.11. Limitations on Transactions with Affiliates....................................................60
SECTION 4.12. Limitation on Additional Indebtedness and Issuance of Preferred Stock..........................62
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries........63
SECTION 4.14. Change of Control..............................................................................64
SECTION 4.15. Limitation on Asset Sales......................................................................66
SECTION 4.16. Prohibition on Incurrence of Senior Subordinated Debt..........................................70
SECTION 4.17. Limitation on Liens............................................................................71
SECTION 4.18. Conduct of Business............................................................................71
SECTION 4.19. Limitation on Issuances and Sales of Capital Stock of Wholly Owned Restricted Subsidiaries.....71
SECTION 4.20. Guarantee of the Notes.........................................................................72
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.......................................................73
SECTION 5.02. Successor Corporation Substituted..............................................................75
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE SIX
DEFAULT AND REMEDIES
<S> <C> <C>
SECTION 6.01. Events of Default.....................................................................75
SECTION 6.02. Acceleration..........................................................................77
SECTION 6.03. Other Remedies........................................................................78
SECTION 6.04. Waiver of Past Defaults...............................................................79
SECTION 6.05. Control by Majority...................................................................79
SECTION 6.06. Limitation on Suits...................................................................79
SECTION 6.07. Rights of Holders To Receive Payment..................................................80
SECTION 6.08. Collection Suit by Trustee............................................................80
SECTION 6.09. Trustee May File Proofs of Claim......................................................80
SECTION 6.10. Priorities............................................................................81
SECTION 6.11. Undertaking for Costs.................................................................82
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.....................................................................82
SECTION 7.02. Rights of Trustee.....................................................................84
SECTION 7.03. Individual Rights of Trustee..........................................................85
SECTION 7.04. Trustee's Disclaimer..................................................................85
SECTION 7.05. Notice of Default.....................................................................85
SECTION 7.06. Reports by Trustee to Holders.........................................................86
SECTION 7.07. Compensation and Indemnity............................................................86
SECTION 7.08. Replacement of Trustee................................................................88
SECTION 7.09. Successor Trustee by Merger, Etc......................................................89
SECTION 7.10. Eligibility; Disqualification.........................................................89
SECTION 7.11. Preferential Collection of Claims Against the Company.................................89
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations..............................................90
SECTION 8.02. Legal Defeasance and Covenant Defeasance..............................................91
SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance.................................93
SECTION 8.04. Application of Trust Money............................................................94
SECTION 8.05. Repayment to the Company..............................................................95
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 8.06. Reinstatement..........................................................................................96
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.............................................................................96
SECTION 9.02. With Consent of Holders................................................................................97
SECTION 9.03. Compliance with TIA....................................................................................99
SECTION 9.04. Revocation and Effect of Consents......................................................................99
SECTION 9.05. Notation on or Exchange of Notes......................................................................100
SECTION 9.06. Trustee To Sign Amendments, Etc.......................................................................100
ARTICLE TEN
SUBORDINATION OF NOTES
SECTION 10.01. Notes Subordinated to Senior Debt....................................................................100
SECTION 10.02. No Payment on Notes in Certain Circumstances ........................................................101
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc. ....................................................102
SECTION 10.04. Payments May Be Paid Prior to Dissolution............................................................104
SECTION 10.05. Subrogation..........................................................................................105
SECTION 10.06. Obligations of the Company Unconditional.............................................................105
SECTION 10.07. Notice to Trustee....................................................................................105
SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent.......................................106
SECTION 10.09. Trustee's Relation to Senior Debt....................................................................106
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt......107
SECTION 10.11. Noteholders Authorize Trustee To Effectuate Subordination of Notes...................................108
SECTION 10.12. This Article Ten Not To Prevent Events of Default....................................................108
SECTION 10.13. Trustee's Compensation Not Prejudiced................................................................108
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE ELEVEN
GUARANTEE
<S> <C> <C>
SECTION 11.01. Unconditional Guarantee......................................................................109
SECTION 11.02. Subordination of Guarantee...................................................................110
SECTION 11.03. Severability.................................................................................110
SECTION 11.04. Release of a Guarantor.......................................................................110
SECTION 11.05. Limitation of Guarantor's Liability..........................................................111
SECTION 11.06. Guarantors May Consolidate, etc., on Certain Terms...........................................111
SECTION 11.07. Contribution.................................................................................112
SECTION 11.08. Waiver of Subrogation........................................................................113
SECTION 11.09. Execution of Guarantee.......................................................................114
SECTION 11.10. Waiver of Stay, Extension or Usury Laws......................................................114
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior Debt..................................115
SECTION 12.02. No Payment on Notes in Certain Circumstances.................................................115
SECTION 12.03. Payment Over of Proceeds upon Dissolution, Etc...............................................117
SECTION 12.04. Payments May Be Paid Prior to Dissolution....................................................119
SECTION 12.05. Subrogation..................................................................................119
SECTION 12.06. Obligations of the Guarantors Unconditional..................................................120
SECTION 12.07. Notice to Trustee............................................................................120
SECTION 12.08. Reliance on Judicial Order or Certificate of Liquidating Agent...............................121
SECTION 12.09. Trustee's Relation to Guarantor Senior Debt..................................................121
SECTION 12.10. Subordination Rights Not Impaired by Acts or Omissions of the Guarantors or
Holders of Guarantor Senior Debt.............................................................122
SECTION 12.11. Noteholders Authorize Trustee To Effectuate Subordination of Guarantee Obligations...........122
SECTION 12.12. This Article Twelve Not To Prevent Events of Default.........................................123
</TABLE>
-v-
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 12.13. Trustee's Compensation Not Prejudiced........................................................123
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.................................................................................123
SECTION 13.02. Notices......................................................................................124
SECTION 13.03. Communications by Holders with Other Holders.................................................125
SECTION 13.04. Certificate and Opinion as to Conditions Precedent...........................................125
SECTION 13.05. Statements Required in Certificate or Opinion................................................125
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar....................................................126
SECTION 13.07. Legal Holidays...............................................................................126
SECTION 13.08. Governing Law................................................................................126
SECTION 13.09. No Adverse Interpretation of Other Agreements................................................127
SECTION 13.10. No Recourse Against Others...................................................................127
SECTION 13.11. Successors...................................................................................127
SECTION 13.12. Duplicate Originals..........................................................................127
SECTION 13.13. Severability.................................................................................127
SECTION 13.14. Independence of Covenants....................................................................127
SIGNATURES.....................................................................................................
Exhibit A - Form of Series A Note
Exhibit B - Form of Series B Note
Exhibit C - Form of Legend for Global Notes
Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors
Exhibit E - Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S
Exhibit F - Form of Guarantee
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be part
of this Indenture.
-vi-
<PAGE>
INDENTURE, dated as of July 10, 1997, among CAMBRIDGE INDUSTRIES,
INC., a Delaware corporation (the "Company"), each of the Guarantors named
herein, as guarantors, and STATE STREET BANK AND TRUST COMPANY, as trustee (the
"Trustee").
The Company has duly authorized the creation of an issue of 10 1/4%
Senior Subordinated Notes due 2007, Series A, and 10 1/4% Senior Subordinated
Notes due 2007, Series B, to be issued in exchange for the 10 1/4% Senior
Subordinated Notes due 2007, Series A, pursuant to a registration rights
agreement and, to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture. All things necessary to make the
Notes, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid and binding obligations of the Company and to
make this Indenture a valid and binding agreement of the Company, have been
done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's 10
1/4% Senior Subordinated Notes due 2007, Series A and Series B:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
-----------
"Acceleration Notice" has the meaning provided in Section 6.02.
"Acquired Indebtedness" of any Person means Indebtedness of another
Person and any of its Subsidiaries existing at the time such other Person
becomes a Subsidiary of the referent Person or at the time it merges or
consolidates with the referent Person or any of the referent Person's
Subsidiaries or assumed by the referent Person or any Subsidiary of the referent
Person in connection with the acquisition of assets from such other Person and
in each case not incurred by the referent Person or any Subsidiary of the
referent Person or such other Person in connection with, or in anticipation or
contemplation of, such other Person becoming a Subsidiary of the referent Person
or such acquisition, merger or consolidation.
"Additional Interest" has the meaning provided in the Registration
Rights Agreement.
<PAGE>
-2-
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, and the terms
"controlling" and "controlled" have meanings correlative of the foregoing;
provided, however, that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control. Notwithstanding the
foregoing, no Person (other than the Company or any Restricted Subsidiary of the
Company) in whom a Receivables Subsidiary makes an Investment in connection with
a Qualified Receivables Transaction shall be deemed to be an Affiliate of the
Company or any of its Restricted Subsidiaries solely by reason of such
Investment.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or Co-Registrar.
"Agent Bank" means: Bankers Trust Company or any successor as agent
under the Credit Agreement.
"all or substantially all" shall have the meaning given such phrase
in the Revised Model Business Corporation Act.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprises any division or line of business
of such Person or any other properties or assets of such Person other than in
the ordinary course of business.
"Asset Sale" means (i) the sale, lease (other than pursuant to
operating leases of real or personal property entered into in the ordinary
course of business), conveyance or other disposition (collectively,
"dispositions") of any assets
<PAGE>
-3-
(including by way of a Sale/Leaseback Transaction) other than dispositions of
inventory in the ordinary course of business; (ii) the issuance by any
Restricted Subsidiary of Equity Interests of such Restricted Subsidiary; and
(iii) the disposition by the Company, in the case of either clause (i), (ii) or
(iii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $1,000,000 or (b) for net proceeds in
excess of $1,000,000. Notwithstanding the foregoing, the following will not be
deemed to be Asset Sales: (i) a disposition of assets by the Company or a
Restricted Subsidiary to the Company or a Wholly Owned Restricted Subsidiary;
(ii) an issuance of (a) Equity Interests by a Restricted Subsidiary to the
Company or to a Wholly Owned Restricted Subsidiary, (b) Preferred Stock issued
in accordance with the Fixed Charge Coverage Ratio under Section 4.12 or (c)
Permitted Subsidiary Preferred Stock; (iii) a disposition consisting of a
Permitted Investment or Restricted Payment permitted by Section 4.10; (iv) the
disposition of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole permitted by the covenant described
above under Section 5.01; (v) the surrender or waiver of contract rights or the
settlement, release or surrender of contract, tort or other claims of any kind;
(vi) the grant in the ordinary course of business of any non-exclusive license
of patents, trademarks, registrations therefor and other similar intellectual
property; (vii) sales of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof, including cash in an
amount at least equal to 75% of the book value thereof as determined in
accordance with GAAP; (viii) transfers of accounts receivable and related assets
of the type specified in the definition of "Qualified Receivables Transaction"
(or a fractional undivided interest therein) by a Receivables Subsidiary in a
Qualified Receivables Transaction; and (ix) the sale or discount, in each case
without recourse, of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof. For
the purposes of clause (viii), notes received in exchange for the transfer of
accounts receivable and related assets shall be deemed cash if the Receivables
Subsidiary or other payor is required to repay said notes as soon as practicable
from available cash collections less amounts required to be established as
reserves pursuant to contractual agreements with entities that are not
Affiliates of the Company entered into as part of a Qualified Receivables
Transaction.
<PAGE>
-4-
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP or,
in the event that such rate of interest is not reasonably determinable,
discounted at the rate of interest borne by the Notes) of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such Sale and Leaseback Transaction (including any period for which such
lease has been extended or may, at the option of the lessor, be extended).
"Bain" means Bain Capital, Inc., a Delaware corporation.
"Bain Funds" means Bain Capital Fund V, L.P., Bain Capital Fund V-B,
L.P., Bain Capital V Mezzanine Fund, L.P., Bain Capital Fund IV, L.P., Bain
Capital Fund IV-B, L.P., BCIP Associates, and BCIP Trust Associates, L.P.
"Bankruptcy Law" means Title 11, United States Code or any similar
federal, state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 10.02.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Borrowing Base" means the sum of (i) 85% of the net book value
(after allowance for doubtful accounts) of accounts receivable of the Company
and the Guarantors arising in the ordinary course of business from the sale of
products sold by the Company and the Guarantors or the provision of services by
the Company and the Guarantors and (ii) 65% of the net book value (after
appropriate write-downs of obsolescence, quality problems and the like) of
inventories of the Company and the Guarantors held in the ordinary course of
business, in each case on a consolidated basis with Restricted Subsidiaries in
accordance with generally accepted accounting principles.
<PAGE>
-5-
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligation at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $100,000,000; (v)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; and (vi) investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (i) through (v).
<PAGE>
-6-
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition, in one or a series
of related transactions, of all or substantially all of the assets of Holdings
or the Company to any Person or group (as such term is used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) other than the Principals or their Related
Parties; (ii) the adoption of a plan relating to the liquidation or dissolution
of Holdings or the Company; (iii) any Person or group (as defined above), other
than the Principals or their Related Parties, is or becomes the "beneficial
owner" (as defined in Rules 13d-2 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 25% of the total voting power of the Voting Stock of the Company, including
by way of merger, consolidation or otherwise; provided that the Principals or
their Related Parties "beneficially own" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company than
such other Person (for the purposes of this clause); (iii) any Person shall be
deemed to beneficially own any Voting Stock of a corporation held by any other
corporation (the "parent corporation"), if such Person "beneficially owns" (with
respect to any Person or group other than the Principals or their Related
Parties, as defined in clause (iii) above or, with respect to the Principals or
their Related Parties, as defined in the provision to clause (iii) above),
directly or indirectly, more than 50% of the voting power of the Voting Stock of
such parent corporation); and (iv) the first day on which a majority of the
members of the Board of Directors of Holdings or the Company are not Continuing
Directors.
"Change of Control Offer" has the meaning provided in Section 4.14.
"Change of Control Payment Date" has the meaning provided in
Section 4.14.
"Commission" or "SEC" means the Securities and Exchange Commission.
"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any Subsidiary designed to protect the Company or any of its Subsidiaries
<PAGE>
-7-
against fluctuations in the price of commodities actually used in the ordinary
course of business of the Company and its Subsidiaries.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor and also includes for the purposes of any provision contained herein
and required by the TIA any other obligor on the Notes.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, plus (a) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an asset sale, to the extent such losses were deducted in computing
Consolidated Net Income, plus (b) provision for taxes based on income or profits
of such Person for such period, to the extent such provision for taxes was
deducted in computing Consolidated Net Income, plus (c) Consolidated Interest
Expense of such Person for such period, to the extent such amount was deducted
in computing Consolidated Net Income, plus (d) depreciation and amortization
(including amortization of goodwill and other intangibles and amortization of
deferred compensation in respect of non-cash compensation but excluding
amortization of prepaid cash expenses that were paid in a prior period) of such
Person for such period, to the extent such depreciation and amortization were
deducted in computing Consolidated Net Income, in each case, for such period
without duplication on a consolidated basis and determined in accordance with
GAAP.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business), (B) Consolidated
Interest Expense and (C) Consolidated Non-cash Charges.
<PAGE>
-8-
"Consolidated Interest Expense" means, with respect to any Person for
any period, the aggregate consolidated interest, whether expensed or
capitalized, paid, accrued or scheduled to be paid or accrued, of such Person
and its Restricted Subsidiaries for such period (including: (i) amortization of
original issue discount and non-cash interest payments and accruals; (ii) the
interest portion of all deferred payment obligations, calculated in accordance
with the effective interest method; and (iii) the interest component of any
payments associated with Capitalized Lease Obligations and net payments (if any)
pursuant to Hedging Obligations, in each case, to the extent attributable to
such period, but excluding (x) commissions, discounts and other fees and charges
incurred with respect to letters of credit and bankers' acceptances financing
and (y) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or secured by a Lien on assets of such Person)
determined in accordance with GAAP. Consolidated Interest Expense of the Company
shall not include any prepayment premiums or amortization of original issue
discount or deferred financing costs, to the extent such amounts are incurred as
a result of the prepayment on the date of this Indenture of any Indebtedness of
the Company with the proceeds of the Notes.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of cash dividends or cash
distributions paid to the referent Person or a Wholly Owned Subsidiary thereof
that is a Guarantor or Foreign Subsidiary or both; (ii) the Net Income of any
Person that is a Restricted Subsidiary (other than a Wholly Owned Restricted
Subsidiary that is a Guarantor or Foreign Subsidiary or both) shall be included
only to the extent of the amount of cash dividends or cash distributions paid to
the referent Person or a Wholly Owned Restricted Subsidiary thereof that is a
Guarantor; (iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded; (iv) all extraordinary gains and extraordinary losses and any unusual
or non-recurring charges recorded or accrued in connection with the issuance of
the Notes (including without limitation the amounts described in the last
sentence of the definition of Consolidated Interest Expense) shall be excluded;
(v) the cumulative effect of a change in accounting principles shall be
excluded;
<PAGE>
-9-
and (vi) gains from Asset Sales (without regard to the $1.0 million limitation
set forth in the definition thereof) or abandonments or reserves relating
thereto and the related tax effects according to GAAP shall be excluded.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person,
for any period, the aggregate (A) depreciation, (B) amortization and (C) other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP (excluding
for purposes of clause (C) any such charges which require an accrual of or a
reserve for cash charges for any future period).
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company, who: (i) was a member of such
Board of Directors on the date of this Indenture; (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote of a
majority of the Continuing Directors who were members of such Board at the time
of such nomination or election; or (iii) was nominated for election or elected
to such Board of Directors by one or more of the Principals.
"Credit Agreement" means that certain Credit Agreement dated as of
July 10, 1997, among the Company, Holdings, the lenders party thereto from time
to time in their capacities as lenders thereunder and Bankers Trust Company, as
agent (and any successor agent thereunder), together with the related documents
thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing, refunding or otherwise restructuring (including, without limitation,
increasing the amount of available borrowings thereunder or adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
<PAGE>
-10-
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any of its Restricted Subsidiaries in the ordinary course of business
against fluctuation in the values of the currencies of the countries (other than
the United States) in which the Company or its Restricted Subsidiaries conduct
business.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Default Notice" has the meaning provided in Section 10.02.
"Depository" means, with respect to the Notes issued in the form of
one or more Global Notes, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designated Senior Debt" means (a) with respect to the Company, (i)
the Obligations of the Company with respect to the Senior Bank Debt and (ii) any
other Senior Debt of the Company permitted under this Indenture the principal
amount of which at original issuance is $25.0 million or more and is
specifically designated in the instrument evidencing such Senior Debt as
"Designated Senior Debt" by the Company and (b) with respect to any Guarantor,
(i) the Obligations of such Guarantor with respect to the Senior Bank Debt and
(ii) any other Senior Debt of such Guarantor permitted under this Indenture the
principal amount of which at original issuance is $25.0 million or more and is
specifically designated in the instrument evidencing such Senior Debt as
"Designated Senior Debt" by the Company.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Notes and to have satisfied all the obligations under this Indenture relating to
the Notes (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same upon compliance by the Company with the
provisions of Article Eight, except (i) the rights of the Holders of Notes to
receive, from the
<PAGE>
-11-
trust fund described in Article Eight, payment of the principal of and the
interest on such Notes when such payments are due, (ii) the Company's
obligations with respect to the Notes under Sections 2.03 through 2.07, 7.07 and
7.08 and (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder.
"Disqualified Capital Stock" means any Capital Stock 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, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the Holder thereof (other than as a result of a
Change of Control), in whole or in part, on or prior to July 15, 2007.
"Eagle-Picher Acquisition" means the acquisition of all or
substantially all of the assets of the Plastics Division of Eagle-Picher
Industries, Inc. pursuant to a purchase and sale agreement.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" has the meaning provided in paragraph 5 of the
Notes.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the 10 1/4% Senior Subordinated Notes due
2007, Series B, to be issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement.
"Exchange Offer" has the meaning provided in the Registration Rights
Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than the Senior Bank Debt) in existence on the date of this
Indenture, until such amounts are repaid.
<PAGE>
-12-
"Fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Company delivered to the Trustee.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs, assumes, guarantees or redeems
any Indebtedness (other than revolving credit borrowings) or if the Company or
any of its Subsidiaries issues or redeems any preferred stock, in each case
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date of the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Transaction Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter period. For purposes of making the
computation referred to above, acquisitions (including all mergers and
consolidations), dispositions and discontinuance of operations that have been
made by the Company or any of its Subsidiaries during the four-quarter reference
period or subsequent to such reference period and on or prior to the Transaction
Date shall be calculated on a pro forma basis assuming that all such
acquisitions, dispositions and discontinuance of operations had occurred on the
first day of the four-quarter reference period; provided, however, that Fixed
Charges shall be reduced by amounts attributable to operations that are so
disposed of or discontinued only to the extent that the obligations giving rise
to such Fixed Charges would no longer be obligations contributing to the
Company's Fixed Charges subsequent to the Transaction Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (a) Consolidated Interest Expense, (b) commissions,
discounts and other fees and charges incurred with respect to letters of credit
and bankers' acceptances financing, (c) any interest expense on Indebtedness of
another Person that is guaranteed by such Person or secured by a Lien on assets
of such Person, and (d) the product of
<PAGE>
-13-
(i) all cash dividend payments (and non-cash dividend payments in the case of a
Subsidiary of such Person) on any series of preferred stock of such Person or
any Subsidiary of such Person, times (ii) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal,
determined, in each case, on a consolidated basis and in accordance with GAAP.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary
organized under the laws of a country or jurisdiction other than the United
States, any state or territory thereof or the District of Columbia.
"Foreign Subsidiary" means any subsidiary organized and incorporated
in a jurisdiction outside of the United States.
"Funds" means the aggregate amount of U.S. Legal Tender and/or U.S.
Government Obligations deposited with the Trustee pursuant to Article Eight.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect as of the
Issue Date. All ratios and computations based on GAAP contained in this
Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of this Indenture shall be
made without giving effect to (i) the deduction or amortization of any premiums,
fees, and expenses incurred in connection with the Eagle-Picher Acquisition, the
Goodyear-Jackson Acquisition and related financings or any other permitted
incurrence of Indebtedness or Refinancing Indebtedness and (ii) except as
otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 (including non-cash write-ups and
non-cash charges relating to inventory, fixed assets and in-process research and
development, in each case arising in connection with
<PAGE>
-14-
the Eagle-Picher Acquisition and the Goodyear-Jackson Acquisition) and 17
(including non-cash charges relating to intangibles and goodwill arising in
connection with the Eagle-Picher Acquisition and the Goodyear-Jackson
Acquisition).
"Global Notes" means one or more IAI Global Notes, Regulation S
Global Notes and 144A Global Notes.
"Goodyear-Jackson Acquisition" means the acquisition by the Company
of the engineered composites business of The Goodyear Tire and Rubber Company
pursuant to a purchase and sale agreement.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantor" means: (i) CE Automotive Trim Systems, Inc.; and (ii)
each of the Company's Restricted Subsidiaries located in the U.S. that in the
future executes a supplemental indenture in which such Restricted Subsidiary
agrees to be bound by the terms of this Indenture as a Guarantor; provided that
any Person constituting a Guarantor as described above shall cease to constitute
a Guarantor when its respective Guarantee is released in accordance with the
terms of this Indenture.
"Guarantor Senior Debt" means with respect to any Guarantor, the
principal of, premium, if any, and interest (including any Post-Petition
Interest) on any Indebtedness of a Guarantor, whether outstanding on the Issue
Date or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Guarantee of such
Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior
Debt" shall also include the principal of, premium, if any, interest (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) on, and all other
amounts owing in respect of, (x) all monetary obligations of every nature of a
Guarantor under the Credit Agreement, including, without limitation, obligations
to pay principal and interest, reimbursement obligations under letters of
credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and
<PAGE>
-15-
(z) all obligations under Currency Agreements, in each case whether outstanding
on the Issue Date or thereafter incurred. Notwithstanding the foregoing,
"Guarantor Senior Debt" shall not include (i) any Indebtedness of such Guarantor
to a Subsidiary of such Guarantor or any Affiliate of such Guarantor or any of
such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of,
any shareholder, director, officer or employee of such Guarantor or any
Subsidiary of such Guarantor (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal, state,
local or other taxes owed or owing by such Guarantor, (vi) Indebtedness incurred
in violation of Section 4.12 (but, as to any such obligation, no such violation
shall be deemed to exist for purposes of this clause (vi) if the holder(s) of
such obligation or their representative and the Trustee shall have received an
officers' certificate of the Company to the effect that the incurrence of such
Indebtedness does not (or, in the case of revolving credit Indebtedness, that
the incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate such provisions of this
Indenture), (vii) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to such Guarantor and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of such
Guarantor.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"Holdings" means Cambridge Industries Holdings, Inc., a Delaware
corporation.
"Holdings Services Agreement" means the Services Agreement between
Holdings and the Company as in effect on the Issue Date.
<PAGE>
-16-
"IAI Global Note" means a permanent global note in registered form
representing the aggregate principal amount of Notes sold to Institutional
Accredited Investors.
"incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such person
(and "incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means with respect to any Person, without duplication:
(i) all Obligations of such Person for borrowed money; (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments;
(iii) all Capitalized Lease Obligations of such Person; (iv) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and accrued liabilities arising
in the ordinary course of business); (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction; (vi) all Guarantees of such Person; (vii) Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP; (viii) all Indebtedness of
others secured by any Lien on any asset or property (including, without
limitation, leasehold interests and any other tangible or intangible property)
of such Person, the amount of such Indebtedness for the purposes of this
definition shall be limited to the lesser of the amount of such Indebtedness
secured by such Lien or the fair market value of the assets or property securing
such Lien; and (ix) all Disqualified Capital Stock issued by such Person with
the amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends, if any.
<PAGE>
-17-
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Industrial Revenue Obligations" means any debt obligation issued by
a state or local government or governmental authority to finance plants,
equipment or facilities that are made subject to a lease, or other transaction
which provides the credit support for such debt obligation, with the Company or
any Wholly Owned Restricted Subsidiary that is a Guarantor or a Foreign
Subsidiary or both.
"Initial Notes" means the 10 1/4% Senior Subordinated Notes due 2007,
Series A, of the Company.
"Initial Purchaser" means BT Securities Corporation.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans
(including Guarantees), advances or capital contributions (excluding commission,
travel, salary and other advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP. For purposes of Section 4.10, (i) "Investment" in a Subsidiary shall
include the portion (proportionate to the Company's Equity Interest in such
Subsidiary) of the fair market value (as determined in good faith by the Board
of Directors) of such
<PAGE>
-18-
Subsidiary at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided that upon a redesignation of such 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 (as determined in good
faith by the Board of Directors) of the net assets of such Subsidiary at the
time of such redesignation; 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.
"Issue Date" means July 10, 1997.
"Legal Holiday" has the meaning provided in Section 13.07.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Maturity Date" means July 15, 2007.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents (including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, brokerage, legal, accounting
and investment banking fees and sales commissions) and any relocation expenses
incurred as a result thereof, (b) taxes paid or payable ((1) including, without
limitation, income taxes reasonably estimated to be actually payable as a result
of any disposition of property within two years of the date of disposition and
(2) after taking into account any reduction in tax liability due to available
tax credits or deductions and any tax sharing arrangements) and (c) appropriate
amounts to be provided by the Com-
<PAGE>
-19-
pany as a reserve, in accordance with GAAP, against any liabilities associated
with such Asset Sale and retained by the Company after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale and the
repayment of Indebtedness secured by a Lien on the asset or assets subject to
the Asset Sale.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (i) any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions), or (ii) the disposition of any
securities or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, and (b) any extraordinary gain or loss, together
with any related provision for taxes on such extraordinary gain or loss, (c) any
one time charges relating to the GenCorp Acquisition including, without
limitation, any one-time charges relating to integration costs and adjustments
resulting in the write-up of inventory above cost, and (d) any write-off of
deferred financing fees or the incurrence of prepayment penalties or premiums
relating to the GenCorp Acquisition.
"Net Proceeds Offer" has the meaning provided in Section 4.15.
"Net Proceeds Offer Amount" has the meaning provided in Section 4.15.
"Net Proceeds Offer Payment Date" has the meaning provided in
Section 4.15.
"Net Proceeds Offer Trigger Date" has the meaning provided in
Section 4.15.
"Non-U.S. Person" has the meaning assigned to such term in
Regulation S.
"Notes" means, collectively, the Initial Notes, the Private Exchange
Notes, if any, and the Unrestricted Notes, treated as a single class of
securities under this Indenture.
<PAGE>
-20-
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer or any Treasurer of such Person that
shall comply with applicable provisions of this Indenture.
"144A Global Note" means a permanent global note in registered form
representing the aggregate principal amount of Notes sold in reliance on Rule
144A under the Securities Act.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee complying with the requirements of
Sections 13.05 and 13.06, as they relate to the giving of an Opinion of Counsel,
and delivered to the Trustee.
"Paying Agent" has the meaning provided in Section 2.03, except that,
during the continuance of a Default or Event of Default and for the purposes of
Articles Three and Eight and Sections 4.14 and 4.15, the Paying Agent shall not
be the Company or any Affiliate of the Company.
"Permitted Business" means a business in which the Company and its
Subsidiaries was engaged on the date of this Indenture or a business that is
directly related or incidental thereto, including, without limitation, the
automotive component manufacturing business.
"Permitted Indebtedness" means without duplication each of the
following:
(i) Existing Indebtedness (including Indebtedness of the Company and
its Restricted Subsidiaries under the Notes issued on the Issue Date)
outstanding on the date of this Indenture;
<PAGE>
-21-
(ii) Indebtedness of the Company or any of its Restricted
Subsidiaries that are Guarantors or Foreign Subsidiaries or both incurred
pursuant to the Credit Agreement in an aggregate principal amount at any
time outstanding not to exceed the greater of (a) $280.0 million or (b) the
Borrowing Base at such time; provided, however that the aggregate principal
amount of Indebtedness under clauses (a) and (b) shall be reduced dollar
for dollar for any Indebtedness outstanding under clause (viii) below and
to the extent Net Cash Proceeds relating to an Asset Sale is used to prepay
Indebtedness under this clause (ii) in accordance with the provisions
described under Section 4.15; provided, further that the aggregate
principal amount of Indebtedness under clause (b) shall be reduced dollar
for dollar for any Indebtedness outstanding under clause (viii) below only
to the extent that the receivables transferred by the Company or any of its
Restricted Subsidiaries pursuant to the Qualified Receivables Transaction
giving rise to the Indebtedness incurred under clause (viii) below are
included in the Borrowing Base;
(iii) Obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
of the Company in the ordinary course of business;
(iv) Hedging Obligations that are incurred by the Company or any of
its Restricted Subsidiaries that are Guarantors or Foreign Subsidiaries or
both for the purpose of fixing or hedging interest rate risk with respect
to any Indebtedness that is permitted by the terms of this Indenture to be
outstanding;
(v) Intercompany Indebtedness incurred by the Company or any of its
Restricted Subsidiaries to the Company or any of its Restricted
Subsidiaries that are Guarantors or Foreign Subsidiaries or both, in each
case subject to no Lien (other than Liens securing the Credit Agreement)
held by a Person other than the Company or a Restricted Subsidiary or a
Guarantor or a Foreign Subsidiary or the holders of Senior Debt; provided
--------
that if as of any date any Person other than the Company or a Restricted
Subsidiary or a Guarantor or a Foreign Subsidiary or the holders of Senior
Debt owns or holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness;
<PAGE>
-22-
(vi) Indebtedness of the Company or any of its Restricted
Subsidiaries that are Guarantors or Foreign Subsidiaries or both
attributable to any Currency Agreement or Commodity Agreement; provided,
however, that such agreements are entered into to protect the Company from
fluctuations in the prices of currency exchange rates and commodities,
respectively;
(vii) Acquired Indebtedness incurred pursuant to this clause (vii)
by the Company or any of its Restricted Subsidiaries that are Guarantors or
Foreign Subsidiaries or both, which does not exceed $15,000,000 at any time
outstanding;
(viii) The incurrence by a Receivables Subsidiary of Indebtedness in
a Qualified Receivables Transaction that is without recourse to the Company
or to any Restricted Subsidiary of the Company or their assets (other than
such Receivables Subsidiary and its assets), and is not guaranteed by any
such Person; provided that any outstanding Indebtedness incurred under this
clause (viii) shall reduce the aggregate amount permitted to be incurred
under clause (ii) above to the extent set forth therein;
(ix) Guarantees by the Company's Restricted Subsidiaries of
Indebtedness permitted to be incurred under this Indenture; provided that
such Restricted Subsidiary complies with Section 4.20;
(x) Additional Indebtedness of the Company or any of its
Restricted Subsidiaries that are Guarantors or Foreign Subsidiaries or both
incurred pursuant to this clause (x), which together with the aggregate
liquidation value of outstanding Permitted Subsidiary Preferred Stock, does
not exceed $20,000,000 at any time outstanding (which amount may be, but
need not be, incurred in whole or in part under the Credit Agreement);
(xi) The incurrence by the Company or any of its Restricted
Subsidiaries that are Guarantors or Foreign Subsidiaries or both of
Indebtedness issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace, defease or refund Indebtedness permitted
to be incurred or remain outstanding under this Indenture in whole or in
part; provided, however, that (1) the principal amount of such Refinancing
-------- -------
Indebtedness shall not exceed the principal amount of Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded;
<PAGE>
-23-
(2) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, the
Refinancing Indebtedness shall be subordinated in right of payment to the Notes
or any Guarantees on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (4) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is Indebtedness of the Company or a Guarantor, the Refinancing Indebtedness
shall be incurred by the Company or a Guarantor (any such extension,
refinancing, renewal, replacement, defeasance or refunding being referred to as
"Refinancing Indebtedness"); provided, further, that the foregoing clauses (1),
-------- -------
(2) and (3) shall not apply with respect to the Indebtedness under clause (ii)
above or, to the extent incurred under the Credit Agreement, Indebtedness under
clauses (vii) and (x) above so long as the aggregate principal amount of such
Refinancing Indebtedness does not exceed the amount of Indebtedness permitted
under such clauses (ii), (vii) and (x);
(xii) Indebtedness (including Capitalized Lease Obligations, Industrial
Revenue Obligations or Purchase Money Obligations) incurred by the Company or
any of its Restricted Subsidiaries or Permitted Subsidiary Preferred Stock to
finance the purchase, lease or improvement of property (real or personal) or a
business or equipment (whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets or any Indebtedness or Permitted
Subsidiary Preferred Stock issued to a seller to finance the purchase of
property, a business or equipment in connection therewith) in an aggregate
principal amount not to exceed the greater of $10,000,000 at any one time
outstanding or 5% of Total Assets at the time of any incurrence thereof
(including any Refinancing Indebtedness with respect thereto) (which amount may,
but need not, be incurred in whole or in part under Credit Agreement); and
(xiii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification, adjustment
of purchase price, earn
<PAGE>
-24-
out or other similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Restricted
Subsidiary of the Company, other than guarantees of Indebtedness incurred
by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition;
provided that the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually received
by the Company and its Restricted Subsidiaries in connection with such
disposition.
"Permitted Investments" means (a) any Investments in the Company or
in a Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (b)
any Investments in Cash Equivalents; (c) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment: (i) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company and a Guarantor or (ii) such Person is consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the
Company that is a Guarantor; (d) Investments existing on the date of this
Indenture; (e) Investments in any Foreign Subsidiary in an aggregate amount not
to exceed $10,000,000 at any time outstanding; (f) any Investment in Voplex
Canada Inc. in an amount not to exceed $1,000,000; (g) any Investment by the
Company or a Wholly Owned Restricted Subsidiary of the Company in a Receivables
Subsidiary or any Investment by a Receivables Subsidiary in any other Person in
connection with a Qualified Receivables Transaction; provided that the foregoing
--------
Investment is in the form of a note that the Receivables Subsidiary or other
Person is required to repay as soon as practicable from available cash
collections less amounts required to be established as reserves pursuant to
contractual agreements with entities that are not Affiliates of the Company
entered into as part of a Qualified Receivables Transaction; (h) loans and
advances to employees and officers of the Company and its Restricted
Subsidiaries not in excess of $3,000,000 at any one time outstanding; (i)
accounts receivable created or acquired in the ordinary course of business; (j)
Hedging Obligations, Currency Agreements and Commodity Agreements entered into
in the ordinary course of the Company's or its Restricted Subsidiaries'
businesses and otherwise in compliance with this Indenture; (k) Investments in
Unrestricted Subsidiaries in an amount at any one time outstanding not to exceed
$5,000,000; (l) Guarantees (A) by the Company of Indebtedness otherwise
permitted to be incurred by Restricted Subsidiaries of the Company under
<PAGE>
-25-
this Indenture or (B) permitted by Section 4.20; (m) Investments received by the
Company or its Restricted Subsidiaries as consideration for asset sales,
including Asset Sales; provided in the case of an Asset Sale, such Asset Sale is
effected in compliance with Section 4.15; (n) Investments in securities of trade
creditors or customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (o) additional Investments having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (o) that
are at that time outstanding, not to exceed 5% of Total Assets at the time of
such Investment (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value); and (p)
Investments the payment for which consists exclusively of Qualified Capital
Stock of the Company.
"Permitted Liens" means
(i) Liens in favor of the Company;
(ii) Liens securing Senior Debt of the Company or of any
Guarantor that was permitted to be incurred pursuant to this Indenture;
(iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any Restricted
Subsidiary of the Company, provided that such Liens were in existence prior
--------
to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with
the Company or such Restricted Subsidiary;
(iv) Liens on property existing at the time of acquisition
thereof by the Company or any Subsidiary of the Company; provided that such
--------
Liens were in existence prior to the contemplation of such acquisition;
(v) Liens to secure surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course
of business;
(vi) Liens existing on the date of this Indenture;
(vii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings
<PAGE>
-26-
promptly instituted and diligently concluded; provided that any reserve or
other appropriate provision as shall be required in conformity with GAAP
shall have been made therefor;
(viii) Liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's, and vendors' Liens, incurred in good faith
in the ordinary course of business with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings if a
reserve or other appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made
therefor;
(ix) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor
irregularities of title incident thereto that do not, in the aggregate,
materially detract from the value of the property or the assets of the
Company or impair the use of such property in the operation of the
Company's business;
(x) judgment Liens to the extent that such judgments do not
cause or constitute a Default or an Event of Default;
(xi) Liens to secure the payment of all or a part of the
purchase price of property or assets acquired or constructed in the
ordinary course of business on or after the date of this Indenture,
provided that (a) such property or assets are used in the same or similar
line of business as the Company was engaged in on the date of this
Indenture, (b) at the time of incurrence of any such Lien, the aggregate
principal amount of the obligations secured by such Lien shall not exceed
the lesser of the cost or fair market value of the assets or property (or
portions thereof) so acquired or constructed, (c) each such Lien shall
encumber only the assets or property (or portions thereof) so acquired or
constructed and shall attach to such property within 180 days of the
purchase or construction thereof and (d) any Indebtedness secured by such
Lien shall have been permitted to be incurred under Section 4.12;
(xii) Liens of landlords or of mortgagees of landlords
arising by operation of law; provided that the rentals payments secured
--------
thereby are not yet due and payable;
<PAGE>
-27-
(xiii) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to obligations
that do not exceed $5,000,000 at any one time outstanding and that (a) are
not incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Subsidiary;
(xiv) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security;
(xv) Liens securing reimbursement obligations with respect
to letters of credit which encumber only documents and other property
relating to such letters of credit and the products and proceeds thereof;
(xvi) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty requirements;
(xvii) Liens arising out of consignment or similar
arrangements for the sale of goods in the ordinary course of business;
(xviii) any interest or title of a lessor in property subject
to any capital lease obligation or operating lease;
(xix) any interest or title of a lessor in property subject
to any capital lease obligation or operating lease;
(xx) Liens on assets of a Receivables Subsidiary incurred in
connection with a Qualified Receivables Transaction;
(xxi) Liens securing Indebtedness under Currency Agreements;
(xxii) Liens securing Hedging Obligations which Hedging
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture;
<PAGE>
-28-
(xxiii) leases or subleases granted to others that do not
materially interfere with the ordinary course of business of the Company
and its Restricted Subsidiaries;
(xxiv) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; and
(xxv) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of custom duties in connection
with the importation of goods.
"Permitted Subsidiary Preferred Stock" means any series of Preferred
Stock of a domestic or foreign Restricted Subsidiary of the Company or Wholly
Owned Restricted Subsidiary that constitutes Qualified Capital Stock and has a
fixed dividend rate, the liquidation value of all series of which is issued
pursuant to clauses (x) and (xii) of the definition of Permitted Indebtedness.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Physical Notes" shall have the meaning provided in Section 2.01.
"Post-Petition Interest" means any interest accruing subsequent to
the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"Principals" means Bain, the Bain Funds and Richard S. Crawford.
"Private Exchange Notes" shall have the meaning provided in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on
the Initial Notes in the form set forth on Exhibit A.
---------
<PAGE>
-29-
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's Board of Directors in consultation with its independent certified
public accountants.
"Purchase Money Obligations" of any Person means any obligations of
such Person or any of its subsidiaries to any seller or any other person
incurred or assumed in connection with the purchase of real or personal property
to be used in the business of such person or any of its subsidiaries within 180
days of such incurrence or assumption.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities act.
"Qualified Receivables Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the
case of a transfer by the Company or any of its Restricted Subsidiaries) and
(ii) any other person (in the case of a transfer by a Receivables Subsidiary),
or may grant a security interest in, any accounts receivable (whether now
existing or arising in the future) of the Company or any of its Restricted
Subsidiaries, and any assets related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts and all guarantees
or other obligations in respect of such accounts receivable, proceeds of such
accounts receivable and other assets which are customarily transferred or in
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable.
"Receivables" means any right of payment from or on behalf of any
obligor, whether constituting an account, chattel paper, instrument, general
intangible or otherwise, arising from the financing by the Company or any
Restricted Subsidiary of the Company of merchandise or services, and monies due
thereunder, security in the merchandise and services financed thereby, records
related thereto, and the right to payment of any interest or finance charges and
other obligations with respect thereto, proceeds from claims on insurance
policies re
<PAGE>
-30-
lated thereto, any other proceeds related thereto, and any other related rights.
"Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary
of the Company that engages in no activities other than in connection with the
financing of accounts receivable and that is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a) no
portion of the Indebtedness or any other Obligations (contingent or otherwise)
of which (i) is guaranteed by the Company or any Restricted Subsidiary of the
Company (excluding guarantees of Obligations (other than the principal of, and
interest on, Indebtedness) pursuant to representations, warranties, covenants
and indemnities entered into in the ordinary course of business in connection
with a Qualified Receivables Transaction), (ii) is recourse to or obligates the
Company or any Restricted Subsidiary of the Company in any way other than
pursuant to representations, warranties, covenants and indemnities entered into
in the ordinary course of business in connection with a Qualified Receivables
Transaction or (iii) subjects any property or asset of the Company or any
Restricted Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with a Qualified Receivables Transaction, (b) with which
neither the Company nor any Restricted Subsidiary of the Company has any
material contract, agreement, arrangement or understanding other than on terms
no less favorable to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable and (c) with which neither the
Company nor any Restricted Subsidiary of the Company has any obligation to
maintain or preserve such Restricted Subsidiary's financial condition or cause
such Restricted Subsidiary to achieve certain levels of operating results. Any
such designation by the Board of Directors of the Company shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"Redemption Date" means, with respect to any Notes, the Maturity Date
of such Note or the earlier date on which such Note is to be redeemed by the
Company pursuant to paragraph 5 of the Notes.
<PAGE>
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"Redemption Price" has the meaning provided in Section 3.03.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or
any Restricted Subsidiary of the Company of Indebtedness incurred in accordance
with Section 4.12 (other than pursuant to clause (ii), (iii), (iv), (v), (vi),
(vii), (viii), (ix), (xi), (xii) or (xiii) of the definition of Permitted
Indebtedness), in each case that does not (1) result in an increase in the
aggregate principal amount of Indebtedness of such Person as of the date of such
proposed Refinancing (plus the amount of any premium required to be paid under
the terms of the instrument governing such Indebtedness and plus the amount of
reasonable expenses incurred by the Company or such Restricted Subsidiary, as
the case may be, in connection with such Refinancing), except to the extent that
any such increase in Indebtedness is otherwise permitted by this Indenture, or
(2) create Indebtedness with (A) a Weighted Average Life to Maturity that is
less than the Weighted Average Life to Maturity of the Indebtedness being
Refinanced or (B) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided, however, that (x) if such Indebtedness
-------- -------
being Refinanced is Indebtedness of the Company, then such Refinancing
Indebtedness shall be Indebtedness solely of the Company, (y) if such
Indebtedness being Refinanced is subordinate or junior to the Notes, then such
Refinancing Indebtedness shall be subordinate to the Notes at least to the same
extent and in the same manner as the Indebtedness being Refinanced and (z) if
such Indebtedness being refinanced is subordinated or junior to the Guarantee of
such Guarantor, then such Refinancing Indebtedness shall be subordinate to the
Guarantee of such Guarantor at least to the same extent and in the same manner
as the Indebtedness being refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the exchange and registration
rights agreement dated the Issue Date between the Company, the Guarantors and
the Initial Purchaser.
<PAGE>
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"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Note" means a permanent global note in
registered form representing the aggregate principal amount of Notes sold in
reliance on Regulation S under the Securities Act.
"Related Party" with respect to any Principal means (i) any
controlling stockholder, general partner, majority owned Subsidiary, or spouse
or immediate family member (in the case of an individual) of such Principal or
(ii) (a) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding 80% or more of
the Voting Stock of which consist of such Principal and/or such other Persons
referred to in the immediately preceding clause (i) or (b) any partnership the
sole general partner of which is a Principal or one of the Persons referred in
clause (i).
"Replacement Assets" has the meaning provided in Section 4.15.
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Designated Senior Debt; provided, however,
-------- -------
that if, and for so long as, any Designated Senior Debt lacks such a
representative, then the Representative for such Designated Senior Debt shall at
all times constitute the holders of a majority in outstanding principal amount
of such Designated Senior Debt in respect of any Designated Senior Debt.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Note" means a Note that constitutes a "Restricted
Security" within the meaning of Rule 144(a)(3) under the Securities Act;
provided, however, that the Trustee shall be entitled to request and
- - -------- -------
conclusively rely on an Opinion of Counsel with respect to whether any Note
constitutes a Restricted Note.
"Restricted Payment" has the meaning provided in Section 4.10.
"Restricted Subsidiary" of a Person means any Subsidiary of such
Person that is not an Unrestricted Subsidiary.
<PAGE>
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"Revolving Credit Facility" means the revolving credit portion of the
Credit Agreement.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of the Company of any
property, whether owned by the Company or any Restricted Subsidiary of the
Company at the Issue Date or later acquired, which has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such Person or to
any other Person from whom funds have been or are to be advanced by such Person
on the security of such Property.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Senior Bank Debt" means all Obligations arising under the Credit
Agreement.
"Senior Debt" means (a) with respect to the Company, (i) Senior Bank
Debt of the Company (including, without limitation, Post-Petition Interest with
respect thereto), (ii) Obligations of the Company with respect to Commodity
Agreements, (iii) Obligations of the Company with respect to Currency
Agreements, (iv) Hedging Obligations of the Company (including, without
limitation, Post-Petition Interest with respect thereto) and (v) any other
Indebtedness, including, without limitation, Post-Petition Interest with respect
thereto, incurred by the Company unless the instrument under which such
Indebtedness is incurred expressly provides that it is pari passu with or
----------
subordinated in right of payment to the Notes, and (b) with respect to any
Guarantor: (i) Senior Bank Debt of such Guarantor, (ii) Obligations of such
Guarantor with respect to Commodity Agreements, (iii) Obligations of such
Guarantor with respect to Currency Agreements, (iv) Hedging Obligations of such
Guarantor (including, without limitation, Post-Petition Interest with respect
thereto), (v) any Guarantee by such Guarantor of any Senior Debt of the Company
and (vi) any other Indebtedness, including, without limitation, Post-Petition
Interest with respect thereto, incurred by such Guarantor, unless the instrument
under which such Indebtedness is incurred expressly provides that it is pari
----
passu with or subordinated in right of payment to the Subsidiary Guarantee of
- - -----
such Guarantor. Notwithstanding anything to the contrary in the foregoing,
Senior Debt shall not include (v) any obligation of the Company or any Guarantor
to, in respect of or imposed by any environ-
<PAGE>
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mental, landfill, waste management or other regulatory governmental agency,
statute, law or court order, (w) any liability for federal, state, local or
other taxes owed or owing by the Company or any Guarantor, (x) any Indebtedness
of the Company or any Guarantor to any of the Company's Subsidiaries or other
Affiliates, (y) any trade payables or (z) that portion of any Indebtedness that
is incurred in violation of this Indenture on or before the date of this
Indenture (but, as to any such obligation, no such violation shall be deemed to
exist for purposes of this clause (z) if the holder(s) of such obligation or
their representative and the Trustee shall have received an officers'
certificate of the Company to the effect that the incurrence of such
Indebtedness does not (or, in the case of revolving credit Indebtedness, that
the incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate such provisions of this
Indenture).
"Senior Representative" means the Agent Bank or any other
representative designated in writing to the Trustee or the holders of any class
or issue of Designated Senior Debt; provided that, in the absence of a
--------
representative of the type described above, any holder or holders of a majority
of the principal amount outstanding of any class or issue of Designated Senior
Debt may collectively act as the Senior Representative for such class or issue.
"Significant Restricted Subsidiary" means any Restricted Subsidiary
of the Company constituting a Significant Subsidiary.
"Significant Subsidiary" means any Subsidiary of the Company that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date hereof.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
<PAGE>
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"Tax Sharing Agreement" means the tax sharing agreement, dated
November 17, 1995, between Holdings and the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb), as amended, as in effect on the date on which this Indenture is
qualified under the TIA, except as otherwise provided in Section 9.03.
"Total Assets" means total consolidated assets of the Company and its
Restricted Subsidiaries, as set forth on the Company's most recent consolidated
balance sheet.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters or, in the
case of a successor trustee, an officer assigned to the department, division or
group performing the corporate trust work of such successor.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Unrestricted Notes" means one or more Notes that do not and are not
required to bear the Private Placement Legend in the form set forth in
Exhibit A, including, without limitation, the Exchange Notes.
- - ---------
"Unrestricted Subsidiary" means (A) any Wholly Owned Subsidiary of
the Company designated by the Board of Directors of the Company as an
Unrestricted Subsidiary pursuant to a Board resolution set forth in an Officers'
Certificate and delivered to the Trustee (i) that, at the time of designation,
(x) has total assets not exceeding $1,000 or (y) whose designation as such would
be permitted in accordance with Section 4.10, (ii) no portion of the
Indebtedness or any other obligations (contingent or otherwise) of which is (a)
guaranteed by the Company or any other Subsidiary (other than another
Unrestricted Subsidiary) of the Company, (b) is recourse to or obligates the
Company or any other Subsidiary (other than another Unrestricted Subsidiary) of
the Company in any way or (c) subjects any property or asset of the Company or
any other Subsidiary (other than another Unrestricted Subsidiary) of the
Company, directly or indirectly, contingently or otherwise, to the satisfaction
thereof, (iii) with which neither the Company nor any other Subsidiary of the
Company (other than another Unrestricted Subsidiary) has any contract,
agreement, arrangement
<PAGE>
-36-
or understanding other than on terms no less favorable to the Company or such
other Subsidiary than those that might be obtained at the time from persons who
are not Affiliates of the Company and (iv) with which neither the Company nor
any other Subsidiary of the Company (other than another Unrestricted Subsidiary)
has any obligation (a) to subscribe for additional shares of Capital Stock or
other Equity Interests therein or (b) to maintain or preserve such Subsidiary's
financial condition or to cause such Subsidiary to achieve certain levels of
operating results and (B) any Subsidiary of an Unrestricted Subsidiary.
"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 at the issuer's option.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Voting Stock" means any class or classes of Capital Stock pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers,
general partners or trustees of any Person (irrespective of whether or not, at
the time, Capital Stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency) or, with respect to
a partnership (whether general or limited), any general partner interest in such
partnership.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment at final maturity, in respect thereof, by (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which
<PAGE>
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(other than directors qualifying shares, Permitted Subsidiary Preferred Stock or
Preferred Stock issued in accordance with the Fixed Charge Coverage Ratio under
Section 4.12) shall at the time be owned by such Person or by one or more Wholly
Owned Restricted Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, that
portion of such provision that is required to be incorporated for this Indenture
to be qualified under the TIA is incorporated by reference in, and made a part
of, this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by the TIA by reference to another statute or defined by SEC rule
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. 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 as in effect on the Issue Date;
(3) "or" is not exclusive;
<PAGE>
-38-
(4) words in the singular include the plural, and words in the plural
include the singular; and
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
---------------
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Exchange Notes and
---------
the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit B hereto. The Notes may have notations,
---------
legends or endorsements required by law, stock exchange rule or usage. The
Company shall approve the form of the Notes and any notation, legend or
endorsement thereon. Each Note shall be dated the date of issuance and shall
show the date of its authentication. Each Note shall have an executed Guarantee
from each of the Guarantors endorsed thereon substantially in the form of
Exhibit F hereto.
- - ---------
The terms and provisions contained in the Notes annexed hereto as
Exhibits A and B, shall constitute, and are hereby expressly made, a part of
- - ----------------
this Indenture and, to the extent applicable, the Company, the Guarantors and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A, Notes offered and
sold to institutional "accredited investors" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of one or more Global Notes,
substantially in the form set forth in Exhibit A, deposited with the Trustee, as
---------
custodian for the Depository, duly executed by the Company (and having an
executed Guarantee from each of the Guarantors endorsed thereon) and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in Exhibit C. The aggregate principal amount of the Global Notes may
---------
from time to time be increased or de-
<PAGE>
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creased by adjustments made on the records of the Trustee, as custodian for the
Depository, as hereinafter provided.
Notes issued in exchange for interests in a Global Note pursuant to
Section 2.16 may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Physical
--------- --------
Notes").
- - -----
All Notes offered and sold in reliance on Regulation S shall remain
in the form of a Global Note until the consummation of the Exchange Offer
pursuant to the Registration Rights Agreement; provided, however, that all of
-------- -------
the time periods specified in the Registration Rights Agreement to be complied
with by the Company and the Guarantors have been so complied with.
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount.
---------------------------------------
Two Officers, or an Officer and an Assistant Secretary, shall sign,
or one Officer shall sign, and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company, and the Guarantees for the
Guarantors, by manual or facsimile signature.
If an Officer or Assistant Secretary whose signature is on a Note or
a Guarantee, as the case may be, was an Officer or Assistant Secretary at the
time of such execution but no longer holds that office or position at the time
the Trustee authenticates the Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature of such representative of the Trustee shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue
in an aggregate principal amount not to exceed $100,000,000, (ii) Private
Exchange Notes from time to time only in exchange for a like principal amount of
Initial Notes and (iii) Unrestricted Notes from time to time only in exchange
for (A) a like principal amount of Initial Notes or (B) a like principal amount
of Private Exchange Notes, in each case upon a written order of the Company in
the form of an Officers' Certificate of the Company. Each such written order
shall specify the amount of Notes to be authenticated and the date on which
<PAGE>
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the Notes are to be authenticated, whether the Notes are to be Initial Notes,
Private Exchange Notes or Unrestricted Notes and whether (subject to Section
2.01) the Notes are to be issued as Physical Notes or Global Notes and such
other information as the Trustee may reasonably request. The aggregate principal
amount of Notes outstanding at any time may not exceed $130,000,000, except as
provided in Sections 2.07 and 2.08.
Notwithstanding the foregoing, all Notes issued under this Indenture
shall vote and consent together on all matters (as to which any of such Notes
may vote or consent) as one class and no series of Notes will have the right to
vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as an Agent to deal with the Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in the City of New York, State of New York),
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange ("Registrar"), (b) Notes may be presented or surrendered for
payment ("Paying Agent") and (c) notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The Company, upon
notice to the Trustee, may have one or more co-Registrars and one or more
additional paying agents reasonably acceptable to the Trustee. The term "Paying
Agent" includes any additional paying agent. The Company may change the Paying
Agent or Registrar without notice to any Holder.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such
<PAGE>
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Agent. The Company shall notify the Trustee, in advance, of the name and address
of any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
or fails to give the foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar and Paying
Agent until such time as the Trustee has resigned or a successor has been
appointed. Any of the Registrar, the Paying Agent or any other agent may resign
upon 30 days' notice to the Company. The office of the Paying Agent as Registrar
for purposes of this Section 2.03 shall initially be at 61 Broadway, Concourse
Level, New York, New York.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Company or any other obligor on the Notes),
and shall notify the Trustee of any default by the Company (or any other obligor
on the Notes) in making any such payment. The Company at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets disbursed and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent and the completion of any
accounting required to be made hereunder, the Paying Agent shall have no further
liability for such assets.
SECTION 2.05. Holder Lists.
------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders and shall otherwise comply with TIA (S). 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee five (5) Business
Days before each Interest Payment Date and at such other times as the Trustee
may request in writing a list as of the applicable Record Date and in such form
as the Trustee may reasonably require of the names and addresses of the Holders,
which list may be conclusively relied upon by the Trustee.
<PAGE>
-42-
SECTION 2.06. Transfer and Exchange.
---------------------
Subject to Sections 2.15 and 2.16, when Notes are presented to the
Registrar or a co-Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal principal amount of Notes of other
authorized denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Notes presented or surrendered
-------- -------
for transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Notes at the
Registrar's or co-Registrar's written request. No service charge shall be made
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith. The Registrar or co-Registrar shall not
be required to register the transfer of or exchange of any Note (i) during a
period beginning at the opening of business 15 days before the mailing of a
notice of redemption pursuant to Section 3.03 and paragraph 5 of the Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Notes may be effected only through a book entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry system.
SECTION 2.07. Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note and
each of the Guarantors shall execute a Guarantee thereon if the Trustee's
requirements are met. If required by the Trustee or the Company, such Holder
must provide an indemnity bond or other indemnity, sufficient in the reasonable
judgment of the Company, the Guarantors and the Trustee, to protect the Company,
the
<PAGE>
-43-
Guarantors, the Trustee or any Agent from any loss which any of them may suffer
if a Note is replaced. The Company and the Trustee may charge such Holder for
its reasonable out-of-pocket expenses in replacing a Note, including reasonable
fees and expenses of counsel. Every replacement Note shall constitute an
additional obligation of the Company and every replacement Guarantee shall
constitute an additional obligation of the Guarantors.
SECTION 2.08. Outstanding Notes.
-----------------
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to Section 2.09, a Note does not cease to be outstanding because the Company or
any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
---- ----
of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal, premium, if any, and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
--------------
In determining whether the Holders of the required aggregate
principal amount of Notes have concurred in any direction, waiver, consent or
notice, Notes owned by the Company or an Affiliate shall be considered as though
they are not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, waiver or
consent, only Notes which the Trustee actually knows are so owned shall be so
considered. The Company shall notify the Trustee, in writing, when it or any of
its Affiliates repurchases or otherwise acquires Notes, of the aggregate
<PAGE>
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principal amount of such Notes so repurchased or otherwise acquired.
SECTION 2.10. Temporary Notes.
---------------
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes and the Guarantors
shall prepare temporary Guarantees thereon upon receipt of a written order of
the Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of temporary Notes to be authenticated and the date on
which the temporary Notes are to be authenticated. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and execute, and the Trustee shall authenticate and
the Guarantors shall execute Guarantees on, upon receipt of a written order of
the Company pursuant to Section 2.02, definitive Notes in exchange for temporary
Notes.
SECTION 2.11. Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Company, shall dispose
and deliver evidence of disposal of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07, the Company may not
issue new Notes to replace Notes that the Company has paid or delivered to the
Trustee for cancellation. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
------------------
The Company will pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Notes. The Company shall, to
the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-
<PAGE>
-45-
day months, and, in the case of a partial month, the actual number of days
elapsed.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to
the expiration of the 30-day period set forth in Section 6.01(1) shall be paid
to Holders as of the regular record date for the Interest Payment Date for which
interest has not been paid.
SECTION 2.13. CUSIP Numbers.
-------------
The Company in issuing the Notes may use one or more "CUSIP" numbers,
and if so, the Trustee shall use the CUSIP numbers in notices of redemption or
exchange as a convenience to Holders; provided, however, that no representation
-------- -------
is hereby deemed to be made by the Trustee as to the correctness or accuracy of
the CUSIP numbers printed in the notice or on the Notes, and that reliance may
be placed only on the other identification numbers printed on the Notes. The
Company shall promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Moneys.
-----------------
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Payment Date, and Net Proceeds
Offer Payment Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date, and Net Proceeds Offer Payment Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Maturity Date, Redemption Date,
<PAGE>
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Change of Control Payment Date, and Net Proceeds Offer Payment Date, as the case
may be.
SECTION 2.15. Book-Entry Provisions for Global Notes.
--------------------------------------
(a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C.
- - ---------
Members of, or participants in, the Depository ("Participants") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and
Participants, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.16. In addition, Physical Notes shall
be transferred to all beneficial owners in exchange for their beneficial
interests in Global Notes if (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository for any Global Note and a
successor Depository is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be
<PAGE>
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transferred, and the Company shall execute and the Trustee shall authenticate
and deliver, one or more Physical Notes of authorized denominations in an
aggregate principal amount equal to the principal amount of the beneficial
interest in the Global Note so transferred.
(d) In connection with the transfer of a Global Note as an entirety
to beneficial owners pursuant to paragraph (b) of this Section 2.15, such Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, the Guarantors shall execute Guarantees on and the
Trustee shall upon written instructions from the Company authenticate and
deliver, to each beneficial owner identified by the Depository in exchange for
its beneficial interest in such Global Note, an equal aggregate principal amount
of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c) of
this Section 2.15 shall, except as otherwise provided by Section 2.16, bear the
Private Placement Legend.
(f) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Notes.
SECTION 2.16. Special Transfer Provisions.
---------------------------
(a) Transfers to Non-QIB Institutional Accredited Investors and
-----------------------------------------------------------
Non-U.S. Persons. The following additional provisions shall apply with respect
- - ----------------
to the registration of any proposed transfer of a Restricted Note to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Restricted Note,
whether or not such Note bears the Private Placement Legend, if (x) the
requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the
-------- -------
Company has held any beneficial interest in such note, or portion thereof,
at any time on or prior to the second anniversary of the Issue Date or (y)
(1) in the case of a transfer to an Institutional Accredited Investor which
is not a QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate
<PAGE>
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substantially in the form of Exhibit D hereto and any legal opinions and
---------
certifications required thereby and (2) in the case of a transfer to a Non-
U.S. Person, the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit E hereto;
---------
(ii) if the proposed transferee is a Participant and the Notes to be
transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the IAI Global Note or Regulation S Global
Note, as the case may be, upon receipt by the Registrar of (x) written
instructions given in accordance with the Depository's and the Registrar's
procedures and (y) the appropriate certificate, if any, required by clause
(y) of paragraph (i) above, the Registrar shall register the transfer and
reflect on its books and records the date and an increase in the principal
amount of the IAI Global Note or Regulation S Global Note, as the case may
be, in an amount equal to the principal amount of Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so
transferred; and
(iii) if the proposed transferor is a Participant seeking to transfer
an interest in a Global Note, upon receipt by the Registrar of (x) written
instructions given in accordance with the Depository's and the Registrar's
procedures and (y) the appropriate certificate, if any, required by clause
(y) of paragraph (i) above, the Registrar shall register the transfer and
reflect on its books and records the date and (A) a decrease in the
principal amount of the Global Note from which such interests are to be
transferred in an amount equal to the principal amount of the Notes to be
transferred and (B) an increase in the principal amount of the IAI Global
Note or the Regulation S Global Note, as the case may be, in an amount
equal to the principal amount of the Notes to be transferred.
(b) Transfers to QIBs. The following provisions shall apply with
------------------
respect to the registration of any proposed transfer of a Restricted Security to
a QIB:
(i) the Registrar shall register the transfer of any Restricted
Note, whether or not such Note bears the Private Placement Legend, if (x)
the requested transfer is after the second anniversary of the Issue Date;
provided, however, that neither the Company nor any Affiliate of the
-------- -------
Company has held any beneficial interest in such Note, or portion thereof,
at any time on or prior to the second an-
<PAGE>
-49-
niversary of the Issue Date or (y) such transfer is being made by a
proposed transferor who has checked the box provided for on the form of
Note stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification provided for on
the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Note 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 QIB within the meaning of Rule 144A,
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
it 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) if the proposed transferee is a Participant and the Notes to be
transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the 144A Global Note, upon receipt by the
Registrar of written instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall register the transfer
and reflect on its book and records the date and an increase in the
principal amount of the 144A Global Note in an amount equal to the
principal amount of Physical Notes to be transferred, and the Trustee shall
cancel the Physical Note so transferred; and
(iii) if the proposed transferor is a Participant seeking to transfer
an interest in the IAI Global Note or the Regulation S Global Note, upon
receipt by the Registrar of written instructions given in accordance with
the Depository's and the Registrar's procedures, the Registrar shall
register the transfer and reflect on its books and records the date and (A)
a decrease in the principal amount of the IAI Global Note or the Regulation
S Global Note, as the case may be, in an amount equal to the principal
amount of the Notes to be transferred and (B) an increase in the principal
amount of the 144A Global Note in an amount equal to the principal amount
of the Notes to be transferred.
(c) Restrictions on Transfer and Exchange of Global Notes.
-----------------------------------------------------
Notwithstanding any other provisions of this Indenture,
<PAGE>
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a Global Note may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(d) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar or co-Registrar shall deliver only Notes that
bear the Private Placement Legend unless (i) there is delivered to the Trustee
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 or (ii) such Note has been sold pursuant to an effective registration
statement under the Securities Act.
(e) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to paragraph 5 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the aggregate principal amount of the Notes to be redeemed.
Such notice must be given at least 30 days prior to the Redemption Date
<PAGE>
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(unless a shorter notice shall be satisfactory to the Trustee), but shall not be
given more than 60 days before the Redemption Date. Any such notice may be
cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Notes To Be Redeemed.
---------------------------------
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on which
the Notes are listed as certified to the Trustee by the Company, or, in the
absence of such requirements or if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of $1,000 or less shall be redeemed in part. On
- - -------- -------
and after the Redemption Date, interest shall cease to accrue on the Note or
portions of them called for redemption; provided, further, however, that if a
-------- ------- -------
partial redemption is made with the proceeds of an Equity Offering, selection of
the Notes or portions thereof for redemption shall be made by the Trustee only
on a pro rata basis or on as nearly a pro rata basis as is practicable (subject
to DTC procedures), unless such method is otherwise prohibited.
SECTION 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
and, in the case of an Equity Proceeds Offer within 30 days following the date
upon which the relevant Equity Offering is consummated, the Company shall mail
or cause to be mailed a notice of redemption by first-class mail to each Holder
whose Notes are to be redeemed at its registered address, with a copy to the
Trustee. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid (the "Redemption Price");
(3) the paragraph and subparagraph of the Notes pursuant to which the
Notes are being redeemed;
<PAGE>
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(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(6) that, unless the Company defaults in making the redemption
payment, interest, if any, on Notes called for redemption shall cease to
accrue on and after the Redemption Date, and the only remaining right of
the Holders of such Notes is to receive payment of the Redemption Price
upon surrender to the Paying Agent of the Notes redeemed;
(7) that, if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
and
(8) that, if less than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price. Upon surrender to the Trustee or Paying Agent, such Notes
called for redemption shall be paid at the Redemption Price, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant record
dates referred to in the Notes. Interest shall accrue on or after the Redemption
Date and shall be payable only if the Company defaults in payment of the
Redemption Price.
<PAGE>
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SECTION 3.05. Deposit of Redemption Price.
---------------------------
On or before 11:00 a.m. New York City time on the Redemption Date,
the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the Redemption Price of all Notes to be redeemed on that date. The Paying
Agent shall promptly return to the Company any U.S. Legal Tender so deposited
that is not required for that purpose, except with respect to monies owed as
obligations to the Trustee pursuant to Article Seven.
Unless the Company fails to comply with the preceding paragraph and
defaults in the payment of such Redemption Price, interest on the Notes to be
redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes are presented for payment.
SECTION 3.06. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
----------------
The Company shall pay the interest on the Notes on the dates and in
the manner provided in the Notes. An installment of principal of or interest on
the Notes shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds on
that date U.S. Legal Tender designated for and sufficient to pay in a timely
manner the installment in full and is not prohibited from paying such money to
the Holders, pursuant to the terms of this Indenture. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
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, premium or interest payments hereunder.
<PAGE>
-54-
SECTION 4.02. Maintenance of Office or Agency.
-------------------------------
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 13.02.
SECTION 4.03. Corporate Existence.
-------------------
Except as otherwise permitted by Article Five, the Company shall do
or cause to be done all things reasonably necessary to preserve and keep in full
force and effect its corporate or other existence and the corporate or other
existence of each of its Restricted Subsidiaries in accordance with the
respective organizational documents of each such Restricted Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Restricted Subsidiary; provided, however, that the Company shall not be
-------- -------
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Restricted Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Company or such
Restricted Subsidiary, as the case may be, shall determine that the preservation
thereof is no longer reasonably necessary or desirable in the conduct of the
business of the Company or any such Restricted Subsidiary.
SECTION 4.04. Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
properties of it or any of its Subsidiaries and (ii) all material lawful claims
for labor, materials, supplies and services that, if unpaid, might by law become
a Lien upon the property of it or any of its Subsidiaries; provided, however,
-------- -------
that there shall not be required to be paid or discharged any such tax,
assessment or charge, the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings and for which adequate
provision has been made or for which adequate reserves, to the extent required
un-
<PAGE>
-55-
der GAAP, have been taken or where the failure to effect such payment or
discharge is not adverse in any material respect to the Holders.
SECTION 4.05. Maintenance of Properties and Insurance.
---------------------------------------
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, maintain its material properties in normal condition (subject
to ordinary wear and tear) and make all reasonably necessary repairs, renewals
or replacements thereto as in the judgment of the Company may be reasonably
necessary to the conduct of the business of the Company and its Restricted
Subsidiaries; provided, however, that nothing in this Section 4.05 shall prevent
-------- -------
the Company or any of its Restricted Subsidiaries from discontinuing the
operation and maintenance of any of its properties, if such properties are, in
the reasonable and good faith judgment of the Board of Directors of the Company
or the Restricted Subsidiary, as the case may be, no longer reasonably necessary
in the conduct of their respective businesses.
(b) The Company shall provide or cause to be provided, for itself and
each of its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith judgment of the Board of Directors of the Company, are adequate and
appropriate for the conduct of the business of the Company and such Restricted
Subsidiaries in a prudent manner, with reputable insurers or with the government
of the United States of America or an agency or instrumentality thereof, in such
amounts, with such deductibles, and by such methods as shall be customary, in
the good faith judgment of the Board of Directors of the Company, for companies
similarly situated in the industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each of the Company's fiscal years, an Officers' Certificate (signed
by the principal executive officer, principal financial officer and principal
accounting officer) stating that a review of its activities and the activities
of its Restricted Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing officers with a view to determining whether
it has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such officer signing such certificate,
that to the best of his knowledge the Company during such
<PAGE>
-56-
preceding fiscal year has kept, observed, performed and fulfilled each and every
such obligation and no Default or Event of Default occurred during such year and
at the date of such certificate there is no Default or Event of Default that has
occurred and is continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe the Default or Event of Default and
its status with particularity. The Officers' Certificate shall also notify the
Trustee should the Company elect to change the manner in which it fixes its
fiscal year end.
(b) The annual financial statements delivered to the Trustee pursuant
to Section 4.08 shall be accompanied by a written report of the Company's
independent accountants that in conducting their audit of the financial
statements which are a part of such annual report or such annual financial
statements nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article Four, Five or Six of
this Indenture insofar as they relate to accounting matters or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) So long as any of the Notes are outstanding (i) if any Default or
Event of Default has occurred and is continuing or (ii) if any Holder seeks to
exercise any remedy hereunder with respect to a claimed Default under this
Indenture or the Notes, the Company shall promptly deliver to the Trustee by
registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action within five Business Days of its
becoming aware of such occurrence.
SECTION 4.07. 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 department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as are not in the aggregate
reasonably likely to have a material adverse effect on the financial condition
or
<PAGE>
-57-
results of operations of the Company and its Restricted Subsidiaries taken as
a whole.
SECTION 4.08. Reports to Holders.
------------------
(a) The Company (at its own expense) will deliver to the Trustee
within 15 days after the filing of the same with the Commission, copies of the
quarterly and annual reports and of the information, documents and other
reports, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants, if
any, which the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act.
(b) Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will provide the Trustee and Holders with such annual reports and such
information, documents and other reports specified in Sections 13 and 15(d) of
the Exchange Act.
(c) In addition, whether or not required by the rules and regulations
of the Commission, at any time after the Company files the Exchange Offer
Registration Statement with the Commission, the Company will file a copy of all
such information with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available to
investors who request it in writing. The Company will also comply with the other
provisions of TIA (S) 314(a).
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of, premium or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the obligations or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the
<PAGE>
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execution of every such power as though no such law had been enacted.
SECTION 4.10. Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Equity Interests, (b) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of the Company, (c) purchase, redeem or otherwise
acquire or retire for value any Indebtedness (other than the Notes) that is
subordinated to the Notes, except at final maturity, (d) make any Investments
(other than Permitted Investments) (all such payments and other actions set
forth in clauses (a) through (d) above being referred to as "Restricted
Payments"), if, at the time of or immediately after giving effect to such
Restricted Payment, (i) a Default or Event of Default has occurred and is
continuing or would result therefrom; (ii) the Company is not able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.12; (iii) the aggregate amount of Restricted Payments
made subsequent to the Issue Date (the amount of any such payment, if other than
cash, to be determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a resolution in an Officers' Certificate delivered
to the Trustee), together with the aggregate of all other Restricted Payments
made after the date of this Indenture (including Restricted Payments permitted
by the next succeeding paragraph other than pursuant to clauses (ii), (iii),
(iv), (vii), (ix) or (x) or (vi) (to the extent "key-man" life insurance
policies are used to make such redemptions or repurchases in respect thereof),
shall exceed the sum of (1) $5,000,000, plus (2) the sum of (x) 50% of the
Consolidated Net Income of the Company (or, if such Consolidated Net Income for
such period is a loss, minus 100% of such loss) earned subsequent to the Issue
Date and on or prior to the date the Restricted Payment occurs (the "Reference
Date") (treating such period as a single accounting period); plus (y) 100% of
the aggregate net proceeds received by the Company (including the fair market
value of property other than cash) from the issue or sale subsequent to the
Issue Date of Qualified Capital Stock of the Company or of Disqualified Capital
Stock or debt securities of the Company that have been converted into, or
exchanged for, such Qualified Capital Stock (other than Qualified Capital Stock
sold or issued to a Subsidiary of the Company), plus (3) 100% of the aggregate
pro-
<PAGE>
-59-
ceeds (including the fair value of property other than cash) received by the
Company as capital contributions to the Company after the date on which the
Notes are originally issued, plus (4) the amount of the net reduction in
Investments in Unrestricted Subsidiaries resulting from (A) the payment of cash
dividends or the repayment in cash of the principal of loans or the cash return
on any Investment, in each case to the extent received by the Company or any
Wholly Owned Restricted Subsidiary of the Company from Unrestricted Subsidiaries
and to the extent not included in Consolidated Net Income, (B) to the extent
that any Restricted Investment that was made after the date of this Indenture is
sold for cash or otherwise liquidated or repaid for cash and to the extent such
proceeds are not included in Consolidated Net Income, the after-tax cash return
of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (C) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued as provided in the definition of "Investment"),
such aggregate amount of the net reduction in Investments not to exceed in the
case of any Unrestricted Subsidiary, the amount of Restricted 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.
Notwithstanding the foregoing, these provisions do not prohibit (i)
the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of this Indenture; (ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company, or the defeasance,
redemption or repurchase of subordinated Indebtedness in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of the Company) of Equity Interests of the Company (other than any Disqualified
Stock) or out of the proceeds of a substantially concurrent cash capital
contribution received by the Company; (iii) the defeasance, redemption or
repurchase of subordinated Indebtedness with the net proceeds from an incurrence
of Refinancing Indebtedness; (iv) the making of Restricted Payments to Holdings
to be used by Holdings to pay its reasonable out-of-pocket operating and
administrative expenses, including directors' fees, legal and audit expenses,
Commission compliance expenses and corporate franchise and other taxes; provided
--------
that no such payments may be made to any Affiliate of Holdings; (v) the making
of Investments in joint ventures that are engaged in a Permitted Business in an
--------------
aggregate amount not to exceed $10,000,000; (vi) the making of Restricted
Payments to
<PAGE>
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Holdings of up to $2,000,000 per year or $5,000,000 in the aggregate (which
amount shall be increased by the aggregate amount of (x) net cash proceeds from
sales of Capital Stock of Holdings to management employees subsequent to the
date of this Indenture to the extent contributed to the Company and not
otherwise applied to any calculation under clause (y) of the immediately
preceding paragraph to make a Restricted Payment and (y) any "key-man" insurance
policies that are used to make such redemptions or repurchases), net of the cash
proceeds received by the Company from subsequent reissuances of such Equity
Interests to new members of management, to be used by Holdings to redeem,
repurchase or retire for value any Equity Interests of Holdings held by one or
more employees of Holdings or the Company or any of its Subsidiaries in
connection with the termination of such employee's or employees' employment with
such employer for any reason; provided that the cancellation of Indebtedness
--------
owing to the Company from members of management of the Company or any of its
Restricted Subsidiaries in connection with a repurchase of Capital Stock of
Holdings will not be deemed to constitute a Restricted Payment under this
Indenture; (vii) the making of Restricted Payments to or for the benefit of
Holdings pursuant to the Tax Sharing Agreement or the Holdings Service Agreement
in each case as in effect on the Issue Date; (viii) the acquisition by a
Receivables Subsidiary in connection with a Qualified Receivables Transaction of
Equity Interests of a trust or other Person established by such Receivables
Subsidiary to effect such Qualified Receivables Transaction; (ix) so long as no
Default or Event of Default shall have occurred and be continuing, payments to
Holdings not to exceed $100,000 in the aggregate, to enable Holdings to make
payments to holders of its Capital Stock in lieu of issuance of fractional
shares of its Capital Stock; and (x) repurchases of Capital Stock deemed to
occur upon the exercise of stock options if such Capital Stock represents a
portion of the exercise price thereof.
SECTION 4.11. Limitations on Transactions with Affiliates.
-------------------------------------------
(a) The Company will not and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, conduct any business or
enter into any transaction or series of transactions with or for the benefit of
any of their Affiliates involving aggregate consideration in excess of $1.0
million (each an "Affiliate Transaction") other than (x) Affiliate Transactions
permitted under paragraph (b) below and (y) Affiliate Transactions on terms that
are not materially less favorable to the Company than those that could have been
<PAGE>
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obtained in a comparable transaction on an arm's-length basis from a Person not
an Affiliate of the Company. With respect to all Affiliate Transactions
involving aggregate payments equal to or in excess of $5,000,000 and less than
$10,000,000, the Company or such Restricted Subsidiary, as the case may be,
shall have delivered a resolution of the Board of Directors of the Company set
forth in an officers' certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (y) above. All
Affiliate Transactions (and each series of related Affiliate Transactions which
are similar or part of a common plan) involving aggregate payments or other
property with a fair market value in excess of $10,000,000, the Company or such
Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view from an
investment bank of national standing with an expertise in underwriting
non-investment grade debt securities and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
any employment agreement or stock option agreement entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business; (ii)
transactions between or among the Company and its Restricted Subsidiaries; (iii)
transactions permitted by Section 4.10; (iv) the payment of reasonable fees to
directors of the Company or its Restricted Subsidiaries; (v) 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 of the Company entered into in the ordinary course of business
and approved by the Board of Directors, (vi) transactions exclusively between or
among the Company and/or its Wholly Owned Restricted Subsidiaries; provided that
--------
such transactions are not otherwise prohibited by this Indenture, transactions
exclusively between a Receivables Subsidiary and any Person in which the
Receivables Subsidiary has an Investment in connection with a Qualified
Receivable Transaction; (vii) any agreements as in effect as of the Issue Date
or any amendment thereto or any transaction contemplated thereby (including
pursuant to any amendment thereto) in any replacement agreement thereto so long
as any such amendment or replacement is not more disadvantageous to the Holders
in any material respect than the original agreement as in effect on the Issue
Date; (viii) reasonable fees and related expenses paid to the Principals and
their Affiliates for management, consulting and advisory services as determined
in good
<PAGE>
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faith by the Company's Board of Directors or senior management; (ix) payments by
the Company or any of its Restricted Subsidiaries to the Principals and their
Affiliates made pursuant to any financial advisory, financing, underwriting or
placement agreement as in effect as of the Issue Date or any amendment thereto,
or any transaction contemplated thereby (including pursuant to any amendment
thereto) or any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any material
respect than the original agreement as in effect on the Issue Date; (x) payments
or loans to employees or consultants which are approved by the Board of
Directors of the Company in good faith; (xi) transactions permitted by, and
complying with the provisions of Section 5.01; and (xii) transactions with
customers, clients, suppliers, joint venture partners or purchasers or sellers
of goods or services, in each case in the ordinary course of business
(including, without limitation, pursuant to joint venture agreements) and
otherwise in compliance with the terms of this Indenture which are fair to the
Company or its Restricted Subsidiaries, in the reasonable determination of the
Board of Directors of the Company or the senior management thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party.
SECTION 4.12. Limitation on Additional Indebtedness
and Issuance of Preferred Stock.
-------------------------------------
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee, acquire, become liable contingently or otherwise, with
respect to, or otherwise become responsible for payment of any Indebtedness
(other than Permitted Indebtedness), and the Company will not permit any of its
Subsidiaries to issue any shares of Preferred Stock other than Permitted
Subsidiary Preferred Stock; provided, however, that if no Default or Event of
-------- -------
Default shall have occurred or be continuing at the time of or as a consequence
of the incurrence of such Indebtedness or issuance of Preferred Stock, the
Company or any of its Restricted Subsidiaries that are Guarantors may incur
Indebtedness and Restricted Subsidiaries that are Guarantors may issue shares of
Preferred Stock if on the date of the incurrence of such Indebtedness or
issuance of such Preferred Stock, after giving effect to the incurrence or
issuance thereof, the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Pre-
<PAGE>
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ferred Stock is issued, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Preferred Stock had been issued, as the case may be,
at the beginning of such four-quarter period would have been greater than 2.0 to
1.0 for Indebtedness incurred or Preferred Stock issued on or prior to July 15,
2000 and 2.25 to 1.0 thereafter.
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
-----------------------------------------------------
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to (a) pay dividends or
make any other distributions to the Company or any of its Restricted
Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest
or participation in, or measured by, its profits, (b) pay any indebtedness owed
to the Company or any of its Subsidiaries, (c) make loans or advances or pay any
indebtedness owed to the Company or any of its Subsidiaries or (d) transfer any
of its property or assets to the Company or any of its Subsidiaries, except for
such encumbrances or restrictions existing under or by reason of (1) Existing
Indebtedness as in effect on the date of this Indenture, (2) this Indenture, the
Notes and the Guarantees, (3) applicable law, (4) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (5) customary nonassignment
provisions in contracts entered into in the ordinary course of business, (6)
Purchase Money Obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (d) above on
the property so acquired, (7) any restriction or encumbrance contained in
contracts for sale of assets permitted by Section 4.15 in respect of the assets
being sold pursuant to such contracts, (8) Indebtedness or other contractual
requirements of a Receivables Subsidiary in connection with a Qualified
Receivables Transaction, provided that such restrictions apply only to such
Receivables Subsidiary, (9) restrictions on the transfer of assets subject to
any Lien permitted under this Inden-
<PAGE>
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ture imposed by the holder of such Lien, (10) Refinancing Indebtedness;
provided, however, that the provisions relating to such restrictions contained
- - -------- -------
in such Refinancing Indebtedness are not less favorable to the Company in any
material respect as determined by the Board of Directors of the Company than the
provisions relating to such restrictions contained in the agreements referred to
in clause (a), (b), (c) or (d) above.
SECTION 4.14. Change of Control.
-----------------
(a) Upon a Change of Control, the Company will be required to make an
offer to repurchase the Notes pursuant to the offer described below (the "Change
of Control Offer"), at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase.
(b) Prior to the mailing of the notice referred to in paragraph (c)
below, but in any event within 30 days following any Change of Control, the
Company will (i) repay in full and terminate all commitments under indebtedness
under the Credit Agreement and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full and terminate all
commitments under all Indebtedness under the Credit Agreement and all other such
Senior Debt and to repay the Indebtedness owed to each lender that has accepted
such offer or (ii) obtain the requisite consents under the Credit Agreement and
all other Senior Debt to permit the repurchase of the Notes as provided below.
The Company shall first comply with the covenant in the immediately preceding
sentence before it shall be required to repurchase Notes pursuant to the
provisions described below. The Company's failure to comply with the immediately
preceding paragraph and the next paragraph shall constitute an Event of Default
described in clause (3) and not in clause (2) under Section 6.01.
(c) Within 30 days following the date upon which a Change of Control
occurs, the Company must send, by first class mail, a notice to each Holder,
with a copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant
to Section 4.14 of this Indenture and that all Notes validly tendered and
not withdrawn will be accepted for payment;
<PAGE>
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(2) the purchase price (including the amount of accrued interest, if
any) and the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed, other than as may
be required by law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a Change
of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent and Registrar for the Notes at the address
specified in the notice prior to the close of business on the third
Business Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(7) that Holders whose Notes are purchased only in part will be issued
new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided, however, that each Note purchased and each new
-------- -------
Note issued shall be in a principal amount of $1,000 or integral multiples
thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control.
(d) On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Notes or portions thereof tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all Notes
so tendered and (iii) deliver to the Trustee Notes so ac-
<PAGE>
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cepted together with an Officers' Certificate stating the Notes or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Notes so accepted payment in an amount equal to the purchase
price plus accrued interest, if any, and the Trustee shall promptly authenticate
and mail to such Holders new Notes equal in principal amount to any unpurchased
portion of the Notes surrendered. Any Notes not so accepted shall be promptly
mailed by the Company to the Holder thereof. For purposes of this Section 4.14,
the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to a Change
of Control Offer shall be returned by the Trustee to the Company.
(e) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of this Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations relating to such Change of Control Offer by virtue
thereof.
SECTION 4.15. Limitation on Asset Sales.
-------------------------
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless: (i) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors, the approval shall be evidenced by a Board
Resolution); (ii) at least 75% of the consideration received by the Company or
the Restricted Subsidiary, as the case may be, from such Asset Sale shall be
cash or Cash Equivalents and is received at the time of such disposition;
provided, however, that the amount of (A) any liabilities (as shown on the
- - -------- -------
Company's or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated in right of payment to the
Notes) that are assumed by the transferee of any such assets and (B) any notes
or other obligations received by the Company or such Restricted Subsidiary from
such transferee that are immediately
<PAGE>
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converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received), shall be deemed to be cash for purposes of this
provision; and provided, further, that the 75% limitation referred to in this
-------- -------
clause (ii) shall not apply to any Asset Sale in which the cash portion of the
consideration received therefrom, determined in accordance with the foregoing
proviso, is equal to or greater than what the after-tax proceeds would have been
had such Asset Sale complied with the aforementioned 75% limitation; and (iii)
upon the consummation of an Asset Sale, the Company shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 270 days of receipt thereof either (A) to prepay any Senior Debt
and, in the case of any Senior Debt under any revolving credit facility, effect
a permanent reduction in the availability under such revolving credit facility,
(B) to invest in another business, capital expenditures or other long-term
tangible assets, in each case, in the same or a similar line of business as the
Company or any Subsidiary was engaged in on the date of this Indenture
("Replacement Assets") or (C) a combination of payment and investment permitted
by clauses (A) and (B) above. On the 271st day after an Asset Sale or such
earlier date, if any, as the Board of Directors of the Company or of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (iii)(A), (iii)(B) or (iii)(C) of the
next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B)
and (iii)(C) of the next preceding sentence (each, a "Net Proceeds Offer
Amount") shall be applied by the Company or such Subsidiary to make an offer to
purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment
Date") not less than 30 nor more than 45 days following the applicable Net
Proceeds Offer Trigger Date, from all Holders on a pro rata basis that amount of
--- ----
Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the
principal amount of the Notes to be purchased, plus accrued and unpaid interest
thereon, if any, to the date of purchase; provided, however, that if at any time
-------- -------
any non-cash consideration received by the Company or any Restricted Subsidiary
of the Company, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash (other than interest
received with respect to any such non-cash consideration), then such conversion
or disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this Section 4.15. A
transfer of assets by the Company to a Wholly Owned Restricted Subsidiary
<PAGE>
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or by a Restricted Subsidiary to the Company or to another Wholly Owned
Restricted Subsidiary will not be deemed to be an Asset Sale.
(b) Notwithstanding the immediately preceding paragraph (a) the Company
and its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraph to the extent (i) at least 75% of the
consideration for such Asset Sale constitutes Replacement Assets, cash, Cash
Equivalents and/or marketable securities (i.e., such securities which would be
----
converted into cash within 180 days of the acquisition thereof) and (ii) such
Asset Sale is for fair market value (as determined in good faith by the
Company's Board of Directors); provided that any consideration not constituting
--------
Replacement Assets received by the Company or any of its Restricted Subsidiaries
in connection with any Asset Sale permitted to be consummated under this
paragraph shall be subject to the provisions of the preceding paragraph.
(c) Notwithstanding the foregoing, if a Net Proceeds Offer Amount is
less than $10,000,000, the application of the Net Cash Proceeds constituting
such Net Proceeds Offer Amount to a Net Proceeds Offer may be deferred until
such time as such Net Proceeds Offer Amount plus the aggregate amount of all Net
Proceeds Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date
relating to such initial Net Proceeds Offer Amount from all Asset Sales by the
Company and its Restricted Subsidiaries aggregates at least $10,000,000, at
which time the Company or such Subsidiary shall apply all Net Cash Proceeds
constituting all Net Proceeds Offer Amounts that have been so deferred to make a
Net Proceeds Offer (the first date the aggregate of all such deferred Net
Proceeds Offer Amounts is equal to $10,000,000 or more shall be deemed to be a
"Net Proceeds Offer Trigger Date"). To the extent the aggregate amount of the
Notes tendered pursuant to the Net Proceeds Offer is less than the Net Proceeds
Offer Amount, the Company may use such deficiency for general corporate
purposes. Upon completion of such offer to purchase, the Net Proceeds Offer
Amount shall be reset at zero.
(d) Subject to the deferral right set forth in the final proviso of
Section 4.15(a), each notice of a Net Proceeds Offer pursuant to this Section
4.15 shall be mailed, by first-class mail, by the Company to Holders of Notes at
their last registered address not less than 30 days nor more than 60 days
following the Net Proceeds Offer Trigger Date, with a copy to the Trustee. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursu-
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ant to the Net Proceeds Offer and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to Section 4.15
of this Indenture, that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes tendered
-------- -------
in a Net proceeds Offer plus accrued interest at the expiration of such
offer exceeds the aggregate amount of the Net Proceeds Offer, the Company
shall select the Notes to be purchased on a pro rata basis (with such
--- ----
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000 or multiples thereof shall be purchased) and
that the Net Proceeds Offer shall remain open for a period of 20 Business
Days or such longer periods as may be required by law;
(2) the purchase price (including the amount of accrued interest) and
the Net Proceeds Offer Payment Date (which shall be not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date
and which shall be at least five business Days after the Trustee receives
notice thereof from the Company);
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Net Proceeds Offer shall cease to
accrue interest after the Net Proceeds Offer Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day prior to the Net Proceeds
Offer Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the
Net Proceeds Offer Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Notes the holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased; and
<PAGE>
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(7) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Note surrendered; provided, however, that each Note
-------- -------
purchased and each new Note issued shall be in an original principal
amount of $1,000 or integral multiples thereof.
On or before the Net Proceeds Offer Payment Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (d)(1) above,
(ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
purchase price plus accrued interest, if ant, of all Notes to be purchased and
(iii) deliver to the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the purchase price plus accrued interest,
if any. For purposes of this Section 4.15, the Trustee shall act as the Paying
Agent.
Any amounts remaining after the purchase of Notes pursuant to a Net
Proceeds Offer shall be returned by the Trustee to the Company.
(e) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of this Section 4.15, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of this Section 4.15 by virtue
thereof. The agreements governing certain outstanding Senior Debt of the Company
will require that the Company and its Subsidiaries apply all proceeds from asset
sales to repay in full outstanding obligations under such Senior Debt prior to
the application of such proceeds to repurchase outstanding notes.
SECTION 4.16. Prohibition on Incurrence of Senior Subordinated Debt.
-----------------------------------------------------
Neither the Company nor any Guarantor will incur or suffer to exist
Indebtedness that is senior in right of payment to the Notes or such Guarantor's
Guarantee and subordinate in
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right of payment to any Senior Debt of the Company or Guarantees by such
Guarantor.
SECTION 4.17. Limitation on Liens.
-------------------
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist or remain in effect any Liens of any kind against or upon any of
its property or assets of the Company or any of its Restricted Subsidiaries
whether owned on the Issue Date or acquired after the Issue Date, or any
proceeds therefrom unless (i) in the case of Liens securing Indebtedness that is
expressly subordinate or junior in right of payment to the Notes, the Notes are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (ii) in all other cases, the Notes are equally and
ratably secured, except for (A) Liens existing as of the Issue Date and any
extensions, renewals or replacements thereof; (B) Liens securing Senior Debt
and/or Guarantor Senior Debt; (C) Liens securing the Notes and the Guarantees;
(D) Liens of the Company or a Wholly Owned Restricted Subsidiary on assets of
any Restricted Subsidiary of the Company; (E) Liens securing Indebtedness which
is incurred to refinance Indebtedness which has been secured by a Lien permitted
under this Indenture and which has been incurred in accordance with the
provisions of this Indenture; provided, however, that such Liens do not extend
-------- -------
to or cover any property or assets of the Company or any of its Subsidiaries not
securing the Indebtedness so refinanced; and (F) Permitted Liens.
SECTION 4.18. Conduct of Business.
-------------------
The Company and its Subsidiaries will not engage in any businesses
which are not the same, similar or related to or a reasonable extension,
development or expansion of, the businesses in which the Company and its
Subsidiaries are engaged on the Issue Date.
SECTION 4.19. Limitation on Issuances and Sales of Capital Stock of
Wholly Owned Restricted Subsidiaries.
-----------------------------------------------------
Other than in connection with the issuance of Preferred Stock issued in
accordance with the Fixed Charge Coverage Ratio under Section 4.12 and Permitted
Subsidiary Preferred Stock, the Company (i) will not, and will not cause or
permit any Wholly Owned Restricted Subsidiary of the Company to, transfer,
convey, sell, lease or otherwise dispose of any Capi-
<PAGE>
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tal Stock of any Wholly Owned Restricted Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Restricted Subsidiary of the Company)
unless (a) such transfer, conveyance, sale, lease or other disposition is of all
of the Capital Stock of such Wholly Owned Restricted Subsidiary and (b) the Net
Cash Proceeds from such transfer, conveyance, sale, lease or other disposition
are applied in accordance with Section 4.15, and (ii) will not permit any Wholly
Owned Restricted Subsidiary of the Company to issue any of its Equity Interests
(other than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company.
SECTION 4.20. Guarantee of the Notes.
----------------------
(a) The Company will not permit any Restricted Subsidiary to Guarantee
any Indebtedness (other than (A) Indebtedness and other obligations under the
Credit Agreement, (B) Permitted Indebtedness of a Restricted Subsidiary, (C)
Indebtedness under any Currency Agreements or Commodity Agreements in reliance
on clause (vi) of the definition of Permitted Indebtedness, (D) Hedging
Obligations incurred in reliance on clause (iv) of the definition of Permitted
Indebtedness, or (E) Indebtedness incurred in reliance on clause (x) of the
definition of Permitted Indebtedness), unless such Restricted Subsidiary enters
into or has entered into a Guarantee of the Notes in accordance with the terms
of this Indenture (except if such Guarantee is a Guarantee by a Foreign
Subsidiary solely of the Indebtedness of another Foreign Subsidiary).
(b) Any such Guarantee of the Notes by a Restricted Subsidiary will be
subordinated to all Guarantor Senior Debt of such Subsidiary, including any
guarantee by such Restricted Subsidiary of the Company's obligations under the
Credit Agreement, on substantially the same terms as the Notes are subordinated
to Senior Debt of the Company. Any such Guarantee by a Restricted Subsidiary
will be limited in amount to an amount not to exceed the maximum amount that can
be guaranteed by that Restricted Subsidiary without rendering such Guarantee
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally.
Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of
the Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged, without any further action required on
the part of the Trustee or any Holder, upon: (i) release of such Restricted
Subsidiary from its liability in respect of the
<PAGE>
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Indebtedness in connection with which such Guarantee was executed and delivered
pursuant to the preceding paragraph (including any deemed release upon payment
in full of all obligations under such Indebtedness); or (ii) sale or other
disposition of a Restricted Subsidiary that is a Guarantor (other than to the
Company or an Affiliate of the Company) permitted by this Indenture, provided
that the proceeds of such sale or disposition are applied in accordance with the
provisions described under Section 4.15.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
----------------------------------------
(a) The Company will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of the Company's assets, whether as an entirety or substantially as an entirety
to any Person unless:
(i) either (A) the Company is the surviving corporation or
the Person formed by or surviving any such consolidation or merger (if
other than the Company) or (B) the surviving person to which such sale,
assignment, transfer, lease, conveyance or other disposition (x) shall have
been made is a corporation, partnership or trust and validly existing under
the laws of the United States, any state thereof or the District of
Columbia and (y) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made and shall expressly assume, by supplemental indenture, in a form
reasonably satisfactory to the Trustee all the obligations of the Company
under the Notes and this Indenture and the Registration Rights Agreement;
(ii) immediately after such transaction no Default or Event of Default
exists; and
(iii) the Company or any Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposi-
<PAGE>
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tion shall have been made, will, at the time of such transaction and
after giving pro forma effect thereto (including giving effect to any
--- -----
Indebtedness and Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction) as if
such transaction had occurred at the beginning of the applicable four-
quarter period, be permitted to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.12.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties and assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
(c) Each Guarantor (other than any Guarantor whose Guarantee
is to be released in accordance with the terms of the Guarantee and this
Indenture in connection with any transaction complying with the provisions of
Section 4.15) will not, and the Company will not cause or permit any Guarantor
to, consolidate with or merge with or into any Person other than the Company or
any other Guarantor unless: (i) the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) or to which such sale,
lease, conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia; (ii) such entity assumes by supplemental indenture
all of the obligations of the Guarantor on the Guarantee; (iii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; and (iv) immediately after giving effect to
such transaction and the use of any net proceeds therefrom on a pro forma basis,
--- -----
the Company could satisfy the provisions of clause (iii) of the first paragraph
of this Section 5.01. Any merger or consolidation of a Guarantor with and into
the Company (with the Company being the surviving entity) or another Guarantor
that is a Wholly Owned Restricted Subsidiary of the Company need only comply
with the following sentence of this Section 5.01. The Company or the surviving
entity shall have delivered to the Trustee an officers' certificate and an
opinion of counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental
<PAGE>
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indenture comply with the applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such transaction have been
satisfied.
SECTION 5.02. Successor Corporation Substituted.
---------------------------------
Upon any consolidation, combination or merger, or any transfer
of all or substantially all of the assets of the Company in accordance with
Section 5.01 in which the Company is not the continuing corporation, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture and the Notes with the same effect as if such successor
Person had been named as the Company herein. When a successor corporation
assumes all of the obligations of the Company hereunder and under the Notes and
agrees to be bound hereby and thereby, the predecessor shall be released from
such obligations.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
-----------------
Each of the following shall be an "Event of Default":
(1) the failure to pay interest, if any, on any Notes when
the same becomes due and payable and the default continues for a period
of 30 days;
(2) the failure to pay the principal on any Notes, when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including, the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or Net Proceeds Offer)
(whether or not such payment shall be prohibited by the provisions of
this Indenture);
(3) a default in the observance or performance of any other
covenant or agreement contained in this Indenture which default
continues for a period of 30 days after the Company receives written
notice specifying the default (and demanding that such default be
remedied) from the Trustee or the Holders of at least 25% of the
outstanding
<PAGE>
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principal amount of the Notes (except in the case of a default with
respect to Section 5.01, which will constitute an Event of Default with
such notice requirement but without such passage of time requirement);
(4) one or more judgments in an aggregate amount in excess
of $10,000,000 (to the extent not covered by third-party insurance as
to which the insurance company has acknowledged coverage) shall have
been rendered against the Company or any of its Significant Restricted
Subsidiaries and such judgments remain undischarged, unpaid or unstayed
for a period of 60 days after such judgment or judgments become final
and non-appealable;
(5) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Company or any of its Restricted
Subsidiaries (other than a Receivables Subsidiary) (or the payment of
which is guaranteed by the Company or any of its Restricted
Subsidiaries (other than a Receivables Subsidiary)), whether such
Indebtedness now exists or is created after the Issue Date, which
default either (x) is caused by a failure to pay any such Indebtedness
at its stated final maturity and such failure continues for a period of
20 days or more or (y) relates to an obligation other than the
obligation to pay such Indebtedness at its stated final maturity and
results in the holder or holders of such Indebtedness causing such
Indebtedness to become due prior to its stated final maturity (which
acceleration is not rescinded, annulled or otherwise cured within 20
days of receipt by the Company or such Restricted Subsidiary of notice
of any such acceleration) and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at stated
final maturity or the maturity of which has been so accelerated, in
each case with respect to which the default continues for a period of
20 days, aggregates $10,000,000 or more at any one time outstanding;
(6) any Guarantee by a Significant Restricted Subsidiary
being held in any judicial proceeding to be unenforceable or invalid or
failure of any Guarantee by a Significant Restricted Subsidiary to be
in full force and effect other than as permitted by the Indenture or
the denial or disaffirmance by any Guarantor that is a Signifi-
<PAGE>
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cant Restricted Subsidiary of its obligations under its Guarantee;
(7) the Company or any Significant Restricted Subsidiary of the Company
(A) commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it or for
substantially all of its property, (D) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (E)
makes a general assignment for the benefit of its creditors, or (F) takes
any corporate action to authorize or effect any of the foregoing; and
(8) a court of competent jurisdiction enters a judgment, decree or
order or relief in respect of the Company or any Significant Subsidiary of
the Company in an involuntary case or proceeding under any Bankruptcy Law,
which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any such Significant Restricted Subsidiary, (B) appoint a
Custodian of the Company or any such Significant Restricted Subsidiary or
for substantially all of its property or (C) order the winding up or
liquidation of its affairs; and such judgment, decree or order shall remain
unstayed and in effect for a period of 60 consecutive days.
SECTION 6.02. Acceleration.
------------
(a) If any Event of Default occurs and is continuing and has not been
waived pursuant to Section 6.04, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare the principal of and
accrued interest on all the Notes to be due and payable immediately;
provided, however, that so long as the Credit Agreement shall be in effect, if
- - -------- -------
an Event of Default shall have occurred and be continuing (other than an Event
of Default specified in Section 6.01(7) or (8) above with respect to the
Company), any such acceleration shall not be effective until the earlier of (x)
five business days following delivery of a notice of acceleration specifying the
respective Event of Default and stating that it is a "notice of acceleration" to
the Agent Bank under the Credit Agreement (but if only such Event of Default is
then continuing) and (y) the acceleration of any Indebtedness under the Credit
Agreement. The Trustee may withhold from Holders of
<PAGE>
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the Notes notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
(b) If an Event of Default specified in Section 6.01(7) or (8) occurs
and is continuing with respect to the Company, all unpaid principal of and
premium, if any, and accrued and unpaid interest on all of the outstanding Notes
shall ipso facto become and be immediately due and payable without any
---- -----
declaration or other act on the part of the Trustee or any Holder.
(c) At any time after a declaration of acceleration with respect to the
Notes as described in Section 6.02(a), the Holders of a majority in principal
amount of the Notes may rescind and cancel such declaration and its consequences
(i) if the rescission would not conflict with any judgment or decree, (ii) if
all existing Events of Default have been cured or waived except nonpayment of
principal or interest, if any, that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest, if any, and overdue principal that
has become due otherwise than by such declaration of acceleration has been paid,
(iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) in
the event of the cure or waiver of an Event of Default of the type described in
clauses (vi), (vii) and (viii) in the description above of Events of Default,
the Trustee shall have received an Officers' Certificate and an opinion of
counsel that such Event of Default has been cured or waived. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, or accrued and unpaid interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an
<PAGE>
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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 to the extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
-----------------------
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in
principal amount of the Notes may waive any existing Default or Event of Default
under this Indenture, and its consequences, except a default in the payment of
the aggregate principal amount of or interest, if any, on any Notes as specified
in clauses (1) and (2) of Section 6.01. When a Default or Event of Default is
waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
-------------------
Subject to Section 2.09, the Holders of a majority in principal amount
of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it, including, without limitation, any remedies
provided for in Section 6.03. Subject to Section 7.01, however, the Trustee may,
in its discretion, refuse to follow any direction that conflicts with any law or
this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of another Holder (it being understood that the Trustee shall have no
duty to ascertain whether or not such actions or forbearances are unduly
prejudicial to such Holders) or that may involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
-------- -------
proper by the Trustee, in its discretion, that is not inconsistent with such
direction.
SECTION 6.06. Limitation on Suits.
-------------------
A Holder may not pursue any remedy with respect to this Indenture or
the Notes unless:
(1) the Holder gives to the Trustee notice of a continuing
Event of Default;
(2) Holders of at least 25% in aggregate principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(3) such Holders offer to the Trustee indemnity or security
against any loss, liability or expense to be in-
<PAGE>
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curred in compliance with such request which is satisfactory to the
Trustee;
(4) the Trustee does not comply with the request within 45 days after
receipt of the request and the offer of satisfactory indemnity or security;
and
(5) during such 45-day period the Holders of a majority in aggregate
principal amount of the then outstanding Notes do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, premium and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal or interest specified in
clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of principal and
accrued interest remaining unpaid, together with interest on overdue principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in the Notes and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee 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
(including any claim for the
<PAGE>
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reasonable compensation, expenses, taxes, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relating to the Company or any other obligor upon the Notes, any of
their respective creditors or any of their respective property, and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
custodian in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07. The Company's payment obligations
under this Section 6.09 shall be secured in accordance with the provisions of
Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this Article Six, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Sections 6.09 and 7.07;
Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes
for principal, premium, if any, and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
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The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
aggregate principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent Person would exercise or use under the circumstances in the
conduct of its own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are specifically set
forth in this Indenture or the TIA and no duties, covenants,
responsibilities or obligations shall be implied in this Indenture that are
adverse to the Trustee.
(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 (including Officers'
Certifi-
<PAGE>
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cates) or opinions (including Opinions of Counsel) furnished to the
Trustee and conforming to the requirements of this Indenture. However,
as to any certificates or opinions which are required by any provision
of this Indenture to be delivered or provided to the Trustee, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01.
(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.
(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 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any 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 for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any money
or assets received by it except as the Trustee may agree with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
(g) In the absence of bad faith, negligence or willful
misconduct on the part of the Trustee, the Trustee shall
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not be responsible for the application of any money by any Paying Agent other
than the Trustee.
SECTION 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 13.05 and 13.06. The Trustee shall
not be liable for and shall be fully protected in respect of any action it
takes or omits to take in good faith in reliance on such Officers'
Certificate, or an Opinion of Counsel or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith that it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate (including any
Officers' Certificate), statement, instrument, opinion (including any
Opinion of Counsel), notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice to
the Company, to examine the books, records, and premises of the Company,
personally or by agent or attorney.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this
<PAGE>
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Indenture at the request, order or direction of any of the Holders of the
Notes pursuant to the provisions of this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Notes shall be full and complete authorization and protection from
liability with 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.
(h) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Restricted or Unrestricted Subsidiary, or their respective Affiliates, with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in this Indenture or the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if
the Trustee has actual knowledge of such Default or Event of Default, the
Trustee shall mail to each Noteholder notice of the uncured Default or Event of
Default within 60 days after such Default or Event of Default occurs. Except in
the case of a Default or an Event of Default in the payment of interest or
principal of, premium or interest on, any Note, including an accelerated payment
and the failure to make pay-
<PAGE>
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ment on the Change of Control Payment Date pursuant to a Change of Control Offer
or on the Proceeds Purchase Date pursuant to a Net Proceeds Offer and, except in
the case of a failure to comply with Article Five, the Trustee may withhold the
notice if and so long as its Board of Directors, the executive committee of its
Board of Directors or a committee of its Board of Directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
of the Holders. The Trustee shall not be deemed to have knowledge of a Default
or Event of Default other than (i) any Event of Default occurring pursuant to
Sections 6.01(1) or 6.01(2); or (ii) any Default or Event of Default of which a
Trust Officer shall have received written notification or obtained actual
knowledge. As used herein, the term "actual knowledge" means the actual fact or
statement of knowing, without any duty to make any investigation with regard
thereto.
SECTION 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after May 15 of each year beginning with May 15, 1998,
the Trustee shall, to the extent that any of the events described in TIA (S)
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Noteholder a brief report dated as of such date that complies with TIA (S)
313(a). The Trustee also shall comply with TIA (S)(S) 313(b) and 313(c).
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange, and if the Notes are so listed, the Trustee shall
comply with TIA (S) 313(d).
SECTION 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, such compensation as may be agreed upon by the
Company and the Trustee. 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,
disbursements and advances incurred or made by it in connection with the
performance of its duties and the discharge of its obligations under this
Indenture. Such
<PAGE>
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expenses shall include the reasonable fees and expenses of the Trustee's agents
and counsel.
The Company shall indemnify the Trustee and its agents, employees,
officers, stockholders and directors for, and hold them harmless against, any
loss, liability or expense incurred by them except for such actions to the
extent caused by any negligence, bad faith or willful misconduct on their part,
arising out of or in connection with the acceptance or administration of this
trust including the reasonable costs and expenses of defending themselves
against or investigating any claim or liability in connection with the exercise
or performance of any of the Trustee's rights, powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee or any of its agents, employees, officers, stockholders and directors
for which it may seek indemnity. At the Trustee's sole discretion, the Company
shall defend the claim and the Trustee shall cooperate and may participate in
the defense; provided that any settlement of a claim shall be approved in
--------
writing by the Trustee. Alternatively, the Trustee may at its option have
separate counsel of its own choosing and the Company shall pay the reasonable
fees and expenses of such counsel; provided, however, that the Company will not
-------- -------
be required to pay such fees and expenses if it assumes the Trustee's defense
and there is no conflict of interest between the Company and the Trustee and its
agents, employees, officers, stockholders and directors subject to the claim in
connection with such defense as reasonably determined by the Trustee. The
Company need not pay for any settlement made without its written consent. The
Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(7) or (8) occurs, such expenses and the
compensation for such services shall be paid to the extent allowed under any
Bankruptcy Law.
<PAGE>
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SECTION 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing at
least 10 days in advance. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by so notifying the Company and the
Trustee and may appoint a successor Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only with
the successor Trustee's acceptance of appointment as provided in this Section.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Promptly after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, 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. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
<PAGE>
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If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided, however, that
-------- -------
such corporation shall be otherwise qualified and eligible under this Article
Seven.
SECTION 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirement of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee (or in the case of
a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA (S) 310(a)(2). The Trustee shall
comply with TIA (S) 310(b); provided, however, that there shall be excluded from
-------- -------
the operation of TIA (S) 310(b)(1) any indenture or indentures under which other
notes, or certificates of interest or participation in other notes, of the
Company are outstanding, if the requirements for such exclusion set forth in TIA
(S) 310(b)(1) are met. The provisions of TIA (S) 310 shall apply to the Company
and any other obligor of the Notes.
SECTION 7.11. Preferential Collection of
Claims Against the Company.
--------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein. The
provisions of
<PAGE>
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TIA (S) 311 shall apply to the Company and any other obligor of the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01. Termination of the Company's Obligations.
----------------------------------------
The Company may terminate its obligations under the Notes and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.01, if all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes which have been replaced or paid or Notes
for whose payment U.S. Legal Tender has theretofore been deposited with the
Trustee or the Paying Agent in trust or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in Section 8.05) have
been delivered to the Trustee for cancellation and the Company has paid
sums payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have given
notice to the Trustee and mailed a notice of redemption to each Holder of
the redemption of all the Notes under arrangements satisfactory to the
Trustee for the giving of such notice or (ii) all Notes have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, U.S. Legal Tender in such amount as is
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, without consideration of reinvestment of such interest,
to pay principal of, premium, if any, and interest on the outstanding Notes
to maturity or redemption; provided that the Trustee shall have been
--------
irrevocably instructed to apply such U.S. Legal Tender to the payment of
said principal, premium, if any, interest with respect to the Notes and,
provided, further, that from and after the time of deposit, the money
-------- -------
deposited shall not be subject to the rights of holders of Senior Debt
pursuant to the provisions of Article Ten;
<PAGE>
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(c) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for or relating to the termination of the Company's
obligations under the Notes and this Indenture have been complied with.
Such Opinion of Counsel shall also state that such satisfaction and
discharge does not result in a default under the Credit Agreement (if then
in effect) or any other agreement or instrument then known to such counsel
that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive
until the Notes are no longer outstanding pursuant to the last paragraph of
Section 2.08. After the Notes are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Notes and this Indenture except for those surviving obligations specified
above.
SECTION 8.02. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option by Board Resolution of the Board
of Directors of the Company, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Notes upon compliance with the
conditions set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter,
<PAGE>
-92-
"Legal Defeasance"). For this purpose, Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.04 hereof and the other Sections of this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and any amounts deposited
under Section 8.03 hereof shall cease to be subject to any obligations to, or
the rights of, any holder of Senior Debt under Article Ten or otherwise, except
for the following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of and interest
on such Notes when such payments are due, (ii) the Company's obligations with
respect to such Notes under Article Two and Section 4.02 hereof, (iii) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (iv) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.03 hereof, be released
from its obligations under the covenants contained in Sections 4.11 through 4.20
and Article Five hereof with respect to the outstanding Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes) and Holders of the Notes and any amounts deposited under Section 8.03
hereof shall cease to be subject to any obligations to, or the rights of, any
holder of Senior Debt under Article Ten or otherwise. For this purpose, such
Covenant Defeasance means that, with respect to the outstanding Notes, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such
<PAGE>
-93-
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.01(3) hereof, but, except as specified above, the remainder of this Indenture
and such Notes shall be unaffected thereby. In addition, upon the Company's
exercise under paragraph (a) hereof of the option applicable to this paragraph
(c), subject to the satisfaction of the conditions set forth in Section 8.03
hereof, Sections 6.01(3), 6.01(4), 6.01(5) and 6.01(6) shall not constitute
Events of Default.
SECTION 8.03. Conditions to Legal Defeasance
or Covenant Defeasance.
------------------------------
The following shall be the conditions to the application of either
Section 8.02(b) or 8.02(c) hereof to the outstanding Notes:
(a) the Company shall have irrevocably deposited with the Trustee, in
trust, for the benefit of the Holders cash in U.S. dollars, non-callable
U.S. Government Obligations, or a combination thereof, in such amount as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
and interest on the Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be;
(b) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee
<PAGE>
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confirming that the Holders 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;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default with respect to the Indenture resulting from the incurrence of
Indebtedness all or a portion of which will be used to defease the Notes
concurrently with such incurrence) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under the Indenture or
any other material agreement or instrument to which the Company is a party
or by which the Company is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
others;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(h) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that (A) the trust funds will not be subject to any
rights of holder of Senior Debt, including, without limitation, those
arising under the Indenture and (B) after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally.
SECTION 8.04. Application of Trust Money.
--------------------------
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Article Eight, and
shall apply the deposited U.S.
<PAGE>
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Legal Tender and the money from U.S. Government Obligations in accordance with
this Indenture to the payment of principal of and interest on the Notes. The
Trustee shall be under no obligation to invest said U.S. Legal Tender or U.S.
Government Obligations except as it may agree with the Company.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any U.S. Legal Tender or U.S. Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.05. Repayment to the Company.
------------------------
Subject to Section 8.01, the Trustee and the Paying Agent shall
promptly pay to the Company upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided that the
--------
Trustee or such Paying Agent, before being required to make any payment, may at
the expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein which shall be at least 30 days from the date of such publication or
mailing any unclaimed balance of such money then remaining will be repaid to the
Company. After payment to the Company, Holder entitled to such money must look
to the Company for payment as general creditors unless an applicable law
designates another Person.
<PAGE>
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SECTION 8.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Article Eight by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Article
Eight until such time as the Trustee or Paying Agent is permitted to apply all
such U.S. Legal Tender or U.S. Government Obligations in accordance with Article
Eight; provided that if the Company has made any payment of interest on or
--------
principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
--------------------------
The Company and the Guarantors, when authorized by a Board Resolution
and the Trustee, together, may amend or supplement this Indenture or the Notes
without the consent of any Holders:
(1) to cure any ambiguity, defect or inconsistency, so long as such
change does not, in the opinion of the Trustee, adversely affect the rights
of any of the Holders in any material respect;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(4) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA;
(5) to make any other change that would provide any additional
benefit or rights to the Holders or that does
<PAGE>
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not adversely affect in any material respect the rights of any Noteholders
hereunder;
(6) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will
be modified or eliminated, as appropriate), and which will be treated
together with any outstanding Initial Notes, as a single issue of
securities; or
(7) to make any other change that does not, in the opinion of the
Trustee, adversely affect in any material respect the rights of any Holders
hereunder;
provided, however, that the Company has delivered to the Trustee an Opinion of
- - -------- -------
Counsel and an Officers' Certificate, each stating that such amendment or
supplement complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
-----------------------
(a) Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, may amend or supplement this Indenture or the Notes, without notice to
any other Holders. Subject to Section 6.07, the Holder or Holders of a majority
in aggregate principal amount of the outstanding Notes may waive compliance by
the Company with any provision of this Indenture or the Notes without notice to
any other Holder. No amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, shall, without the consent of each Holder of each Note
affected thereby:
(1) reduce the amount of Notes whose Holders must consent to an
amendment;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, if any, including defaulted interest, on any
Notes;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;
<PAGE>
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(4) make any Notes payable in money other than that stated in the
Notes;
(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal and interest, if any,
on such Note on or after the due date thereof or to bring suit to enforce
such payment, or permitting Holders of a majority in principal amount of
Notes to waive Defaults or Events of Default;
(6) amend, change or modify in any material respect the obligation of
the Company to make and consummate a Net Proceeds Offer with respect to any
Asset Sale that has been consummated or modify any of the provisions or
definitions with respect thereto;
(7) modify or change any provision of this Indenture or the related
definitions affecting the subordination or ranking of the Notes or any
Guarantee in a manner that adversely affects the Holders; or
(8) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture.
(b) Without the consent of at least 80% in principal amount of the
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for Notes), no waiver or amendment to this Indenture may
make any change in the provisions described above under Section 4.14 if such
change would adversely affect the rights of any Holder of Notes. Notwithstanding
the foregoing, without the consent of any Holder of Notes, the Company and the
Trustee may amend or supplement this Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's or any Guarantor's obligations to Holders of the Notes in the case
of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under this Indenture of any such Holder, or to
comply with requirements of the Commission in order to effect or maintain the
qualification of this Indenture under the TIA.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form
<PAGE>
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of any proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective (as provided in Section 9.04), the Company shall mail to the
Holders affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.03. Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to his Note or portion of his Note by notice to the
Trustee or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Notes have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver (at which time such amendment, supplement or
waiver shall become effective).
The Company may, but shall not be obligated to, fix such record date
as it may select for the purpose of determining the Holders entitled to consent
to any amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
<PAGE>
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SECTION 9.05. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note,
the Trustee may require the Holder of the Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.
SECTION 9.06. Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to and adopted in accordance with this Article Nine;
provided, however, that the Trustee may, but shall not be obligated to, execute
- - -------- -------
any such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture. The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel and
an Officers' Certificate each stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture. Such Opinion of Counsel shall not be an expense of
the Trustee.
ARTICLE TEN
SUBORDINATION OF NOTES
SECTION 10.01. Notes Subordinated to Senior Debt.
---------------------------------
The Company covenants and agrees, and the Trustee and each Holder of
the Notes, by its acceptance thereof, likewise covenants and agrees, that all
Notes shall be issued subject to the provisions of this Article Ten; and the
Trustee and each Person holding any Note, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the payment of
all Obligations on the Notes by the Company shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior payment in full in cash or Cash Equivalents of all Obligations on the
Senior Debt; that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Senior Debt, and that each holder of
Senior Debt whether now outstanding or hereafter created, incurred, assumed or
guaranteed shall
<PAGE>
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be deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Notes.
SECTION 10.02. No Payment on Notes in
Certain Circumstances.
---------------------
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of or regularly accruing fees with respect to any Senior Debt, no
payment of any kind or character shall be made by or on behalf of the Company or
any other Person on its or their behalf with respect to any Obligations on the
Notes or to acquire any of the Notes for cash or property or otherwise. In
addition, if any other event of default occurs and is continuing with respect to
any Designated Senior Debt, as such event of default is defined in the
instrument creating or evidencing such Designated Senior Debt, permitting the
holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default have
been cured or waived or have ceased to exist or the Trustee receives notice from
the Representative for the respective issue of Designated Senior Debt
terminating the Blockage Period (as defined below), during the 179 days after
the delivery of such Default Notice (the "Blockage Period"), neither the Company
nor any other Person on its behalf shall (x) make any payment of any kind or
character with respect to any Obligations on the Notes or (y) acquire any of the
Notes for cash or property or otherwise. Notwithstanding anything herein to the
contrary, in no event will a Blockage Period extend beyond 179 days from the
date the payment on the Notes was due and only one such Blockage Period may be
commenced within any 360 consecutive days. No event of default which existed or
was continuing on the date of the commencement of any Blockage Period with
respect to the Designated Senior Debt shall be, or be made, the basis for
commencement of a second Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 360 consecutive days
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action
or any breach of any financial covenants for a period commencing after the date
of commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provi-
<PAGE>
-102-
sions under which an event of default previously existed or was continuing shall
constitute a new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 10.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the respective amount of Senior Debt held by such
holders) or their respective Representatives, as their respective interests may
appear. The Trustee shall be entitled to rely on information regarding amounts
then due and owing on the Senior Debt, if any, received from the holders of
Senior Debt (or their Representatives) or, if such information is not received
from such holders or their Representatives, from the Company and only amounts
included in the information provided to the Trustee shall be paid to the holders
of Senior Debt.
Nothing contained in this Article Ten shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; provided that all Senior Debt thereafter due or declared to be due
--------
shall first be paid in full in cash or Cash Equivalents before the Holders are
entitled to receive any payment of any kind or character with respect to
Obligations on the Notes.
SECTION 10.03. Payment Over of Proceeds
upon Dissolution, Etc.
------------------------
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any total or partial liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Debt shall
first be paid in full in cash or Cash Equivalents, or such payment duly provided
for to the satisfaction of the holders of Senior Debt, before any payment or
distribution of any kind or character is made on account of any Obligations on
the Notes, or for the acquisition of any of the Notes for cash or property or
otherwise (except that Holders of Notes may receive securities of the Company
that are unsecured and subordinated at least to the same extent
<PAGE>
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as the Notes to Senior Debt as provided in the Indenture, do not have a maturity
any shorter than the security which it is replacing and will not cause the Notes
to be treated in any case or proceeding as part of the same class of claims as
the Senior Debt or any class of claims pari passu with, or senior to, the Senior
---- -----
Debt for any payment or distribution). Upon any such dissolution, winding-up,
liquidation, reorganization, receivership or similar proceeding, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee under
this Indenture would be entitled, except for the provisions hereof, shall be
paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Holders or by the Trustee under this Indenture if received by them, directly to
the holders of Senior Debt (pro rata to such holders on the basis of the
respective amounts of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Senior Debt.
(b) To the extent any payment of Senior Debt (whether by or on behalf
of the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then, if such payment is recovered by, or paid over
to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section 10.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or their respective
Representatives,
<PAGE>
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or to the trustee or trustees under any indenture pursuant to which any of such
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of Senior Debt remaining unpaid until all such Senior
Debt has been paid in full in cash or Cash Equivalents, after giving effect to
any concurrent payment, distribution or provision therefor to or for the holders
of such Senior Debt.
(d) The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of the Senior Debt
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Company's obligations
hereunder in accordance with Article Five hereof.
SECTION 10.04. Payments May Be Paid Prior
to Dissolution.
--------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
10.02 and 10.03, from making payments at any time for the purpose of making
payments of principal of and interest on the Notes, or from depositing with the
Trustee any moneys for such payments, or (ii) in the absence of actual knowledge
by the Trustee that a given payment would be prohibited by Section 10.02 or
10.03, the application by the Trustee of any moneys deposited with it for the
purpose of making such payments of principal of, and interest on, the Notes to
the Holders entitled thereto unless at least two Business Days prior to the date
upon which such payment would otherwise become due and payable a Trust Officer
shall have actually received the written notice provided for in the second
sentence of Section 10.02(a) or in Section 10.07 (provided that, notwithstanding
--------
the foregoing, such application shall otherwise be subject to the provisions of
the first sentence of Section 10.02(a) and Section 10.03). The Company shall
give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of the Company.
<PAGE>
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SECTION 10.05. Subrogation.
-----------
Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Debt until the Notes shall be
paid in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of the Senior Debt by or on behalf of the Company
or by or on behalf of the Holders by virtue of this Article Ten which otherwise
would have been made to the Holders shall, as between the Company and the
Holders of the Notes, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article Ten
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Notes, on the one hand, and the holders of the Senior Debt,
on the other hand.
SECTION 10.06. Obligations of the Company
Unconditional.
--------------------------
Nothing contained in this Article Ten or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Debt, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders the
principal of and any interest on the Notes as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Holders and creditors of the Company other than the
holders of the Senior Debt, nor shall anything herein or therein prevent the
Holder of any Note or the Trustee on its behalf from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
SECTION 10.07. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Notes pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or of any other
<PAGE>
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facts which would prohibit the making of any payment to or by the Trustee unless
and until a Trust officer shall have received notice in writing from the
Company, or from a holder of Senior Debt or a Representative therefor, and,
prior to the receipt of any such written notice, the Trustee shall be entitled
to assume (in the absence of actual knowledge by a Trust officer to the
contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Ten, 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.
SECTION 10.08. Reliance on Judicial Order or
Certificate of Liquidating Agent.
--------------------------------
Upon any payment or distribution of assets of the Company referred to
in this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or upon a certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, delivered to
the Trustee or the Holders of the Notes, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Ten.
SECTION 10.09. Trustee's Relation to Senior Debt.
---------------------------------
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article Ten with respect to any
Senior Debt which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Debt and nothing in
<PAGE>
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this Indenture shall deprive the Trustee or any such agent of any of its rights
as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt, the distribution may be made and the notice may be given
to their Representative, if any.
SECTION 10.10. Subordination Rights Not Impaired
by Acts or Omissions of the Company
or Holders of Senior Debt.
-----------------------------------
No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Ten or the obligations
hereunder of the Holders of the Notes to the holders of the Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt, or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the payment or collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
<PAGE>
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SECTION 10.11. Noteholders Authorize Trustee To
Effectuate Subordination of Notes.
---------------------------------
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Notes, the subordination provided in this Article Ten, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the filing of a claim for the unpaid balance of its Notes and accrued
interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Notes. Nothing herein contained shall be deemed to authorize the
Trustee or the holders of Senior Debt or their Representative to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.12. This Article Ten Not To
Prevent Events of Default.
-------------------------
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
SECTION 10.13. Trustee's Compensation
Not Prejudiced.
----------------------
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
<PAGE>
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ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee.
-----------------------
Each Guarantor hereby unconditionally, jointly and severally,
guarantees, subject to Article Twelve, to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
that: (i) the principal of and interest on the Notes will be promptly paid in
full when due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise and interest on the overdue principal, if any, and
interest on any interest, to the extent lawful, of the Notes and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time of payment or
renewal of any Notes or of any such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration or otherwise, subject, however, in the case of clauses (i) and
(ii) above, to the limitations set forth in Section 11.05. Each Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that this
Guarantee will not be discharged except by complete performance of the
obligations contained in the Notes, this Indenture and in this Guarantee. If any
Holder or the Trustee is required by any court or otherwise to return to the
Company, any Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to the Company or any Guarantor, any amount paid by
the Company or any Guarantor to the Trustee or such Holder, this Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor
<PAGE>
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further agrees that, as between each Guarantor, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Six for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (y) in the event of any acceleration of such obligations as provided in
Article Six, such obligations (whether or not due and payable) shall forthwith
become due and payable by each Guarantor for the purpose of this Guarantee.
SECTION 11.02. Subordination of Guarantee.
--------------------------
The obligations of each Guarantor to the Holders of Notes and to the
Trustee pursuant to the Guarantee and this Indenture are expressly subordinate
and subject in right of payment to the prior payment in full of all Guarantor
Senior Debt of such Guarantor, to the extent and in the manner provided in
Article Twelve.
SECTION 11.03. Severability.
------------
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 11.04. Release of a Guarantor.
----------------------
Upon (i) the release by the lenders under the Credit Agreement,
related documents and future refinancings thereof of all guarantees of a
Guarantor and all Liens on the property or assets of said Guarantor relating to
such Indebtedness or (ii) the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of a Guarantor (or all or substantially all
its assets) to an entity which is not a Subsidiary of the Company and which sale
or disposition is otherwise in compliance with the terms of this Indenture, such
Guarantor shall be deemed released from all obligations under this Article
Eleven without any further action required on the part of the Trustee or any
Holder; provided, however, that any such termination shall occur only to the
extent that all obligations of such Guarantor under the Credit Agreement and all
of its guarantees of, and under all of its pledges of assets or other security
interests which secure, such Indebtedness of the Company or the Guarantor shall
also terminate upon such release, sale or transfer.
<PAGE>
-111-
The Trustee shall execute an appropriate instrument delivered by the
Company evidencing such release upon receipt of a request by the Company
accompanied by an Officers' Certificate and Opinion of Counsel certifying as to
the compliance with this Section 11.04. Any Guarantor not so released remains
liable for the full amount of principal of and interest on the Notes as provided
in this Article Eleven.
SECTION 11.05. Limitation of
Guarantor's Liability.
-------------------------
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor (including, but not limited
to, the Guarantor Senior Debt of such Guarantor) and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 11.07, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.
SECTION 11.06. Guarantors May Consolidate, etc., on
Certain Terms.
------------------------------------
(a) Nothing contained in this Indenture or in any of the Notes shall
prevent any consolidation or merger of a Guarantor with or into the Company or
another Guarantor that is a Wholly Owned Restricted Subsidiary of the Company or
shall prevent any sale of assets or conveyance of the property of a Guarantor as
an entirety or substantially as an entirety, to the Company or another Guarantor
that is a Wholly Owned Restricted Subsidiary of the Company. Upon any such
consolidation, merger, sale or conveyance, the Guarantee given by such Guarantor
shall no longer have any force or effect.
(b) Except as set forth in Article Four and Article Five hereof,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guar-
<PAGE>
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antor with or into a corporation or corporations other than the Company or
another Guarantor (whether or not affiliated with the Guarantor) or shall
prevent any sale of assets or conveyance of the property of a Guarantor as an
entirety or substantially as an entirety, to a corporation or corporations other
than the Company or another Guarantor (whether or not affiliated with the
Guarantor); provided, however, that, subject to Sections 11.04 and 11.06(a), (i)
-------- -------
immediately after such transaction and giving effect thereto, such transaction
does not (a) violate any covenants set forth herein or (b) result in a Default
or Event of Default under this Indenture that is continuing, (ii) upon any such
consolidation, merger, sale or conveyance, the Guarantee of such Guarantor set
forth in this Article Eleven, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by such Guarantor, shall be expressly assumed (in the event that the
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Trustee and in compliance with Section
9.06, executed and delivered to the Trustee, by the corporation formed by such
consolidation, or into which the Guarantor shall have merged, or by the
corporation that shall have acquired such property, and (iii) in the event that
such Guarantor is not the surviving corporation in the merger, such surviving
corporation shall be a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia. In the case of
any such consolidation, merger, sale or conveyance and upon the assumption by
the successor corporation, by supplemental indenture executed and delivered to
the Trustee and satisfactory in form to the Trustee of the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor.
SECTION 11.07. Contribution.
-------------
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
--------
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Notes or any other Guarantor's obligations with
respect
<PAGE>
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to the Guarantee. "Adjusted Net Assets" of such Guarantor at any date shall mean
the lesser of the amount by which (x) the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Guarantee, of such Guarantor at such date and (y) the
present fair saleable value of the assets of such Guarantor at such date exceeds
the amount that will be required to pay the probable liability of such Guarantor
on its debts including, without limitation, Guarantor Senior Debt (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Guarantor in respect of the obligations of such Subsidiary under the Guarantee),
excluding debt in respect of the Guarantee of such Guarantor, as they become
absolute and matured.
SECTION 11.08. Waiver of Subrogation.
----------------------
Until all Obligations are paid in full each Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Company that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under the Guarantees and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall have
been deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Holders of the Notes, and shall, subject to the
provisions of Section 11.02, Article Ten and Article Twelve, forthwith be paid
to the Trustee for the benefit of such Holders to be credited and applied upon
the Notes, whether matured or unmatured, in accordance with the terms of this
Indenture. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 11.08 is knowingly made in contemplation of
such benefits.
<PAGE>
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SECTION 11.09. Execution of Guarantee.
-----------------------
To evidence their guarantee to the Holders set forth in this Article
Eleven, the Guarantors hereby agree to execute the Guarantees in substantially
the form included in Exhibit F, which shall be endorsed on each Note ordered to
be authenticated and delivered by the Trustee. Each Guarantor hereby agrees that
its Guarantee set forth in this Article Eleven shall remain in full force and
effect notwithstanding any failure to endorse on each Note a notation of such
Guarantee. Each such Guarantee shall be signed on behalf of each Guarantor by
two Officers, or an Officer and an Assistant Secretary or one Officer shall sign
and one Officer or an Assistant Secretary (each of whom shall, in each case,
have been duly authorized by all requisite corporate actions) shall attest to
such Guarantee prior to the authentication of the Note on which it is endorsed,
and the delivery of such Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of such Guarantee on behalf of such
Guarantor. Such signatures upon the Guarantees may be by manual or facsimile
signature of such officers and may be imprinted or otherwise reproduced on the
Guarantees, and in case any such officer who shall have signed the Guarantees
shall cease to be such officer before the Note on which such Guarantee is
endorsed shall have been authenticated and delivered by the Trustee or disposed
of by the Company, such Note nevertheless may be authenticated and delivered or
disposed of as though the person who signed the Guarantees had not ceased to be
such officer of the Guarantor
SECTION 11.10. Waiver of Stay, Extension
or Usury Laws.
-------------------------
Each Guarantor covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive each such Guarantor from
performing its Guarantee as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that it may lawfully do so) each such
Guarantor hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
<PAGE>
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ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
--------------------------------------
SECTION 12.01. Guarantee Obligations Subordinated
to Guarantor Senior Debt.
----------------------------------
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Notes, by its acceptance thereof, likewise covenants and agrees, that all
Guarantees shall be issued subject to the provisions of this Article Twelve; and
the Trustee and each Person holding any Note, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that the
payment of all Obligations on the Notes pursuant to the Guarantees by any
Guarantor shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full in cash
or Cash Equivalents of all Obligations on the Guarantor Senior Debt of such
Guarantor; that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Guarantor Senior Debt, and that each
holder of Guarantor Senior Debt whether now outstanding or hereafter created,
incurred, assumed or guaranteed shall be deemed to have acquired Guarantor
Senior Debt in reliance upon the covenants and provisions contained in this
Indenture, the Notes and the Guarantees.
SECTION 12.02. No Payment on Notes in Certain
Circumstances.
------------------------------
(a) If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of or regularly accruing fees with respect to any Guarantor Senior Debt
of any Guarantor, no payment of any kind or character shall be made by or on
behalf of such Guarantor or any other Person on its or their behalf with respect
to any Obligations on the Notes or to acquire any of the Notes for cash or
property or otherwise. In addition, if any other event of default occurs and is
continuing with respect to any Designated Senior Debt, as such event of default
is defined in the instrument creating or evidencing such Designated Senior Debt,
permitting the holders of such Designated Senior Debt then outstanding to
accelerate the maturity thereof and if the Representative for the respective
issue of Designated Senior Debt gives written notice of the event of default to
the Trustee (a "Default Notice"), then, unless and until all events of default
have been
<PAGE>
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cured or waived or have ceased to exist or the Trustee receives notice from the
Representative for the respective issue of Designated Senior Debt terminating
the Blockage Period (as defined below), during the 179 days after the delivery
of such Default Notice (the "Blockage Period"), neither such Guarantor nor any
other Person on its behalf shall (x) make any payment of any kind or character
with respect to any Obligations on the Notes or (y) acquire any of the Notes for
cash or property or otherwise. Notwithstanding anything herein to the contrary,
in no event will a Blockage Period extend beyond 179 days from the date the
payment on the Notes was due and only one such Blockage Period may be commenced
within any 360 consecutive days. No event of default which existed or was
continuing on the date of the commencement of any Blockage Period with respect
to the Designated Senior Debt shall be, or be made, the basis for commencement
of a second Blockage Period by the Representative of such Designated Senior Debt
whether or not within a period of 360 consecutive days unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action or any breach
of any financial covenants for a period commencing after the date of
commencement of such Blockage Period that, in either case, would give rise to an
event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
(b) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 12.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Guarantor Senior Debt (pro
rata to such holders on the basis of the respective amount of Guarantor Senior
Debt held by such holders) or their respective Representatives, as their
respective interests may appear. The Trustee shall be entitled to rely on
information regarding amounts then due and owing on the Guarantor Senior Debt,
if any, received from the holders of Guarantor Senior Debt (or their
Representatives) or, if such information is not received from such holders or
their Representatives, from the Guarantors and only amounts included in the
information provided to the Trustee shall be paid to the holders of Guarantor
Senior Debt.
Nothing contained in this Article Twelve shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; pro-
----
<PAGE>
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vided that all Guarantor Senior Debt thereafter due or declared to be due shall
- - -----
first be paid in full in cash or Cash Equivalents before the Holders are
entitled to receive any payment of any kind or character with respect to
Obligations on the Guarantees.
SECTION 12.03. Payment Over of Proceeds
upon Dissolution, Etc.
------------------------
(a) Upon any payment or distribution of assets of any Guarantor of
any kind or character, whether in cash, property or securities, to creditors
upon any total or partial liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors or marshaling of assets of such
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to such Guarantor or its property, whether voluntary
or involuntary, all Obligations due or to become due upon all Guarantor Senior
Debt shall first be paid in full in cash or Cash Equivalents, or such payment
duly provided for to the satisfaction of the holders of Guarantor Senior Debt,
before any payment or distribution of any kind or character is made on account
of any Obligations on the Notes, or for the acquisition of any of the Notes for
cash or property or otherwise (except that Holders of Notes may receive
securities of the Guarantor that are unsecured and subordinated at least to the
same extent as the Notes to Guarantor Senior Debt as provided in the Indenture,
do not have a maturity any shorter than the security which it is replacing and
will not cause the Notes to be treated in any case or proceeding as part of the
same class of claims as the Guarantor Senior Debt or any class of claims pari
----
passu with, or senior to, the Guarantor Senior Debt for any payment or
- - -----
distribution). Upon any such dissolution, winding-up, liquidation,
reorganization, receivership or similar proceeding, any payment or distribution
of assets of any Guarantor of any kind or character, whether in cash, property
or securities, to which the Holders of the Notes or the Trustee under this
Indenture would be entitled, except for the provisions hereof, shall be paid by
such Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders or
by the Trustee under this Indenture if received by them, directly to the holders
of Guarantor Senior Debt of such Guarantor (pro rata to such holders on the
basis of the respective amounts of such Guarantor Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Guarantor Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of such
<PAGE>
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Guarantor Senior Debt remaining unpaid until all such Guarantor Senior Debt has
been paid in full in cash or Cash Equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Guarantor Senior Debt.
(b) To the extent any payment of such Guarantor Senior Debt (whether
by or on behalf of such Guarantor, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, such Guarantor Senior Debt or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of such Guarantor of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such payment
or distribution is prohibited by Section 12.03(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of such Guarantor Senior Debt (pro rata to such holders on the
basis of the respective amount of such Guarantor Senior Debt held by such
holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Guarantor Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of such Guarantor Senior Debt remaining unpaid until all such Guarantor
Senior Debt has been paid in full in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of such Guarantor Senior Debt.
(d) The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of all or substantially all
of its assets, to another corporation upon the terms and conditions provided in
Section 11.06 hereof and as long as permitted under the terms of the Guarantor
Senior Debt of such Guarantor shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such other
cor-
<PAGE>
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poration shall, as a part of such consolidation, merger, conveyance or transfer,
assume such Guarantor's obligations hereunder in accordance with Section 11.06
hereof.
SECTION 12.04. Payments May Be Paid Prior
to Dissolution.
--------------------------
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) a Guarantor, except under the conditions described
in Sections 12.02 and 12.03, from making payments at any time for the purpose of
making payments in respect of its Guarantee, or from depositing with the Trustee
any moneys for such payments, or (ii) in the absence of actual knowledge by the
Trustee that a given payment would be prohibited by Section 12.02 or 12.03, the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments in respect of the Notes to the Holders entitled thereto
unless at least two Business Days prior to the date upon which such payment
would otherwise become due and payable a Trust Officer shall have actually
received the written notice provided for in the second sentence of Section
12.02(a) or in Section 12.07 (provided that, notwithstanding the foregoing, such
application shall otherwise be subject to the provisions of the first sentence
of Section 12.02(a) and Section 12.03). A Guarantor shall give prompt written
notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of such Guarantor.
SECTION 12.05. Subrogation.
------------
Subject to the payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt of a Guarantor, the Holders of the Guarantee of such
Guarantor shall be subrogated to the rights of the holders of Guarantor Senior
Debt of such Guarantor to receive payments or distributions of cash, property or
securities of such Guarantor applicable to such Guarantor Senior Debt until the
Notes shall be paid in full; and, for the purposes of such subrogation, no such
payments or distributions to the holders of such Guarantor Senior Debt by or on
behalf of such Guarantor or by or on behalf of the Holders by virtue of this
Article Twelve which otherwise would have been made to the Holders shall, as
between such Guarantor and the Holders of the Notes, be deemed to be a payment
by such Guarantor to or on account of such Guarantor Senior Debt, it being
understood that the provisions of this Article Twelve are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Notes, on the one hand, and the holders of the Guarantor Senior Debt, on the
other hand.
<PAGE>
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SECTION 12.06. Obligations of the Guarantors
Unconditional.
-----------------------------
(a) Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Notes or the Guarantees is intended to or shall impair, as
among the Guarantors, its creditors other than the holders of Guarantor Senior
Debt, and the Holders, the obligation of the Guarantors, which is absolute and
unconditional, to pay to the Holders all amounts due and payable under the
Guarantees as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Guarantors other than the holders of the Guarantor
Senior Debt, nor shall anything herein or therein prevent the Holder of any Note
or the Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of the Guarantors received upon the
exercise of any such remedy.
SECTION 12.07. Notice to Trustee.
------------------
The Guarantors shall give prompt written notice to the Trustee of any
fact known to the Guarantors which would prohibit the making of any payment to
or by the Trustee in respect of the Notes and the Guarantees pursuant to the
provisions of this Article Twelve. Regardless of anything to the contrary
contained in this Article Twelve or elsewhere in this Indenture, the Trustee
shall not be charged with knowledge of the existence of any default or event of
default with respect to any Guarantor Senior Debt or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until a
Trust officer shall have received notice in writing from the Guarantors, or from
a holder of Guarantor Senior Debt or a Representative therefor, and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Debt to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amounts of Guarantor Senior
Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of
<PAGE>
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such Person under this Article Twelve, 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.
SECTION 12.08. Reliance on Judicial Order or
Certificate of Liquidating Agent.
---------------------------------
Upon any payment or distribution of assets of the Guarantors referred
to in this Article Twelve, the Trustee, subject to the provisions of Article
Seven hereof, and the Holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or upon a certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, delivered to
the Trustee or the Holders of the Notes, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the
Guarantor Senior Debt and other Indebtedness of the Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Twelve.
SECTION 12.09. Trustee's Relation to Guarantor
Senior Debt.
-------------------------------
The Trustee and any agent of the Guarantors or the Trustee shall be
entitled to all the rights set forth in this Article Twelve with respect to any
Guarantor Senior Debt which may at any time be held by it in its individual or
any other capacity to the same extent as any other holder of Guarantor Senior
Debt and nothing in this Indenture shall deprive the Trustee or any such agent
of any of its rights as such holder.
With respect to the holders of Guarantor Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of Guarantor Senior Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Guarantor Senior Debt.
Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Debt, the distribution may be made and the notice may
be given to their Representative, if any.
<PAGE>
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SECTION 12.10. Subordination Rights Not Impaired by
Acts or Omissions of the Guarantors
or Holders of Guarantor Senior Debt.
------------------------------------
No right of any present or future holders of any Guarantor Senior
Debt to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Guarantors or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Guarantors with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Guarantor Senior Debt may, at any time and from time
to time, without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Twelve or the
obligations hereunder of the Holders of the Notes to the holders of the
Guarantor Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Guarantor Senior Debt, or otherwise amend or supplement in any manner
Guarantor Senior Debt, or any instrument evidencing the same or any agreement
under which Guarantor Senior Debt is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Guarantor Senior Debt; (iii) release any Person liable in any manner for the
payment or collection of Guarantor Senior Debt; and (iv) exercise or refrain
from exercising any rights against the Guarantors and any other Person.
SECTION 12.11. Noteholders Authorize Trustee To
Effectuate Subordination of Guarantee
Obligations.
-------------------------------------
Each Holder of the Notes and the Guarantees by its acceptance of them
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate, as between the holders of
Guarantor Senior Debt and the Holders, the subordination provided in this
Article Twelve, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of
<PAGE>
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the business and assets of any Guarantor, the filing of a claim for the unpaid
balance of its Notes and accrued interest in the form required in those
proceedings.
If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Guarantor Senior Debt
or their Representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Notes. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Guarantor Senior Debt or their
Representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Guarantor Senior Debt or their Representative to vote
in respect of the claim of any Holder in any such proceeding.
SECTION 12.12. This Article Twelve Not To
Prevent Events of Default.
--------------------------
The failure to make a payment in respect of the Guarantees by reason
of any provision of this Article Twelve will not be construed as preventing the
occurrence of an Event of Default.
SECTION 12.13. Trustee's Compensation
Not Prejudiced.
----------------------
Nothing in this Article Twelve will apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA 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 required provision shall control. If any provision of this Indenture
modifies or excludes any provision of the TIA that may be so modified or
<PAGE>
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excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
SECTION 13.02. Notices.
--------
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier, by reputable overnight delivery service, or registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
if to the Company or any Guarantor:
CAMBRIDGE INDUSTRIES, INC.
555 Horace Brown Drive
Madison Heights, Michigan 48071
Attention: Chief Financial Officer
with a copy to:
Jaffe, Raitt, Heuer & Weiss
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
Attention: Peter Sugar, Esq.
if to the Trustee:
STATE STREET BANK AND TRUST COMPANY
225 Asylum Street
Hartford, CT 06115
Attention: Corporate Trust Department
The Company, the Guarantors and the Trustee by written notice to each
other may designate additional or different addresses for notices. Any notice or
communication to the Company, the Guarantors or the Trustee shall be deemed to
have been given or made as of the date so delivered if personally delivered;
when answered back, if telexed; when receipt is acknowledged, if faxed; one (1)
business day after mailing by reputable overnight courier, and five (5) calendar
days after mailing if sent by registered or certified mail, postage prepaid
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
<PAGE>
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Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar and shall be sufficiently given to him
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other
Holders
------------------------------------
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and any other Person shall have the protection of TIA
(S) 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent.
----------------------------------------
Upon any request or application by the Company or the Guarantors to
the Trustee to take any action under this Indenture, the Company shall furnish
to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have been
complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officer's
Certificate required by Section 4.06, shall include:
<PAGE>
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(1) a statement that the Person making such certificate or opinion
has read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably 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 each such
Person, such condition or covenant has been complied with.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 13.07. Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York, or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 13.08. Governing Law.
-------------
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Each of the parties hereto agrees to submit to the jurisdiction of the courts of
the State of New York in any action or proceeding arising out of or relating to
this Indenture or the Notes.
<PAGE>
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SECTION 13.09. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
--------------------------
A past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company or any Guarantor under the Notes,
the Guarantors or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creations. Each Holder by accepting a Note
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 13.11. Successors.
----------
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 13.12. Duplicate Originals.
-------------------
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 13.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
SECTION 13.14. Independence of Covenants.
-------------------------
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such
<PAGE>
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covenants, the fact that it would be permitted by an exception to, or otherwise
be within the limitations of, another covenant shall not avoid the occurrence of
a Default or an Event of Default if such action is taken or condition exists.
[Remainder of Page Intentionally Left Blank]
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
CAMBRIDGE INDUSTRIES, INC., as Issuer
By: /signature appears here/
-------------------------------------------
Name:
Title:
CE AUTOMOTIVE TRIM SYSTEMS, INC., as Guarantor
By: /signature appears here/
-------------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as Trustee
By: /signature appears here/
-------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.3
-----------
[FORM OF SERIES A NOTE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS 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 BELOW. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE ACT) (AN "ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR
THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE), OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT WILL
GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN
TO THEM BY REGULATIONS S UNDER THE ACT.
1
<PAGE>
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("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 IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF 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
SECTION 2.16 OF THE INDENTURE.
2
<PAGE>
CUSIP No.
CAMBRIDGE INDUSTRIES, INC.
10 1/4% Senior Subordinated Note due 2007, Series A
No. $
CAMBRIDGE INDUSTRIES, INC., a Delaware corporation (the "Company"),
for value received, promises to pay to CEDE & CO. or registered assigns, the
principal sum of ________ Dollars, on July 15, 2007.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: July 10, 1997 CAMBRIDGE INDUSTRIES, INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 10 1/4% Senior Subordinated Notes due 2007, Series
A, referred to in the within-mentioned Indenture.
Dated: July 10, 1997
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------------
Authorized Signatory
4
<PAGE>
(REVERSE OF NOTE)
10 1/4% Senior Subordinated Note due 2007, Series A
1. Interest. CAMBRIDGE INDUSTRIES, INC., a Delaware corporation (the
--------
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from July 10, 1997. The Company will pay interest semi-annually in arrears on
each January 15 and July 15 (each, an "Interest Payment Date") and at stated
maturity, commencing on January 15, 1998. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal, premium
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal, premium and interest by its check payable in such
U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. STATE STREET BANK AND TRUST COMPANY
--------------------------
(the "Trustee") will act as Paying Agent and Registrar. The Company may change
any Paying Agent, Registrar or co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Registrar or co-Registrar.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of July 10, 1997 (the "Indenture"), among the Company, each of the Guarantors
named therein and the Trustee. This Note is one of a duly authorized issue of
Notes
5
<PAGE>
of the Company designated as its 10 1/4% Senior Subordinated Notes due 2007,
Series A (the "Initial Notes"), limited (except as otherwise provided in this
Indenture) in aggregate principal amount to $130,000,000, which may be issued
under this Indenture. The Notes include the Initial Notes, the Private Exchange
Notes (as defined in the Indenture) and the Unrestricted Notes, as defined
below, issued in exchange for the Initial Notes pursuant to the Registration
Rights Agreement. The Initial Notes and the Unrestricted Notes are treated as a
single class of securities under this Indenture. Capitalized terms used herein
shall have the meanings assigned to them in this Indenture unless otherwise
defined herein. The terms of the Notes include those stated in this Indenture
and those made part of this Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect on the date of
this Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to this Indenture
and the TIA for a statement of them. The Notes are general unsecured obligations
of the Company.
5. (a) Redemption. The Notes will be redeemable at the Company's
----------
option, in whole at any time or in part from time to time, on and after July 15,
2002 at the following redemption prices (expressed as a percentage of principal
amount), if redeemed during the twelve-month period commencing on July 15 of
each year set forth below, plus, in each case, accrued interest thereon to the
date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002............................... 105.125%
2003............................... 103.417%
2004............................... 101.708%
2005 and thereafter................ 100.000%
</TABLE>
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
------------------------------------------------
from time to time, on or prior to July 15, 2000, the Company may, at its option,
use the net cash proceeds of one or more Equity Offerings (as defined below) to
redeem (the "Equity Proceeds Offer") up to 35% of the aggregate principal amount
of Notes originally issued pursuant to the Offering at a redemption price of
110.25% of the aggregate principal amount of Notes to be redeemed, plus accrued
and unpaid interest, to such redemption date; provided that at least $65.0
--------
million in aggregate principal amount of Notes remains outstanding immediately
after any such redemption.
6
<PAGE>
As used in the preceding paragraph, "Equity Offering" means an
underwritten public offering of Qualified Capital Stock of Holdings or the
Company pursuant to a registration statement filed with the Commission in
accordance with the Securities Act (other than on Form S-8 or any other form
relating to securities issuable under any benefit plan of the Company) or a
private placement of Capital Stock of the Company or Holdings; provided that, in
--------
the event of an Equity Offering by Holdings, Holdings contributes to the capital
of the Company the portion of the net cash proceeds of such Equity Offering
necessary to pay the aggregate redemption price (plus accrued interest to the
redemption date) of the Notes to be redeemed pursuant to the preceding
paragraph.
In order to effect the foregoing redemption with the proceeds of any
Equity Offering, the Company shall make such redemption not more than 90 days
after the consummation of any such Equity Offering (the "Equity Proceeds
Purchase Date").
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
Notes to be redeemed at such Holder's registered address. Notes in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued and unpaid interest, if any, the
Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest, if
any.
7. Offers to Purchase. Sections 4.14 and 4.15 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
8. Subordination. The Notes are subordinated in right of payment, in
-------------
the manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created,
7
<PAGE>
incurred, assumed or guaranteed. The Guarantees in respect of the Notes are
subordinated in right of payment, in the manner and to the extent set forth in
the Indenture, to the prior payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt of each Guarantor, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by
his acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
9. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer or exchange of Notes in accordance
with this Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by this Indenture. The Registrar need not register the transfer or
exchange of any Notes during a period beginning 15 days before the mailing of a
redemption notice for any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall 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 one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of, premium and interest on the Notes to
redemption or maturity and complies with the other provisions of this Indenture
relating thereto, the Company will be discharged from certain provisions of this
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of, premium and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
this Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at
8
<PAGE>
least a majority in aggregate principal amount of the then outstanding Notes,
and any existing Default or Event of Default or noncompliance with any provision
may be waived with the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Notes. Without consent of any Holder,
the parties thereto may amend or supplement this Indenture or the Notes to,
among other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of this Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, pay dividends or make certain other restricted
payments, enter into transactions with Affiliates, create dividend or other
payment restrictions affecting Restricted Subsidiaries and merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with this
----------
Indenture, all the obligations of its predecessor under the Notes and this
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable in
the manner, at the time and with the effect provided in this Indenture. Holders
of Notes may not enforce this Indenture or the Notes except as provided in this
Indenture. The Trustee is not obligated to enforce this Indenture or the Notes
unless it has been offered indemnity or security reasonably satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest) if it determines
in good faith that withholding notice is in their interest.
9
<PAGE>
17. Trustee Dealings with Company. The Trustee under this Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Restricted and Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director, officer,
--------------------------
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication. This Note shall not be valid until the Trustee or
--------------
authenticating agent manually signs the certificate of authentication on this
Note.
20. Governing Law. This Note 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 law of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Registration Rights. Pursuant to the Registration Rights
-------------------
Agreement, the Company and the Guarantors will be obligated upon the occurrence
of certain events to consummate an exchange offer pursuant to which the Holder
of this Note shall have the right to exchange this Series A Note for a 10 1/4%
Senior Subordinated Note due 2007, Series B, of the Company (an "Unrestricted
Note") which have been registered under the Securities Act, in like principal
amount and having terms
10
<PAGE>
identical in all material respects as the Series A Notes. The Holders shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
24. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of this Indenture, as the same may be amended
from time to time. Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in this Indenture.
25. Guarantees. This Note will be entitled to the benefits of certain
----------
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to this Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of this Indenture. Requests may be made to: CAMBRIDGE
INDUSTRIES, INC., 555 Horace Brown Drive, Madison Heights, Michigan 48071,
Attention: Chief Financial Officer.
11
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- - --------------------------------
- - --------------------------------------------------------------------------------
(please print or type name and address)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
- - --------------------------------------------------------------------------------
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:
------------------------------- ----------------------------------------
NOTICE: The signature on this assignment
must correspond with the name as it
appears upon the face of the within Note
in every particular without alteration
or enlargement or any change whatsoever
and be guaranteed by the endorser's bank
or broker.
Signature Guarantee:
------------------------------------------------------------
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) July [ ], 1999 the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
12
<PAGE>
[Check One]
---------
(1) ___ to the Company or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which letter can
be obtained from the Trustee); or
(4) ___ outside the United States to a "foreign purchaser" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(5) ___ pursuant to the exemption from registration provided by Rule 144 under
the Securities Act of 1933, as amended; or
(6) ___ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) ___ pursuant to another available exemption from the registration
statement requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[_] The transferee is an Affiliate of the Company.
Unless one of the items is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if item
-------- -------
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (4) and other information as the Trustee or the Company have
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the reg-
13
<PAGE>
istration requirements of the Securities Act of l933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar
shall not be obligated to register this Note 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 2.16 of this Indenture shall have
been satisfied.
Dated: Signed:
---------------------- ------------------------------
(Sign exactly as name
appears on the other side
of this Note)
Signature Guarantee:
-----------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note 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 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
14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of this Indenture, check the
appropriate box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of this Indenture, state the
amount: $_____________
Date: Your Signature:
------------------------ -----------------------------
(Sign exactly as your
name appears on the other
side of this Note)
Signature Guarantee:
----------------------------------------------------------
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
15
<PAGE>
EXHIBIT 4.4
CUSIP NO.
CAMBRIDGE INDUSTRIES, INC.
10 1/4% Senior Subordinated Note due 2007, Series B
No. 1 $
CAMBRIDGE INDUSTRIES, INC., a Delaware corporation (the "Company"),
for value received, promises to pay to or registered assigns, the principal sum
of Dollars, on July 15, 2007.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: July 10, 1997 CAMBRIDGE INDUSTRIES, INC.
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 10 1/4% Senior Subordinated Notes due 2007, Series
B referred to in the within-mentioned Indenture.
Dated: July 10, 1997
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
----------------------------------------
Authorized Signatory
2
<PAGE>
(REVERSE OF NOTE)
10 1/4% Senior Subordinated Note due 2007, Series B
1. Interest. CAMBRIDGE INDUSTRIES, INC., a Delaware corporation (the
--------
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from July 10, 1997. The Company will pay interest semi-annually in arrears on
each January 15 and July 15 (each, an "Interest Payment Date") and at stated
maturity, commencing on January 15, 1998. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
-----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are canceled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal, premium
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal, premium and interest by its check payable in such
U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, STATE STREET BANK AND TRUST
--------------------------
COMPANY (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act as Registrar or co-Registrar.
4. Indenture. The Company issued the Notes under an Indenture, dated
---------
as of July 10, 1997 (the "Indenture"), among the Company, each of the Guarantors
named therein and the
3
<PAGE>
Trustee. This Note is one of a duly authorized issue of Notes of the Company
designated as its 10 1/4% Senior Subordinated Notes due 2007, Series B (the
"Unrestricted Notes"), limited (except as otherwise provided in this Indenture)
in aggregate principal amount to $130,000,000, which may be issued under this
Indenture. The Notes include the 11% Senior Subordinated Notes due 2007, Series
A (the "Initial Notes"), the Private Exchange Notes (as defined in the
Indenture) and the Unrestricted Notes. The Initial Notes, the Private Exchange
Notes and the Unrestricted Notes are treated as a single class of securities
under this Indenture. Capitalized terms used herein shall have the meanings
assigned to them in this Indenture unless otherwise defined herein. The terms of
the Notes include those stated in this Indenture and those made part of this
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) (the "TIA"), as in effect on the date of this Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to this Indenture and the TIA for
a statement of them. The Notes are general unsecured obligations of the Company.
5. (a) Redemption. The Notes will be redeemable at the Company's
----------
option, in whole at any time or in part from time to time, on and after July 15,
2002 at the following redemption prices (expressed as a percentage of principal
amount), if redeemed during the twelve-month period commencing on July 15 of
each year set forth below, plus, in each case, accrued interest thereon to the
date of redemption:
Year Percentage
---- ----------
2002................................ 105.125%
2003................................ 103.417%
2004................................ 101.708%
2005 and thereafter................. 100.000%
(b) Optional Redemption Upon Public Equity Offerings. At any time, or
------------------------------------------------
from time to time, on or prior to July 15, 2000, the Company may, at its option,
use the net cash proceeds of one or more Equity Offerings (as defined below) to
redeem (the "Equity Proceeds Offer") up to 35% of the aggregate principal amount
of Notes originally issued pursuant to the Offering at a redemption price of
110.25% of the aggregate principal amount of Notes to be redeemed, plus accrued
and unpaid interest, to such redemption date; provided that at least $65.0
--------
million in aggregate principal amount of Notes remains outstanding immediately
after any such redemption.
4
<PAGE>
As used in the preceding paragraph, "Equity Offering" means an
underwritten public offering of Qualified Capital Stock of Holdings or the
Company pursuant to a registration statement filed with the Commission in
accordance with the Securities Act (other than on Form S-8 or any other form
relating to securities issuable under any benefit plan of the Company) or a
private placement of Capital Stock of the Company or Holdings; provided that, in
--------
the event of an Equity Offering by Holdings, Holdings contributes to the capital
of the Company the portion of the net cash proceeds of such Equity Offering
necessary to pay the aggregate redemption price (plus accrued interest to the
redemption date) of the Notes to be redeemed pursuant to the preceding
paragraph.
In order to effect the foregoing redemption with the proceeds of any
Equity Offering, the Company shall make such redemption not more than 90 days
after the consummation of any such Equity Offering (the "Equity Proceeds
Purchase Date").
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
Notes to be redeemed at such Holder's registered address. Notes in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued and unpaid interest, if any, the
Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest, if
any.
7. Offers to Purchase. Sections 4.14 and 4.15 of the Indenture
------------------
provide that, after certain Asset Sales (as defined in the Indenture) and upon
the occurrence of a Change of Control (as defined in the Indenture), and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
8. Subordination. The Notes are subordinated in right of payment, in
-------------
the manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created,
5
<PAGE>
incurred, assumed or guaranteed. The Guarantees in respect of the Notes are
subordinated in right of payment, in the manner and to the extent set forth in
the Indenture, to the prior payment in full in cash or Cash Equivalents of all
Guarantor Senior Debt of each Guarantor, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by
his acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
9. Denominations; Transfer; Exchange. The Notes are in registered
---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer of or exchange Notes in accordance
with this Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by this Indenture. The Registrar need not register the transfer of
or exchange any Notes during a period beginning 15 days before the mailing of a
redemption notice for any Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall 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 one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
-----------------------------------------
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of, premium and interest on the Notes to
redemption or maturity and complies with the other provisions of this Indenture
relating thereto, the Company will be discharged from certain provisions of this
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of, premium and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions,
-----------------------------
this Indenture or the Notes may be amended or supplemented with the written
consent of the Holders of at
6
<PAGE>
least a majority in aggregate principal amount of the then outstanding Notes,
and any existing Default or Event of Default or noncompliance with any provision
may be waived with the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Notes. Without consent of any Holder,
the parties thereto may amend or supplement this Indenture or the Notes to,
among other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of this Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
---------------------
on the ability of the Company and its Subsidiaries to, among other things, incur
additional Indebtedness, pay dividends or make certain other restricted
payments, enter into transactions with Affiliates, create dividend or other
payment restrictions affecting Restricted Subsidiaries and merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with this
----------
Indenture, all the obligations of its predecessor under the Notes and this
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
---------------------
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable in
the manner, at the time and with the effect provided in this Indenture. Holders
of Notes may not enforce this Indenture or the Notes except as provided in this
Indenture. The Trustee is not obligated to enforce this Indenture or the Notes
unless it has been offered indemnity or Security reasonably satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest) if it determines
in good faith that withholding notice is in their interest.
7
<PAGE>
17. Trustee Dealings with Company. The Trustee under this Indenture,
-----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, its Restricted and Unrestricted
Subsidiaries or their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director, officer,
--------------------------
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication. This Note shall not be valid until the Trustee or
--------------
authenticating agent manually signs the certificate of authentication on this
Note.
20. Governing Law. This note 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 law of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations may be
-------------------------------
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be bound
---------
by all of the terms and provisions of this Indenture, as the same may be amended
from time to time. Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in this Indenture.
24. Guarantees. This Note will be entitled to the benefits of certain
----------
Guarantees, if any, made for the benefit of
8
<PAGE>
the Holders. Reference is hereby made to this Indenture for a statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Guarantors, the Trustee and the Holders.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of this Indenture. Requests may be made to: CAMBRIDGE
INDUSTRIES, INC., 555 Horace Brown Drive, Madison Heights, Michigan 48071,
Attention: Chief Financial Officer.
9
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- - --------------------------------
- - ------------------------------------------------------------------------------
(please print or type name and address)
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
- - ------------------------------------------------------------------------------
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:
-------------------------- ----------------------------------
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular
without alteration or enlargement or
any change whatsoever and be
guaranteed by the endorser's bank or
broker.
Signature Guarantee:
----------------------------------------------------------
10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.14 or Section 4.15 of this Indenture, check the
appropriate box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.14 or Section 4.15 of this Indenture, state
the amount: $_____________
Date: Your Signature:
------------------------- ----------------------------
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)
11
<PAGE>
EXHIBIT 4.5
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of July 10, 1997
Among
CAMBRIDGE INDUSTRIES, INC.
as Issuer
and
THE GUARANTORS,
named herein
and
BT SECURITIES CORPORATION
as Initial Purchaser
================================================================================
$100,000,000
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions..................................................... 1
2. Exchange Offer.................................................. 5
3. Shelf Registration.............................................. 9
4. Additional Interest............................................. 10
5. Registration Procedures......................................... 12
6. Registration Expenses........................................... 22
7. Indemnification................................................. 23
8. Rule 144 and 144A............................................... 28
9. Underwritten Registrations...................................... 28
10. Miscellaneous................................................... 28
(a) No Inconsistent Agreements............................. 28
(b) Adjustments Affecting Registrable Notes................ 29
(c) Amendments and Waivers................................. 29
(d) Notices................................................ 29
(e) Successors and Assigns................................. 31
(f) Counterparts........................................... 31
(g) Headings............................................... 31
(h) Governing Law.......................................... 31
(i) Severability........................................... 31
(j) Securities Held by the Company or Its Affiliates....... 31
(k) Third Party Beneficiaries.............................. 32
(l) Entire Agreement....................................... 32
</TABLE>
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of July
---------
10, 1997 by and among Cambridge Industries, Inc., a Delaware corporation (the
"Company"), CE Automotive Trim Systems, Inc., a Michigan corporation (the
-------
"Guarantor") and BT Securities Corporation (the "Initial Purchaser").
-----------------
This Agreement is entered into in connection with the Purchase
Agreement, dated as of July 2, 1997, by and among the Company, the Guarantor and
the Initial Purchaser (the "Purchase Agreement") that provides for the sale by
------------------
the Company to the Initial Purchaser of $100,000,000 aggregate principal amount
of the Company's 10 1/4% Senior Subordinated Notes due 2007 (the "Notes"). The
-----
Company and the Guarantor are collectively referred to herein as the "Issuers".
-------
In order to induce the Initial Purchaser to enter into the Purchase Agreement,
the Issuers have agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchaser and its direct and indirect
transferees and assigns. The execution and delivery of this Agreement is a
condition to the Initial Purchaser's obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a) hereof.
-------------------
Advice: See the last paragraph of Section 5 hereof.
------
Agreement: See the first introductory paragraph hereto.
---------
Applicable Period: See Section 2(b) hereof.
-----------------
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Company: See the first introductory paragraph hereto.
-------
<PAGE>
-2-
Effectiveness Date: The date that is 120 days after the Issue Date.
------------------
Effectiveness Period: See Section 3(a) hereof.
--------------------
Event Date: See Section 4(b) hereof.
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
--------------
Exchange Offer: See Section 2(a) hereof.
--------------
Exchange Registration Statement: See Section 2(a) hereof.
-------------------------------
Filing Date: Within 60 days after the Issue Date.
-----------
Guarantors: CE Automotive Trim Systems, Inc. and the Company's future
----------
U.S. subsidiaries.
Holder: Any holder of a Registrable Note or Registrable Notes.
------
Indemnified Person: See Section 7(c) hereof.
------------------
Indemnifying Person: See Section 7(c) hereof.
-------------------
Indenture: The Indenture, dated as of July 10, 1997 between the
---------
Company and State Street Bank and Trust Company, as trustee, pursuant to which
the Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchaser: See the first introductory paragraph hereto.
-----------------
Inspectors: See Section 5(o) hereof.
----------
Issue Date: The date on which the original Notes were sold to the
----------
Initial Purchaser pursuant to the Purchase Agreement.
Issuers: See the second introductory paragraph hereto.
-------
<PAGE>
-3-
NASD: See Section 5(t) hereof.
----
Notes: See the second introductory paragraph hereto.
-----
Participant: See Section 7(a) hereof.
-----------
Participating Broker-Dealer: See Section 2(b) hereof.
---------------------------
Person: An individual, trustee, corporation, partnership, limited
------
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Private Exchange: See Section 2(b) hereof.
----------------
Private Exchange Notes: See Section 2(b) hereof.
----------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Registrable Notes covered by such Registration Statement including post-
effective amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
------------------
Records: See Section 5(o) hereof.
-------
Registrable Notes: Each Note upon original issuance of the Notes and
-----------------
at all times subsequent thereto, each Exchange Note as to which Section 2(c)(v)
hereof is applicable upon original issuance and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until in the case of any such Note, Exchange Note or Private
Exchange Note, as the case may be, the earliest to occur of (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section
2(c)(v) hereof is applicable, the Exchange Registration Statement) covering such
Note, Exchange Note or Private Exchange Note, as the case may be, has been
declared effective by the SEC and such
<PAGE>
-4-
Note, Exchange Note or Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective Registration Statement, (ii) such
Note, Exchange Note or Private Exchange Note, as the case may be, is sold in
compliance with Rule 144, (iii) such Note has been exchanged for an Exchange
Note or Exchange Notes pursuant to an Exchange Offer and is entitled to be
resold without complying with the prospectus delivery requirements of the
Securities Act, or (iv) such Note, Exchange Note or Private Exchange Note, as
the case may be, ceases to be outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Company,
----------------------
including, but not limited to, the Exchange Registration Statement and any
registration statement filed in connection with a Shelf Registration, filed with
the SEC pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including post-
effective amendments, all exhibits, and all material incorporated by reference
or deemed to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
---------
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
------------
Shelf Registration: See Section 3(a) hereof.
------------------
<PAGE>
-5-
TIA: The Trust Indenture Act of 1939, as amended.
---
Trustee: The trustee under the Indenture and, if existent, the
-------
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
which securities of one or both of the Company are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
--------------
(a) Each of the Issuers shall file with the SEC no later than the
Filing Date an offer to exchange (the "Exchange Offer") any and all of the
--------------
Registrable Notes (other than the Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company that are identical
in all material respects to the Notes (the "Exchange Notes") (and that are
--------------
entitled to the benefits of the Indenture or a trust indenture that is identical
in all material respects to the Indenture (other than such changes to the
Indenture or any such identical trust indenture as are necessary to comply with
any requirements of the SEC to effect or maintain the qualification thereof
under the TIA) and that, in either case, has been qualified under the TIA),
except that the Exchange Notes (other than Private Exchange Notes, if any) shall
have been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and shall comply with all applicable tender
-------------------------------
offer rules and regulations under the Exchange Act. The Issuers agree to use
their best efforts to (x) cause the Exchange Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 20 business days (or longer if
required by applicable law) after the date that notice of the Exchange Offer is
mailed to Holders; and (z) consummate the Exchange Offer on or prior to the
150th day following the Issue Date. If after such Exchange Registration
Statement is declared effective by the SEC, the Exchange Offer or the issuance
of the Exchange Notes thereunder is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Exchange Registration Statement shall be deemed not to
have become effective for purposes of this Agreement. Each Holder who
participates in the Exchange Offer will be required to represent that any
Exchange Notes received by it will be acquired in the ordinary
<PAGE>
-6-
course of its business, that at the time of the consummation of the Exchange
Offer such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Notes in violation of the
provisions of the Securities Act and that such Holder is not an affiliate of the
Company within the meaning of the Securities Act and is not acting on behalf of
any persons or entities who could not truthfully make the foregoing
representations. Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
-------
mutandis, solely with respect to Registrable Notes that are private Exchange
- - --------
Notes and Exchange Notes held by Participating Broker-Dealers, and the Company
shall have no further obligation to register Registrable Notes (other than
Private Exchange Notes and other than in respect of any Exchange Notes as to
which clause 2(c)(v) hereof applies) pursuant to Section 3 hereof. No securities
other than the Exchange Notes shall be included in the Exchange Registration
Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, that shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
-------------
Broker-Dealer"), whether such positions or policies have been publicly
- - -------------
disseminated by the staff of the SEC or such positions or policies, in the
judgment of the Initial Purchaser, represent the prevailing views of the Staff
of the SEC. Such "Plan of Distribution" section shall also expressly permit the
use of the Prospectus by all Persons subject to the prospectus delivery
requirements of the Securities Act, including all Participating Broker-Dealers,
and include a statement describing the means by which Participating Broker-
Dealers may resell the Exchange Notes.
Each of the Issuers shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as is necessary to comply with applicable law in
connection with any resale of the Exchange Notes; provided, however, that such
-------- -------
period shall not exceed
<PAGE>
-7-
180 days after the consummation of the Exchange Offer (or such longer period if
extended pursuant to the last paragraph of Section 5 hereof) (the "Applicable
----------
Period").
- - ------
If, prior to consummation of the Exchange Offer, the Initial Purchaser
holds any Notes acquired by it and having, or that are reasonably likely to be
determined to have, the status of an unsold allotment in the initial
distribution, the Issuers shall, upon the request of the Initial Purchaser
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
shall issue and deliver to the Initial Purchaser in exchange (the "Private
-------
Exchange") for such Notes held by the Initial Purchaser a like principal amount
- - --------
of debt securities of the Company, guaranteed by the Guarantors, that are
identical in all material respects to the Exchange Notes (the "Private Exchange
----------------
Notes") (and that are issued pursuant to the same indenture as the Exchange
- - -----
Notes), except for the placement of a restrictive legend on such Private
Exchange Notes. The Private Exchange Notes shall bear the same CUSIP number as
the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part of
the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York;
(3) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last business day on which the
Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws, rules and regulations.
<PAGE>
-8-
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Notes properly tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee for cancellation all Notes so accepted
for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted for
exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event shall provide that (1) the Exchange Notes shall
not be subject to the transfer restrictions set forth in the Indenture and (2)
the Private Exchange Notes shall be subject to the transfer restrictions set
forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent
together on all matters as one class and that neither the Exchange Notes, the
Private Exchange Notes or the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company is not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 150 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests at any
time after the consummation of the Private Exchange, (iv) the Holders of not
less than a majority in aggregate principal amount of the Registrable Notes
determine that the interests of the Holders would be materially adversely
affected by consummation of the Exchange Offer or (v) in the case of any Holder
that participates in the Exchange Offer, such Holder does not receive Exchange
Notes on the date of the exchange that may be sold without restriction under
state and federal securities laws (other than due solely to the status of such
Holder as an affiliate of the Issuers within the meaning of the Securities Act),
then the Issuers shall promptly deliver to the Holders and the Trustee written
notice thereof (the "Shelf Notice") to the Trustee and in the case of clauses
------------
(i),
<PAGE>
-9-
(ii) and (iv), all Holders, in the case of clause (iii), the Holders of the
Private Exchange Notes and in the case of clause (v), the affected Holder, and
shall file a Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:
(a) Shelf Registration. The Issuers shall as promptly as reasonably
------------------
practicable file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Shelf Registration"). If the Issuers shall not have yet filed an
------------------
Exchange Registration Statement, each of the Issuers shall use its best efforts
to file with the SEC the Shelf Registration on or prior to the Filing Date. The
Shelf Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in the Shelf Registration.
Each of the Issuers shall use its best efforts to cause the Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Shelf Registration continuously effective
under the Securities Act until the date that is two years from the Issue Date,
subject to extension pursuant to the last paragraph of Section 5 hereof (the
"Effectiveness Period"), or such shorter period ending when all Registrable
--------------------
Notes covered by the Shelf Registration have been sold in the manner set forth
and as contemplated in the Shelf Registration.
(b) Withdrawal of Stop Orders. If the Shelf Registration ceases to be
-------------------------
effective for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), each of the
Issuers shall use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof.
(c) Supplements and Amendments. The Issuers shall promptly supplement
--------------------------
and amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if
<PAGE>
-10-
required by the Securities Act, or if reasonably requested by the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement or by any underwriter of such Registrable Notes.
4. Additional Interest
-------------------
(a) The Issuers and the Initial Purchaser agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers agree to pay, as liquidated damages, additional interest on the
Notes ("Additional Interest") under the circumstances and to the extent set
-------------------
forth below (without duplication):
(i) if neither the Exchange Registration Statement nor the Shelf
Registration has been filed on or prior to the Filing Date, Additional
Interest shall accrue on the Notes over and above the stated interest at a
rate of 0.50% per annum for the first 90 days immediately following the
Filing Date, such Additional Interest rate increasing by an additional
0.50% per annum at the beginning of each subsequent 90-day period;
(ii) if neither the Exchange Registration Statement nor the Initial
Shelf Registration is declared effective by the SEC on or prior to the
Effectiveness Date, then, commencing on the 121st day after the Issue Date,
Additional Interest shall be accrued on the Notes included or that should
have been included in such Registration Statement over and above the stated
interest at a rate of 0.50% per annum for the first 90 days immediately
following the Effectiveness Date, such Additional Interest rate increasing
by an additional 0.50% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Issuers have not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 150th day after the Issue Date or (B) the Exchange
Registration Statement ceases to be effective at any time prior to the time
that the Exchange Offer is consummated or (C) if applicable, the Shelf
Registration has been declared effective and such Shelf Registration ceases
to be effective at any time during the Effectiveness Period, then
Additional Interest shall be accrued on the Notes (over and above any
<PAGE>
-11-
interest otherwise payable on the Notes) at a rate of 0.50% per annum on
(x) the 151st day after such effective date, in the case of (A) above, or
(y) the day the Exchange Registration Statement ceases to be effective
without being declared effective within five business days in the case of
(B) above, or (z) the day such Shelf Registration ceases to be effective,
in the case of (C) above, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each such subsequent 90-day
period (it being understood and agreed that, notwithstanding any provision
to the contrary, so long as any Note that is the subject of a Shelf Notice
is then covered by an effective Shelf Registration Statement, no Additional
Interest shall accrue on such Note);
provided, however, that the Additional Interest rate on any affected Note may
- - -------- -------
not exceed at any one time in the aggregate 1.0% per annum; and provided,
--------
further, that (1) upon the filing of the Exchange Registration Statement or a
- - -------
Shelf Registration (in the case of clause (i) of this Section 4(a)), (2) upon
the effectiveness of the Exchange Registration Statement or the Shelf
Registration (in the case of clause (ii) of this Section 4(a)), or (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) of this Section 4(a)), or upon the effectiveness of the Exchange
Registration Statement that had ceased to remain effective (in the case of
(iii)(B) of this Section 4(a)) or upon the effectiveness of the Shelf
Registration that had ceased to remain effective (in the case of (iii)(C) of
this Section 4(a)), Additional Interest on the affected Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any amounts of Additional
----------
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable in cash semi-annually on each January 15 and July 15 (to the holders of
record on the close of business on the January 1 and July 1 immediately
preceding such dates), commencing with the first such date occurring after any
such Additional Interest commences to accrue. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Registrable Notes, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a
<PAGE>
-12-
360-day year comprised of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed) and the denominator of which is 360.
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuers shall effect such registration(s) to
permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuers, hereunder the
Issuers shall:
(a) Prepare and file with the SEC prior to the Filing Date a
Registration Statement or Registration Statements as prescribed by Sections 2 or
3 hereof, and use its best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided, however,
-------- -------
that, if (1) such filing is pursuant to Section 3 hereof or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2
hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
before filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Issuers shall furnish to and afford the Holders of the
Registrable Notes covered by such Registration Statement or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at least
five business days prior to such filing); provided that reasonable modifications
may be made to such documents without requirement of a further 5 day
notice/review period. The Issuers shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto if the Holders of a majority
in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the case may
be, or their counsel, or the managing underwriters, if any, shall reasonably
object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as
the case may be, as may be necessary to keep such Registration Statement
continuously
<PAGE>
-13-
effective for the Effectiveness Period or the Applicable Period, as the case may
be; cause the related Prospectus to be supplemented by any prospectus supplement
required by applicable law, and as so supplemented to be filed pursuant to Rule
424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act and the Exchange Act applicable
to it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so supplemented
and with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus; the Company shall be
deemed not to have used its best efforts to keep a Registration Statement
effective during the Applicable Period if it voluntarily takes any action that
would result in selling Holders of the Registrable Notes covered thereby or
Participating Broker-Dealers seeking to sell Exchange Notes not being able to
sell such Registrable Notes or such Exchange Notes during that period unless
such action is required by applicable law or unless the Company complies with
this Agreement, including without limitation, the provisions of paragraph 5(k)
hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, notify the selling Holders of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event within two business
days) and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request, obtain, at the sole expense
of the Issuers, one conformed copy of such Registration Statement or post-
effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable
<PAGE>
-14-
Notes or resales of Exchange Notes by Participating Broker-Dealers the
representations and warranties of the Issuers contained in any agreement
(including any underwriting agreement), contemplated by Section 5(n) hereof
cease to be true and correct, (iv) of the receipt by the Issuers of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction, or the initiation or written threat of any proceeding
for such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement made in
such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material
respects or that requires the making of any changes in or amendments or
supplements to such Registration Statement, Prospectus or documents so that, in
the case of the Registra-tion Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (vi) of the Issuer's determination that
a post-effective amendment to a Registration Statement would be appropriate.
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or the
Exchange Notes for sale in any jurisdiction and, if any such order is issued, to
use their best efforts to obtain the withdrawal of any such order at the
earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any) or the Holders of
a majority in aggregate principal amount of the Registrable Notes being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters (if any), such Holders, or counsel for any
of them determine is reasonably necessary to be included therein, (ii) make all
required filings of such prospectus supplement or
<PAGE>
-15-
such post-effective amendment as soon as practicable after the Issuers have
received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment and (iii) supplement or make amendments
to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, at the sole expense of the Issuers, one conformed
copy of the Registration Statement or Registration Statements and each post-
effective amendment thereto, including financial statements and schedules and,
if requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their respective
counsel and the underwriters, if any, at the sole expense of the Issuers, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, each Issuer
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or Exchange
Notes or any delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes
<PAGE>
-16-
during the Applicable Period, use its best efforts to register or qualify such
Registrable Notes (and to cooperate with the selling Holders of Registrable
Notes or each such Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes) for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer or the managing underwriter or
underwriters reasonably request in writing; provided, however, that where
-------- -------
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Issuers agree to cause
their counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
Statement; provided, however, that the Issuers shall not be required to (A)
-------- -------
qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use its best efforts to cause the Registrable Notes covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the Holders
thereof
<PAGE>
-17-
or the underwriter or underwriters, if any, to consummate the disposition of
such Registrable Notes, except as may be required solely as a consequence of the
nature of such selling Holder's business, in which case each of the Issuers will
cooperate in all reasonable respects with the filing of such Registration
Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi), hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the Issuer's sole
expense, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will 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, in light of the circumstances under which they were made,
not misleading.
(l) Use its best efforts to cause the Registrable Notes covered by a
Registration Statement or the Exchange Notes, as the case may be, to be rated
with the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes or Exchange Notes, as the case may be, in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes or Exchange Notes, as the case may be.
(n) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten
<PAGE>
-18-
offerings of debt securities similar to the Notes and take all such other
actions as are reasonably requested by the managing underwriter or underwriters
in order to expedite or facilitate the registration or the disposition of such
Registrable Notes and, in such connection, (i) make such representations and
warranties to, and covenants with, the underwriters with respect to the business
of the Issuers and their subsidiaries (including any acquired business,
properties or entity, if applicable) and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and confirm the
same in writing if and when requested; (ii) obtain the written opinion of
counsel to the Issuers and written updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters, addressed
to the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of debt similar to the Notes and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by any of the Issuers for
which financial statements and financial data are, or are required to be,
included or incorporated by reference in the Registration Statement), addressed
to each of the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings of debt securities similar to the Notes and such
other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange
<PAGE>
-19-
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold, or each
such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Notes, if any, and any
attorney, accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
----------
reasonable business hours, all financial and other records, pertinent corporate
documents and instruments of the Issuers and their subsidiaries (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise any
-------
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Issuers and their subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records that the Issuers determine, in good faith, to be confidential
and any Records that it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, (iii) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary or
advisable in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising out
of, based upon, relating to or involving this Agreement, or any transactions
contemplated hereby or arising hereunder or (iv) the information in such Records
has been made generally available to the public. Each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Issuers unless and
until such information is generally available to the public. Each selling Holder
of such Registrable Notes and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Issuers and allow the Issuers to undertake appropriate action to prevent
disclosure of the Records deemed confidential at the Issuers' sole expense.
<PAGE>
-20-
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes and all other
forms and documents required to be filed with the SEC to enable such indenture
to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuers, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes,
as the case may be, and the related indenture constitute legal, valid and
binding obligations of the Issuers, enforce-able against the Issuers in
accordance with its respective terms, subject to customary exceptions and
qualifications.
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuers (or to such
other Person as directed by the Issuers) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Issuers shall mark, or cause
to be marked, on such Registrable Notes that such
<PAGE>
-21-
Registrable Notes are being cancelled in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be; in no event shall such Registrable
Notes be marked as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
----
(u) Use its best efforts to take all other steps necessary or
advisable to effect the registration of the Registrable Notes covered by a
Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude
from such registration the Registrable Notes of any seller who unreasonably
fails to furnish such information within a reasonable time after receiving such
request and in such event shall have no further obligation under this Agreement
with respect to such seller or any subsequent holder of such Registrable Notes.
Each seller as to which any Shelf Registration is being effected agrees to
furnish promptly to the Issuers all information required to be disclosed in
order to make the information previously furnished to the Issuers by such seller
not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon actual receipt
of any notice from the Issuers of the happening of any event of the kind
described in Sections 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "Advice") by the Issuers that the use of the
------
applicable Prospectus may be resumed, and has received copies of any
<PAGE>
-22-
amendments or supplements thereto. In the event that the Issuers shall give any
such notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions (x) where the holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
by the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration Statement or sold by any Participating
Broker-Dealer, as the case may be, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Issuers and fees and
disbursements of special counsel for the sellers of Registrable Notes (subject
to the provisions of Section 6(b) hereof), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, if any,
<PAGE>
-23-
and any fees associated with making the Registrable Notes or Exchange Notes
eligible for trading through the Depository Trust Company (vii) Securities Act
liability insurance, if the Issuers desire such insurance, (viii) fees and
expenses of all other Persons retained by the Issuers, (ix) internal expenses of
the Issuers (including, without limitation, all salaries and expenses of
officers and employees of the Issuers performing legal or accounting duties),
(x) the expense of any annual audit, (xi) the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, if applicable and (xii) the expenses relating to printing, word
processing and distributing of all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary to comply with this Agreement.
(b) The Issuers shall (i) reimburse the Holders of the Registrable
Notes being registered in a Shelf Registration for the reasonable fees and
disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Notes to be included in such Registration Statement and (ii)
reimburse out-of-pocket expenses (other than legal expenses) of Holders of
Registrable Notes incurred in connection with the registration and sale of the
Registrable Notes pursuant to a Shelf Registration or in connection with the
exchange of Registrable Notes pursuant to the Exchange Offer. In addition, the
Issuers shall reimburse the Initial Purchaser for the reasonable fees and
expenses of one counsel in connection with the Exchange Offer, which shall be
Cahill Gordon & Reindel, and shall not be required to pay any other legal
expenses in connection therewith.
7. Indemnification
---------------
(a) Each of the Issuers agree to indemnify and hold harmless each
Holder of Registrable Notes offered pursuant to a Shelf Registration Statement
and each Participating Broker-Dealer selling Exchange Notes during the
Applicable Period, the directors, officers, agents, and employees of each such
Person or its affiliates, and each other Person, if any, who controls any such
Person or its affiliates within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
-----------
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Registrable Notes or Exchange
Notes, as the case may be, is registered (or any amendment thereto) or related
Prospectus (or any amendments or supplements thereto) or any related preliminary
prospectus, or caused by, arising out of or
<PAGE>
-24-
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
--------
however, that each of the Issuers will not be required to indemnify a
- - -------
Participant if (i) such losses, claims, damages or liabilities are caused by
any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Participant, or
information required to be included by such Participant pursuant to Section 2(b)
hereof, furnished to the Issuers in writing by or on behalf of such Participant
expressly for use therein or (ii) if such Participant sold to the person
asserting the claim the Registrable Notes or Exchange Notes that are the subject
of such claim and such untrue statement or omission or alleged untrue statement
or omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and it is established by the Issuers in the related proceeding that
such Participant failed to deliver or provide a copy of the Prospectus (as
amended or supplemented) to such Person with or prior to the confirmation of the
sale of such Registrable Notes or Exchange Notes sold to such Person if required
by applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Issuers with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their directors and officers and each Person who
controls the Issuers within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Issuers to each Participant, but only (i) with reference to information
relating to such Participant furnished to the Issuers in writing by or on behalf
of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto or any preliminary prospectus or
(ii) with respect to any untrue
<PAGE>
-25-
statement or representation made by such Participant in writing to the Issuers.
The liability of any Participant under this paragraph shall in no event exceed
the proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
------------------
notify the Person against whom such indemnity may be sought (the "Indemnifying
------------
Person") in writing, and the Indemnifying Person, upon request of the
- - ------
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
-------- -------
Indemnifying Person shall not relieve it of any obligation or liability that it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the loss or compromise of any material rights or defenses by
the Indemnifying Person and the Indemnifying Person was not otherwise aware of
such action or claim). In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Person shall have failed within a
reasonable period of time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that, unless there exists a conflict among Indemnified Persons,
the Indemnifying Person shall not, in connection with any one such proceeding or
separate but substantially similar related proceeding in the same jurisdiction
arising out of the same general allegations, be liable for the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed
promptly as they are incurred. Any such separate firm for the Participants and
such control Persons of Participants shall be designated in writing by
<PAGE>
-26-
Participants who sold a majority in interest of Registrable Notes and Exchange
Notes sold by all such Participants and any such separate firm for the Issuers,
their directors, their officers and such control Persons of the Issuers shall be
designated in writing by the Issuers. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its prior written
consent, but if settled with such consent or if there be a final non-appealable
judgment for the plaintiff for which the Indemnified Person is entitled to
indemnification pursuant to this Agreement, the Indemnifying Person agrees to
indemnify and hold harmless each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement; provided, however, that the Indemnifying Person shall
-------- -------
not be liable for any settlement effected without its consent pursuant to this
sentence if the Indemnifying Person is contesting, in good faith, the request
for reimbursement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and
<PAGE>
-27-
equitable contribution, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect (i) the relative benefits received
by the Indemnifying Person or Persons on the one hand and the Indemnified Person
or Persons on the other from the offering of the Notes or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the Indemnifying
Person or Persons on the one hand and the Indemnified Person or Persons on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers on the one hand
or such Participant or such other Indemnified Person, as the case may be, on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
<PAGE>
-28-
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rule 144 and 144A
-----------------
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner in accordance with
the requirements of the Securities Act and the Exchange Act and, if at any time
the Company is not required to file such reports, it will, upon the request of
any Holder of Registrable Notes, make publicly available annual reports and such
information, documents and other reports of the type specified in Sections 13
and 15(d) of the Exchange Act. The Company further covenants for so long as any
Registrable Notes remain outstanding, to make available to any Holder or
beneficial owner of Registrable Notes in connection with any sale thereof and
any prospective purchaser of such Registrable Notes from such Holder or
beneficial owner the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
Rule 144A.
9. Underwritten Registrations
--------------------------
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
-------------
(a) No Inconsistent Agreements. The Issuers have not, as of the date
--------------------------
hereof, and shall not, after the date of
<PAGE>
-29-
this Agreement, enter into any agreement with respect to any of the Company's
securities that is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof. The Issuers have not entered (except agreements existing on the date
hereof with respect to equity securities of the Issuer) and will not enter into
any agreement with respect to any of its securities that will grant to any
Person piggy-back registration rights with respect to an Exchange Registration
Statement.
(b) Adjustments Affecting Registrable Notes. The Issuers shall not,
---------------------------------------
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) 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, otherwise than with the prior written
consent of the Holders of not less than a majority in aggregate principal amount
of the then outstanding Registrable Notes. 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 of Registrable Notes whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold by such Holders
pursuant to such Registration Statement; provided, however, that the provisions
-------- -------
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day courier or facsimile:
1. if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar
<PAGE>
-30-
under the Indenture, with a copy in like manner to the Initial Purchaser as
follows:
BT SECURITIES CORPORATION
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No.: (212) 250-7200
Attention: Corporate Finance Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: William M. Hartnett, Esq.
2. if to the Initial Purchaser, at the addresses specified in
Section 10(d)(1);
3. if to the Company, at the address as follows:
Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Facsimile No.: (810) 616-0530
Attention:______________________
with copies to:
Jaffe, Raitt, Heuer & Weiss
One Woodward, Suite 2400
Detroit, MI 48226
Facsimile No.: (313) 961-8358
Attention: Peter Sugar, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving
<PAGE>
-31-
the same to the Trustee at the address and in the manner specified in such
Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto;
provided, however, that this Agreement shall not inure to the benefit of or be
- - -------- -------
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Notes.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. 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 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.
(j) Securities Held by the Company or Its Affiliates. Whenever the
------------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Notes is
required
<PAGE>
-32-
hereunder, Registrable Notes held by the Company or its affiliates (as such term
is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
-------------------------
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchaser on the
one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CAMBRIDGE INDUSTRIES, INC.,
as Company
By: /s/ John M. Colaianne
--------------------------------------
Name: John M. Colaianne
Title: CFO
CE AUTOMOTIVE TRIM SYSTEMS, INC.,
as Guarantor
By: /s/ John M. Colaianne
--------------------------------------
Name: John M. Colaianne
Title: Sec/Treasurer
BT SECURITIES CORPORATION
By: /s/ Mitchell Goldstein
--------------------------------------
Name: Mitchell Goldstein
Title: Vice President
<PAGE>
Exhibit 5.1
August 12, 1997
Cambridge Industries, Inc.
CE Automotive Trim Systems, Inc.
555 Horace Brown Drive
Madison Heights, Michigan 48071
Ladies and Gentlemen:
At your request, we are delivering this opinion to you in connection with
your registration statement (the "Registration Statement"), which you are filing
pursuant to the Securities Act of 1933, covering the Cambridge Industries, Inc.
10 1/4% Senior Subordinated Notes, due 2007, Series B. Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings ascribed to
them in the prospectus included as part of the Registration Statement.
In our capacity as counsel to Cambridge Industries, Inc. ("Cambridge"), we
have considered such matters of law and of fact, and relied upon certificates
and other information furnished to us, as we have deemed appropriate as a basis
for our opinions set forth below.
This opinion is governed by, and shall be interpreted in accordance with,
Part II of the Report of the Ad Hoc Committee of the Business Law Section of the
State Bar of Michigan on Standardized Legal Opinions in Business Transactions
dated August 1, 1991, incorporated herein by reference. Without limiting the
generality of the foregoing, the meaning of the terms and phrases used in this
opinion (other than those defined in the prospectus included as part of the
Registration Statement) is governed by and is subject to such Part II.
Based upon the foregoing, we are of the opinion that the issuance of the
Cambridge Industries, Inc. 10 1/4% Senior Subordinated Notes, due 2007, Series B
has been duly authorized and, when issued and delivered as described in the
prospectus included as part of the Registration Statement, will be validly
issued, fully paid and nonassessable and binding obligations of Cambridge
Industries, Inc. and CE Automotive Trim Systems, Inc.
We also consent to the inclusion of this opinion as an exhibit to the
Registration Statement, and to the inclusion of a reference to this opinion and
to our firm name in the prospectus included as part of the Registration
Statement.
<PAGE>
August 18, 1997
Page 2
We do not purport to be experts on, or to express any opinion herein
concerning any law other than the laws of the State of Michigan and this opinion
is qualified accordingly.
Very truly yours,
JAFFE, RAITT, HEUER & WEISS
Professional Corporation
/s/ Peter Sugar
<PAGE>
Exhibit 10.1
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of November 17,
---------
1995, by and between Cambridge Industries, Inc., a Delaware corporation (the
"Company"), and Richard S. Crawford, ("Executive").
------- ---------
The execution and delivery of this Agreement by the Company and
Executive are conditions to the purchase of shares of the Company's common stock
pursuant to a Refinancing Agreement (the "Refinancing Agreement") of even date
---------------------
herewith by the Purchasers (as defined therein).
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive
----------
hereby accepts employment with the Company, upon the terms and conditions set
forth in this agreement for the period beginning on the date hereof and ending
as provided in paragraph 4 hereof (the "Employment Period").
-----------------
2. Position and Duties.
-------------------
(a) During the Employment Period, Executive shall serve as the President
and Chief Executive Officer of the Company and shall have the normal duties,
responsibilities and authority of the President and Chief Executive Officer,
subject to the power of the Company's board of directors (the "Board") to expand
-----
or limit such duties, responsibilities and authority and to override actions of
the President and Chief Executive Officer.
(b) Executive shall report to the Board, and Executive shall devote his
best efforts and substantially all of his business time and attention (except
for permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company and its Subsidiaries.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
------------
corporation of which the securities having a majority of
<PAGE>
the voting power in electing directors are, at the time of determination, owned
by the Company, directly or through one of more Subsidiaries.
3. Base Salary and Benefits.
------------------------
(a) During the Employment Period, Executive's base salary shall be
$400,000 per annum or such higher rate as the Board may designate from time to
time (the "Base Salary"), which salary shall be payable in regular installments
-----------
in accordance with the Company's general payroll practices and shall be subject
to customary withholding. In addition, during the Employment Period, Executive
shall be entitled to participate in all of the Company's employee benefit
programs for which senior executive employees of the Company and its
Subsidiaries are generally eligible, and Executive shall be entitled to 5 weeks
of paid vacation each year.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) In addition to the Base Salary, the Board may, in its sole
discretion, award a bonus to Executive of up to 50% of the Base Salary following
the end of each fiscal year during the Employment Period based upon Executive's
performance and the Company's operating results during such year.
4. Termination. The Employment Period shall continue until
-----------
Executive's resignation, death or permanent disability or other incapacity (as
determined by the Board in its good faith judgment) or until the Board
determines in its good faith judgment that termination of Executive's employment
is in the best interests of the Company. In the event of Executive's
resignation, Executive shall not be entitled to receive his Base Salary or any
fringe benefits or bonuses for periods after the termination of the Employment
Period, and upon any other termination Employment Period, Executive shall be
entitled to receive his Base Salary and fringe benefits (but no bonuses) for a
period of three months thereafter.
5. Confidential Information. Executive acknowledges that the
------------------------
information, observations and data obtained by him while employed by the Company
and its Subsidiaries (including those obtained while employed by the Company
prior to the date of this Agreement) concerning the business or affairs of the
Company or any
- 2 -
<PAGE>
of its Subsidiaries ("Confidential Information") are the property of the Company
------------------------
or such Subsidiary. Therefore, Executive agrees that he shall not disclose to
any unauthorized person or use for his own purposes any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions. Executive
shall deliver to the Company at the termination of the Employment Period, or at
any other time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and data
(and copies thereof) relating to the Confidential Information, Work Product (as
defined below) or the business of the Company or any Subsidiary which he may
then possess or have under his control.
6. Inventories and Patents. Executive acknowledges that all inventions,
-----------------------
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) which
relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed by the
Company and its Subsidiaries ("Work Product") belong to the Company or such
------------
Subsidiary. Executive shall promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
7. Non-Compete, Non-Solicitation.
-----------------------------
(a) In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that in the course of his employment with the
Company prior to the date of this Agreement he shall become familiar, and during
his employment with the Company he has become familiar, with the Company's trade
secrets and with other Confidential Information concerning the Company and its
Subsidiaries and that his services have been and shall be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, Executive
agrees that, during the Employment Period and for two years thereafter (the
"Noncompete Period"), he shall not directly or indirectly own any interest in,
-----------------
manage, control, participate in, consult with, render services for, or in any
manner engage in any business competing with the businesses of the Company or
its Subsidiaries, as such businesses exist or are in process on the date of the
termination of Executive's employment, within any geographical area in which the
Company or its Subsidiaries engage or plan to engage in such
- 3 -
<PAGE>
businesses. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation which
is publicly traded, so long as Executive has no active participation in the
business of such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary (including, without
limitation, making any negative statements or communications about the Company
or its Subsidiaries).
8. Enforcement. If, at the time of enforcement of paragraph 5, 6 or 7
-----------
of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services are unique and because Executive has access to
Confidential Information and Work Product, the parties hereto agree that money
damages would not be an adequate remedy for any breach of this Agreement.
Therefore, in the event a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation by
Executive of paragraph 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured. Executive agrees that the restrictions
contained in paragraph 7 are reasonable.
9. Executive's Representations. Executive hereby represents and
---------------------------
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to
- 4 -
<PAGE>
which Executive is a party or by which he is bound, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that he has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.
10. Survival. Paragraph 5, 6 and 7 and paragraphs 10 through 18 shall
--------
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
11. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:
Notices to Executive:
--------------------
Richard S. Crawford
c/o Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, Michigan 48071
With copy to:
Jaffe, Raitt, Heuer & Weiss, Professional Corporation
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
Attn: Ira J. Jaffe, Esq.
Notices to the Company:
----------------------
Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, Michigan 48071
Attn: Board of Directors
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
- 5 -
<PAGE>
12. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way
(including, without limitation, the Employment Agreement between the parties
hereto, dated August 1, 1994), but excluding any breaches thereof by either
party prior to the date hereof.
14. No Strict Construction. The language used in this Agreement
----------------------
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
15. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
16. Successors and Assigns. This Agreement is intended to bind and
----------------------
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
17. Choice of Law. All issues and questions concerning the
-------------
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Michigan, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Michigan or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Michigan. In furtherance of the foregoing,
the internal law of the State of Michigan shall control the interpretation and
construction of this Agreement (and
- 6 -
<PAGE>
all schedules and exhibits hereto), even though under that jurisdiction's choice
of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
18. Amendment and Waiver. The provisions of this Agreement may be
--------------------
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
* * * * *
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
CAMBRIDGE INDUSTRIES, INC.
By: [SIGNATURE APPEARS HERE]
--------------------------------
Its: Secretary
-------------------------------
/s/ Richard S. Crawford
------------------------------------
Richard S. Crawford
<PAGE>
Exhibit 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"), dated March 1,
1996, is by and between Cambridge Industries, Inc. (the "Company") and Richard
S. Crawford ("Executive").
WHEREAS, Executive is employed by the Company pursuant to the terms of that
certain Employment Agreement (the "Agreement") dated as of November 17, 1995
between the Company and Executive.
WHEREAS, the Company and Executive wish to amend the Agreement.
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
1. Paragraph 3 of the Agreement is hereby amended by replacing "$400,000"
with "$475,000".
2. Paragraph 3 of the Agreement is hereby amended, effective the date
hereof, by adding after subparagraph (c) the following subparagraph:
"(d) In addition to the Base Salary, the Company shall pay Executive
$412,500 upon the acquisition of the Reinforced Plastic Division of
GenCorp, Inc., an Ohio corporation."
3. Applicable Law. All issues and questions concerning the construction,
--------------
validity, interpretation and enforceability of this Amendment shall be governed
by, and construed in accordance with, the laws of the State of Michigan, without
giving effect to any choice of law or conflict of law provisions (whether of the
State of Michigan or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Michigan.
4. Counterparts; Effectiveness. This Amendment may be executed in any
---------------------------
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Amendment shall become effective upon the execution of a
counterpart hereof by each of the parties hereto, and written or telephonic
notification of such execution and authorization of delivery thereof has been
received by each party hereto.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Amendment to be
executed by their respective officers hereunto duly authorized as of the day and
year first written above.
CAMBRIDGE INDUSTRIES, INC.
By: /s/ [SIGNATURE APPEARS HERE]
-----------------------------------
Name:
Title:
/s/ Richard S. Crawford
---------------------------------------
RICHARD S. CRAWFORD
2
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of November 17, 1995, by
and between RICHARD E. WARNICK (the "Employee"), whose address is 22920
Nottingham, Beverly Hills, Michigan 48025, and CAMBRIDGE INDUSTRIES, INC., a
Delaware corporation (the "Company"), whose address is 555 Horace Brown Drive,
Rochester, Michigan 48071.
RECITALS:
A. The Employee has served as Chief Operating Officer of the
Company.
B. The Company wishes to have the Employee assume a more advisory
role for the Company and its parent, Cambridge Industries
Holdings, Inc. ("Holdings"), and the Employee desires to be
employed by the Company in such capacity.
C. The Company also desires to provide for a smooth transition to
a new Chief Operating Officer as the Employee assumes such an
advisory role.
D. The Company and the Employee desire to enter into this
Agreement upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, for and in consideration of the premises, the mutual
understandings of the parties hereto, and other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, it is hereby agreed as
follows:
1. Employment. Until this Agreement is terminated pursuant to the
terms hereof, the Company will employ the Employee to perform such services for
and on behalf of the Company as the Board of Directors or the President of the
Company may from time to time direct, which services shall include assisting the
Company in connection with a smooth transition in employing a new Chief
Operating Officer, and Employee hereby accepts such employment, upon the terms
and conditions set forth in this Agreement.
2. Term. The term of this Agreement shall commence as of the date
of this Agreement and shall continue for a period of two (2) years, unless this
Agreement is otherwise terminated pursuant to Paragraph 8 hereof.
3. Compensation. For all services to be rendered by him under
this Agreement, the Company shall pay the Employee an annual salary of $250,000
(the "Salary"), payable in equal bi-weekly installments during the employment of
Employee hereunder. If this Agreement is terminated on a day other than the last
day of a pay period, the Company shall be obligated to pay a pro rata portion of
the Salary for that abbreviated pay period.
4. Additional Benefits. In addition to the compensation set forth
in Paragraph 3, the Employee shall have the right to receive or participate in
those reasonable fringe benefits which he now receives from the Company
including, without limitation, group term life insurance, health insurance, and
participation in the Company retirement plan, subject to the provisions of any
such programs or plans, which programs or plans may be modified or eliminated at
the discretion of the Board of Directors of the Company at any time.
<PAGE>
5. Reimbursement of Expenses. The Company shall reimburse the
Employee for all necessary and reasonable business expenses incurred by him in
the performance of his duties under this Agreement in accordance with practices
established from time to time by the Company, upon presentation by the Employee
of vouchers, receipts or other evidences of such expenditures, satisfactory to
the Company.
6. Services.
(a) The Employee shall perform his duties under this
Agreement faithfully, diligently and to the best of his ability. He
shall serve subject to the policies and instruction of the Board of
Directors or President of the Company, and shall devote his full
business time, attention, energies and loyalty to the Company.
(b) During the term of this Agreement, the Employee will not
engage in any activities in conflict with the best interests of the
Company or of any Affiliate. As used in this Agreement, the term
"Affiliate" shall mean (a) at any time each corporation or other
business entity directly or indirectly controlling, controlled by, or
under common control with the Company, including all corporations and
other business entities now or hereafter owned or acquired by the
controlling shareholders of the Company, and (b) at any time each
corporation or other business entity in which at least fifty (50%)
percent of the voting or non-voting stock or other interest therein is
owned beneficially and/or of record directly or indirectly by the
Company or its controlling shareholders.
(c) The Employee shall (i) act in an advisory capacity to
facilitate the training and assumption of responsibilities of a new
chief operating officer, or officers serving substantially in that
capacity, to be appointed by the Board of Directors; (ii) be available
for consultation with such operating officers, and (iii) have such
other responsibilities and duties as may be delegated to him from time
to time by the Company's Board of Directors or President.
7. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to be duly given when personally delivered,
telecopied, or deposited in the United States mail, certified or registered,
return receipt requested, postage prepaid, addressed to the parties at their
respective addresses set forth on the first page of this Agreement (or at such
other address as shall be given in writing to the parties hereto or their
successors or assigns) and, in the case of notices to the Company, with a
required copy to Jaffe, Raitt, Heuer & Weiss, Professional Corporation, One
Woodward Avenue, Suite 2400, Detroit, Michigan 48226, Attn: Robin H. Krueger,
Esq.
8. Termination.
(a) The Employee's employment under this Agreement may be
terminated:
(i) by the Employee on sixty (60) days' written
notice;
(ii) by the Company at any time for "cause" (as
defined below), without prior notice;
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<PAGE>
(iii) by the Company if the Employee is unable to
perform his duties under this Agreement by reason of illness
or physical or mental incapacity for an aggregate period of
sixty (60) days within any period of 365 consecutive days,
upon thirty (30) days prior written notice; or
(iv) upon the Employee's death.
(b) For purposes hereof, for "cause" shall mean the breach
of any material provision of this Agreement by the Employee, and any
action of the Employee (or the Employee's failure to act), which, in
the reasonable determination of the Company's Board of Directors,
involves malfeasance, nonfeasance, fraud or moral turpitude, or which,
if generally known, would or might have a material adverse effect on
the Company and/or its reputation.
9. Restrictive Covenants.
(a) The Employee acknowledges that the services which have
been and will be performed by him are unique, and, by reason of such
employment, the Employee has acquired and will continue to acquire
confidential information and trade secrets concerning the operations of
the Company and of one or more Affiliates concerning their respective
methods of doing business and future plans. Accordingly, the Employee
agrees that:
(i) The Employee will not at any time, for so
long as any Confidential Information (as defined below) shall
remain confidential or otherwise remain wholly or partially
protectable, either during the course of the Employee's
employment or thereafter, use or disclose, directly or
indirectly to any person outside of the Company any
Confidential Information;
(ii) Promptly upon the termination of the
Employee's employment for any reason, the Employee (or in the
event of the Employee's death, his personal representative)
shall return to the Company any and all copies (whether
prepared or copied by, or at the direction of, the Company or
the Employee) of all records, drawings, materials, memoranda
and other data constituting or pertaining to Confidential
Information; and
(iii) For a period commencing on the date of this
Agreement and ending upon the expiration of five years from
the termination for any reason of the Employee's employment
hereunder, the Employee shall not directly or indirectly
divert, or by aid to others, do anything which would tend to
divert, from the Company any trade or business with any
customer with whom the Employee had any contact or association
during the term of the Employee's employment with the Company
or with any party whose identity or potential as a customer
was confidential or learned by the Employee during his
employment by the Company;
As used in this Agreement, the term "Confidential Information" shall
mean all business information of any nature and in any form which at
the time or times concerned is not generally known to those persons
engaged in business similar to that conducted or contemplated by the
Company (other than by the act or acts of an employee not authorized by
the Company to
-3-
<PAGE>
disclose such information) and which relates to any one or more of the
aspects of the present or past business of the Company or any Affiliate
or any of their respective predecessors, including, without limitation,
patents and patent applications, inventions and improvements (whether
or not patentable), development projects, policies, processes,
formulas, techniques, know-how, and other facts relating to sales,
advertising, promotions, financial matters, customers, customer lists,
customer purchases or requirements, and other trade secrets.
(b) The Employee understands that the Company would not have
an adequate remedy at law for the breach or threatened breach by the
Employee of any one or more of the covenants set forth above, and
agrees that if there is any such breach or threatened breach the
Company may, in addition to the other legal or equitable remedies which
may be available to it, obtain an injunction or restraining order to
enjoin or restrain the Employee from the breach or threatened breach of
such covenants.
(c) The Employee acknowledges and agrees that he is bound by
the Covenant Not to Compete set forth Section 6.4 of that certain Stock
Purchase Agreement among R & C Warnick, L.L.C., Holdings, Crawford
Investment Group L.L.C., and J & M Craft L.L.C. (the "Purchase
Agreement"), exactly as if such Covenant Not to Compete were contained
in this Agreement, and that breach of such Covenant shall be deemed to
be a breach of a material provision of this Agreement.
(d) The Employee acknowledges and agrees that the covenants
set forth above, including without limitation, those set forth in
Section 6.4 of the Purchase Agreement, are reasonable and valid in
geographical and temporal scope and in all other respects. If the
aforesaid covenants and warranties not to compete set forth in Section
6.4 of the Purchase Agreement are found by any court having
jurisdiction in the premises to be too broad in extent, either as to
the time period or geographical area designated, or otherwise, then and
in such case, the covenants and warranties not to compete shall
nevertheless remain effective, but shall be considered amended (as to
time or area or otherwise, as the case may be) to a point considered by
said court to be reasonable, and as so amended shall be fully
enforceable. The Employee and the Company intend to and hereby confer
jurisdiction to enforce the covenants upon the courts of any
jurisdiction within the geographical scope of such covenants. If the
courts of any one or more of such jurisdictions hold the covenants, or
any part of the covenants, unenforceable by reason of the breadth of
such scope or otherwise, it is the intention of the Employee and the
Company that such determination not bar or in any way affect the right
of the Company to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such covenants as to
breaches of such covenants in such other respective jurisdictions. For
this purpose, such covenants as they relate to each jurisdiction shall
be severable into diverse and independent covenants. Notwithstanding
anything in the foregoing to the contrary, the parties agree that the
jurisdiction to enforce the covenants conferred on courts outside the
State of Michigan ("non-Michigan courts") shall be restricted to
jurisdiction over actions in respect of breaches of covenants relating
to the jurisdiction in which such non-Michigan court is located.
10. Miscellaneous.
(a) The terms and conditions of this Agreement shall be
binding upon and inure to
-4-
<PAGE>
the benefit of the parties hereto and their respective heirs,
successors and personal representatives.
(b) This Agreement has been executed in, and shall be
construed and enforced in accordance with, the laws of the State of
Michigan.
(c) This Agreement may not be modified except by written
instrument executed by each of the parties hereto.
(d) This Agreement sets forth the entire understanding and
agreement of the parties hereto with respect to its subject matter and
supersedes all prior understandings and agreements, whether written or
oral, in respect thereof, including, without limitation, that certain
employment agreement dated August 1, 1994 by and between the Employee
and the Company (the "Prior Agreement"), and all of the Company's
obligations under such prior agreement including the obligation to pay
the Employee any Performance or Cash Flow Bonus (as defined in the
Prior Agreement) for the Company's 1995 fiscal year, shall be
terminated as of the date of this Agreement.
(e) This Agreement is personal to Employee and may not be
assigned by him in any manner whatsoever.
(f) The headings and captions used herein are for
convenience of reference only and shall not be considered in construing
this Agreement.
(g) If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid, illegal or
unenforceable, such provision shall be modified so as to be enforceable
to the fullest extent permitted by applicable law, and the validity,
legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby.
(h) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
/s/ Richard E. Warnick
------------------------------
RICHARD E. WARNICK
CAMBRIDGE INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Richard Crawford
---------------------------
-5-
<PAGE>
Richard S. Crawford, President
-6-
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of November 17, 1995, by and
between JOHN D. CRAFT (the "Employee"), whose address is 3640 Edinborough,
Rochester, Michigan 48306, and CAMBRIDGE INDUSTRIES, INC., a Delaware
corporation (the "Company"), whose address is 555 Horace Brown Drive, Rochester,
Michigan 48071.
RECITALS:
A. The Employee has served as Chief Financial Officer of the Company.
B. The Company wishes to have the Employee assume a more advisory
role for the Company and its parent, Cambridge Industries
Holdings, Inc. ("Holdings"), and the Employee desires to be
employed by the Company in such capacity.
C. The Company also desires to provide for a smooth transition to a
new Chief Financial Officer as the Employee assumes such an
advisory role.
D. The Company and the Employee desire to enter into this Agreement
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, for and in consideration of the premises, the mutual
understandings of the parties hereto, and other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, it is hereby agreed as
follows:
1. Employment. Until the earlier of (a) May 31, 1996, or (b) the date
a new Chief Financial Officer for the Company is appointed and begins service,
the Employee will continue to serve on a full time basis as the Chief Financial
Officer for the Company, in a manner consistent with the Employee's services as
such prior to the date of this Agreement. Thereafter, until this Agreement is
terminated pursuant to the terms hereof, the Employee will provide such
consulting services as the Company may from time to time reasonably request,
which services shall include assisting the Company in connection with a smooth
transition in employing a new Chief Financial Officer. Employee hereby accepts
such employment, upon the terms and conditions set forth in this Agreement.
2. Term. The term of this Agreement shall commence as of the date of
this Agreement and shall continue for a period of two (2) years, unless this
Agreement is otherwise terminated pursuant to Paragraph 8 hereof.
3. Compensation. For all services to be rendered by him under this
Agreement up to May 31, 1996, the Company shall pay the Employee a salary at the
annual rate of $250,000 (the "Salary"), payable in equal bi-weekly installments
during that period. If this period ends on a day other than the last day of a
pay period, the Company will pay a pro rata portion of the Salary for that
abbreviated pay period. Consulting services after May 31, 1996 will be
compensated at the rate of $120 per hour (pro rated for fractions of hours
worked).
4. Additional Benefits. In addition to the compensation set forth in
Paragraph 3, the Employee shall have the right to receive or participate in
those reasonable fringe benefits which he now
<PAGE>
receives from the Company including, without limitation, group term life
insurance, health insurance, and participation in the Company retirement plan,
subject to the provisions of any such programs or plans, which programs or plans
may be modified or eliminated at the discretion of the Board of Directors of the
Company at any time.
5. Reimbursement of Expenses. The Company shall reimburse the
Employee for all necessary and reasonable business expenses incurred by him in
the performance of his duties under this Agreement in accordance with practices
established from time to time by the Company, upon presentation by the Employee
of vouchers, receipts or other evidences of such expenditures, satisfactory to
the Company.
6. Services.
(a) The Employee shall perform his duties under this Agreement
faithfully, diligently and to the best of his ability. He shall serve
subject to the policies and instruction of the Board of Directors or
President of the Company, and shall during the period specified for
full time services in Section 1 devote his full business time,
attention, energies and loyalty to the Company.
(b) During the period specified for full time services in Section
1 of this Agreement, the Employee will not engage in any activities in
conflict with the best interests of the Company or of its parent or
subsidiaries. As used in this Agreement, the term "Affiliate" shall
mean (a) at any time each corporation or other business entity directly
or indirectly controlling, controlled by, or under common control with
the Company, including all corporations and other business entities now
or hereafter owned or acquired by the controlling shareholders of the
Company, and (b) at any time each corporation or other business entity
in which at least fifty (50%) percent of the voting or non-voting stock
or other interest therein is owned beneficially and/or of record
directly or indirectly by the Company or its controlling shareholders.
(c) The Employee shall (i) act in an advisory capacity to
facilitate the training and assumption of responsibilities of a new
chief financial officer, or officers serving substantially in that
capacity, to be appointed by the Board of Directors; (ii) be available
for consultation with such financial officers, and (iii) have such
other responsibilities and duties as may be delegated to him from time
to time by the Company's Board of Directors or President; all in a
manner consistent with Section 1, above.
7. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to be duly given when personally delivered,
telecopied, or deposited in the United States mail, certified or registered,
return receipt requested, postage prepaid, addressed to the parties at their
respective addresses set forth on the first page of this Agreement (or at such
other address as shall be given in writing to the parties hereto or their
successors or assigns) and, in the case of all notices to either party, with a
required copy to each of Jaffe, Raitt, Heuer & Weiss, Professional Corporation,
One Woodward Avenue, Suite 2400, Detroit, Michigan 48226, Attn: Ira J. Jaffe,
Esq. and Miller, Canfield, Paddock and Stone, PLC, 1400 North Woodward Avenue,
Suite 100, Bollmfield hills, Michigan 48303-2014, Attn: John J. Collins, Esq.
-2-
<PAGE>
8. Termination.
(a) The Employee's employment under this Agreement may be
terminated:
(i) by the Employee on sixty (60) days' written notice;
(ii) by the Company at any time for "cause" (as defined
below), without prior notice;
(iii) by the Company if the Employee is unable to perform
his duties under this Agreement by reason of illness or
physical or mental incapacity for an aggregate period of sixty
(60) days within any period of 365 consecutive days, upon
thirty (30) days prior written notice; or
(iv) upon the Employee's death.
(b) For purposes hereof, for "cause" shall mean the breach of
any material provision of this Agreement by the Employee, and any
action of the Employee (or the Employee's failure to act), which, in
the reasonable determination of the Company's Board of Directors,
involves malfeasance, nonfeasance, fraud or moral turpitude, or which,
if generally known, would or might have a material adverse effect on
the Company and/or its reputation.
9. Restrictive Covenants.
(a) The Employee acknowledges that the services which have
been and will be performed by him are unique, and, by reason of such
employment, the Employee has acquired and will continue to acquire
confidential information and trade secrets concerning the operations of
the Company and of one or more Affiliates concerning their respective
methods of doing business and future plans. Accordingly, the Employee
agrees that:
(i) The Employee will not at any time, for so long as
any Confidential Information (as defined below) shall remain
confidential or otherwise remain wholly or partially
protectable, either during the course of the Employee's
employment or thereafter, use or disclose, directly or
indirectly to any person outside of the Company any
Confidential Information;
(ii) Promptly upon the termination of the Employee's
employment for any reason, the Employee (or in the event of
the Employee's death, his personal representative) shall
return to the Company any and all copies (whether prepared or
copied by, or at the direction of, the Company or the
Employee) of all records, drawings, materials, memoranda and
other data constituting or pertaining to Confidential
Information; and
(iii) During the period specified for full time
services in Section 1 of this Agreement, the Employee shall
not directly or indirectly divert, or by aid to others, do
anything which would tend to divert, from the Company any
trade or business with any customer with whom the Employee had
any contact or association during the term of
-3-
<PAGE>
the Employee's employment with the Company or with any party
whose identity or potential as a customer was confidential or
learned by the Employee during his employment by the Company.
As used in this Agreement, the term "Confidential Information" shall
mean all business information of any nature and in any form which at
the time or times concerned is not generally known to those persons
engaged in business similar to that conducted or contemplated by the
Company (other than by the act or acts of an employee not authorized by
the Company to disclose such information) and which relates to any one
or more of the aspects of the present or past business of the Company
or any Affiliate or any of their respective predecessors, including,
without limitation, patents and patent applications, inventions and
improvements (whether or not patentable), development projects,
policies, processes, formulas, techniques, know-how, and other facts
relating to sales, advertising, promotions, financial matters,
customers, customer lists, customer purchases or requirements, and
other trade secrets.
(b) The Employee understands that the Company would not have
an adequate remedy at law for the breach or threatened breach by the
Employee of any one or more of the covenants set forth above, and
agrees that if there is any such breach or threatened breach the
Company may, in addition to the other legal or equitable remedies which
may be available to it, obtain an injunction or restraining order to
enjoin or restrain the Employee from the breach or threatened breach of
such covenants.
(c) The Employee acknowledges and agrees that he is bound by
the Covenant Not to Compete set forth Section 6.4 of that certain Stock
Purchase Agreement between Holdings and J & M Craft L.L.C. (the
"Purchase Agreement"), exactly as if such Covenant Not to Compete were
contained in this Agreement, and that breach of such Covenant shall be
deemed to be a breach of a material provision of this Agreement.
(d) The Employee acknowledges and agrees that the covenants
set forth above, including without limitation, those set forth in
Section 6.4 of the Purchase Agreement, are reasonable and valid in
geographical and temporal scope and in all other respects. If the
aforesaid covenants and warranties not to compete set forth in Section
6.4 of the Purchase Agreement are found by any court having
jurisdiction in the premises to be too broad in extent, either as to
the time period or geographical area designated, or otherwise, then and
in such case, the covenants and warranties not to compete shall
nevertheless remain effective, but shall be considered amended (as to
time or area or otherwise, as the case may be) to a point considered by
said court to be reasonable, and as so amended shall be fully
enforceable. The Employee and the Company intend to and hereby confer
jurisdiction to enforce the covenants upon the courts of any
jurisdiction within the geographical scope of such covenants. If the
courts of any one or more of such jurisdictions hold the covenants, or
any part of the covenants, unenforceable by reason of the breadth of
such scope or otherwise, it is the intention of the Employee and the
Company that such determination not bar or in any way affect the right
of the Company to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such covenants as to
breaches of such covenants in such other respective jurisdictions. For
this purpose, such covenants as they relate to each jurisdiction shall
be severable into diverse and independent covenants. Notwithstanding
anything in the foregoing to the contrary, the parties agree that the
jurisdiction to enforce the
-4-
<PAGE>
covenants conferred on courts outside the State of Michigan ("non-
Michigan courts") shall be restricted to jurisdiction over actions in
respect of breaches of covenants relating to the jurisdiction in which
such non-Michigan court is located.
10. Miscellaneous.
(a) The terms and conditions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and personal representatives.
(b) This Agreement has been executed in, and shall be
construed and enforced in accordance with, the laws of the State of
Michigan.
(c) This Agreement may not be modified except by written
instrument executed by each of the parties hereto.
(d) This Agreement sets forth the entire understanding and
agreement of the parties hereto with respect to its subject matter and
supersedes all prior understandings and agreements, whether written or
oral, in respect thereof, including, without limitation, that certain
employment agreement dated August 1, 1994 by and between the Employee
and the Company (the "Prior Agreement"), and all of the
Company's obligations under such prior agreement including the
obligation to pay the Employee any Performance or Cash Flow Bonus (as
defined in the Prior Agreement) for the Company's 1995 fiscal year,
shall be terminated as of the date of this Agreement.
(e) This Agreement is personal to Employee and may not be
assigned by him in any manner whatsoever.
(f) The headings and captions used herein are for convenience
of reference only and shall not be considered in construing this
Agreement.
(g) If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid, illegal or
unenforceable, such provision shall be modified so as to be enforceable
to the fullest extent permitted by applicable law, and the validity,
legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby.
(h) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
/s/ John D. Craft
---------------------------
JOHN D. CRAFT
-5-
<PAGE>
CAMBRIDGE INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Richard S. Crawford
------------------------
Richard S. Crawford, President
-6-
<PAGE>
Exhibit 10.5
MANAGEMENT SERVICES AGREEMENT
-----------------------------
This Agreement is made as of November 17, 1995, by and between Cambridge
Industries, Inc., a Delaware corporation (the "Company"), and Bain Capital,
-------
Inc., a Delaware corporation ("Bain").
----
WHEREAS, the Company desires to retain Bain and Bain desires to perform
for the Company and its subsidiaries certain services;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. Term. This Agreement shall be in effect for an initial term of 5
----
years commencing on the date hereof (the "Term"), and shall be automatically
----
extended thereafter on a year to year basis unless the Company or Bain provides
written notice of its desire to terminate this Agreement to the other party 90
days prior to the expiration of the Term or any extension thereof.
2. Services. Bain shall perform or cause to be performed such
--------
services for the Company and its subsidiaries as directed by the Company's board
of directors (the "Board"), which may include, without limitation, the
-----
following:
(a) general executive and management services;
(b) identification, support, negotiation and analysis of acquisitions
and dispositions by the Company or its subsidiaries;
(c) support, negotiation and analysis of financing alternatives,
including, without limitation, in connection with acquisitions, capital
expenditures and refinancing of existing indebtedness;
(d) finance functions, including assistance in the preparation of
financial projections, and monitoring of compliance with financing agreements;
(e) marketing functions, including monitoring of marketing plans and
strategies;
(f) human resource functions, including searching and hiring of
executives; and
<PAGE>
(g) other services for the Company and its subsidiaries upon which the
Board and Bain agree.
3. Advisory Fees and Transaction Fees. Payment to Bain for services
-----------------------------------
rendered in connection with the performance of services pursuant to this
Agreement shall be $875,000 per year ("Advisory Fees") plus reasonable
-------------
out-of-pocket expenses of Bain, payable by the Company on a quarterly basis in
arrears commencing December 31, 1995; provided that, the amount payable to Bain
--------
respect of Advisory Fees for any given quarter will be reduced by the amount of
Transaction Fees (as defined below), if any, received by Bain during such
quarter, and, to the extent Transaction Fees received by Bain exceed Advisory
Fees payable by the Company for such quarter, such excess will be carried
forward and will reduce future Advisory Fees payable during the next three
consecutive fiscal quarters (but will not be carried forward to offset Advisory
Fees beyond the third consecutive fiscal quarter after the fiscal quarter in
which the Transaction Fees were received).
(b) During the term of this Agreement, Bain shall be entitled to
receive from the Company a transaction fee in connection with the consummation
of each acquisition by the Company of an additional business in an amount equal
to 1% of the aggregate transaction value of such acquisition (each such payment,
a "Transaction Fee"); provided that, Bain may waive the payment of a Transaction
--------------- --------
Fee in connection with any acquisition as to which Bain and the Board mutually
agree that a Transaction Fee is not appropriate. In addition, upon the
consummation of the transactions contemplated by the Refinancing Agreement dated
as of the date hereof by and among the Company and the Company's equityholders,
the Company shall pay to Bain a transaction fee of $2,250,000 in immediately
available funds, to an account designated by Bain.
4. Personnel. Bain shall provide and devote to the performance of
---------
this Agreement such partners, employees and agents of Bain as Bain shall deem
appropriate to the furnishing of the services required.
5. Liability. Neither Bain nor any of its affiliates, partners,
---------
employees or agents shall be liable to the Company or its subsidiaries or
affiliates for any loss, liability, damage or expense arising out of or in
connection with the performance of services contemplated by this Agreement,
unless such loss, liability, damage or expense shall be proven to result
directly from gross negligence, willful misconduct or bad faith on the part of
Bain, its affiliates, partners, employees or agents acting within the scope of
their employment or authority.
-2-
<PAGE>
6. Indemnity. The Company and its subsidiaries shall defend, indemnify
---------
and hold harmless Bain, its affiliates, partners, employees and agents from and
against any and all loss, liability, damage, or expenses arising from any claim
(a "Claim") by any person with respect to, or in any way related to, the
-----
performance of services contemplated by this Agreement (included attorneys'
fees) (collectively, "Claims") resulting from any act or omission of Bain, its
------
affiliates, partners, employees or agents, other than for Claims which shall be
proven to be the direct result of gross negligence, bad faith or willful
misconduct by Bain, its affiliates, partners, employees or agents. The Company
and its subsidiaries shall defend at its own cost and expense any and all suits
or actions (just or unjust) which may be brought against the Company, its
subsidiaries and Bain, its officers, directors, affiliates, partners, employees
or agents or in which Bain, its affiliates, partners, employees or agents may be
impleaded with others upon any Claim or Claims, or upon any matter, directly or
indirectly, related to or arising out of this Agreement or the performance
hereof by Bain, its affiliates, partners, employees or agents, except that if
such damage shall be proven to be the direct result of gross negligence, bad
faith or willful misconduct by Bain, its affiliates, partners, employees or
agents, then Bain shall reimburse the Company and its subsidiaries for the costs
of defense and other costs incurred by the Company and its subsidiaries.
7. Notices. All notices hereunder shall be in writing and shall be
-------
delivered personally or mailed by United States mail, postage prepaid, addressed
to the parties as follows:
To the Company:
--------------
Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, Michigan 48071
Attention: Board of Directors
To Bain:
-------
Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attention: Robert C. Gay
Edward Conard
Ronald P. Mika
8. Assignment. Neither party may assign any obligations hereunder to any
----------
other party without the prior written consent of the other party; such consent
shall not be unreasonably
- 3 -
<PAGE>
withheld; provided, however, that Bain may assign its rights and obligations
under this Agreement to any of its affiliates without the consent of the
Company. The assignor shall remain liable for the performance of any assignee.
9. Successors. This Agreement and all the obligations and benefits
----------
hereunder shall inure to the successors and assigns of the parties.
10. Counterparts. This Agreement may be executed and delivered by each
------------
party hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and both of which taken together shall
constitute but one and the same agreement.
11. Entire Agreement; Modification; Governing Law. The terms and conditions
---------------------------------------------
hereof constitute the entire agreement between the parties hereto with respect
to the subject matter of this Agreement and supersede all previous
communications, either oral or written, representations or warranties of any
kind whatsoever, except as expressly set forth herein. No modifications of this
Agreement nor waiver of the terms or conditions thereof shall be binding upon
either party unless approved in writing by an authorized representative of such
party. All issues concerning this agreement shall be governed by and construed
in accordance with the laws of the State of Michigan, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Michigan or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than the State of Michigan.
* * * *
- 4 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Management Services
Agreement as of the date first written above.
CAMBRIDGE INDUSTRIES, INC.
By: [SIGNATURE APPEARS HERE]
------------------------------
Its: Pres.
-----------------------------
BAIN CAPITAL, INC.
By: [SIGNATURE APPEARS HERE]
------------------------------
Its:
-----------------------------
<PAGE>
AMENDMENT TO MANAGEMENT SERVICES AGREEMENT
This AMENDMENT TO MANAGEMENT SERVICES AGREEMENT (this "Amendment"), dated
March 1, 1996, is by and between Cambridge Industries, Inc. (the "Company") and
Bain Capital, Inc. ("Bain").
WHEREAS, Bain is acting as an advisor to the Company pursuant to the terms
of that certain Management Services Agreement (the "Agreement") dated as of
November 17, 1995 between the Company and Bain.
WHEREAS, the Company and Bain wish to amend the Agreement.
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
1. Paragraph 3 of the Agreement is hereby amended by replacing
subparagraph 3(a) with the following:
"3. Advisory Fees and Transaction Fees. (a) Payment to Bain
----------------------------------
for services rendered in connection with the performance of services
pursuant to this Agreement shall be $950,000 per year ("Advisory Fees")
-------------
plus reasonable out-of-pocket expenses of Bain, payable by the Company
on a quarterly basis in arrears commencing March 31, 1996; provided
--------
that, the amount payable to Bain in respect of Advisory Fees for any
----
given quarter will be reduced by the amount of Transaction Fees (as
defined below)(other than the $412,500 Transaction Fee payable to Bain
in connection with the acquisition of the Reinforced Plastic Division
of GenCorp, Inc.), if any, received by Bain during such quarter, and,
to the extent such Transaction Fees received by Bain exceed Advisory
Fees payable by the Company for such quarter, such excess will be
carried forward and will reduce future Advisory Fees payable during the
next three consecutive fiscal quarters (but will not be carried forward
to offset Advisory Fees beyond the third consecutive fiscal quarter
after the fiscal quarter in which the Transaction Fees were received)."
2. Applicable Law. All issues and questions concerning the
--------------
construction, validity, interpretation and enforceability of this Amendment
shall be governed by, and construed in accordance with, the laws of the State of
Michigan, without giving effect to any choice of law or conflict of law
provisions (whether of the State of Michigan or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Michigan.
<PAGE>
3. Counterparts; Effectiveness. This Amendment may be executed in any
---------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument.
This Amendment shall become effective upon the execution of a counterpart hereof
by each of the parties hereto, and written or telephonic notification of such
execution and authorization of delivery thereof has been received by each party
hereto.
* * * * *
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Amendment to be
excuted by their respective officers hereunto duly authorized as of the day and
year first written above.
CAMBRIDGE INDUSTRIES, INC.
By: /s/ Edward Conas
--------------------------------
Name: Edward Conas
Title: Vice President
BAIN CAPITAL, INC.
By: /s/ Edward Conas
--------------------------------
Its:
-------------------------------
3
<PAGE>
EXHIBIT 10.6
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement") dated as of November 17, 1995
between Cambridge Industries Holdings, Inc., a corporation incorporated under
the laws of the State of Delaware (with its successors, the "Company") and
Bankers Trust Company (the "Initial Holder").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Cambridge Industries, Inc. (the "Borrower"), the Company,
certain lenders from time to time party thereto, and Bankers Trust Company, as
agent for such lenders, are parties to a Credit Agreement dated as of November
17, 1995 (as the same shall be modified, amended and supplemented and in effect
from time to time, the "Credit Agreement");
WHEREAS, in order to induce Bankers Trust Company to enter into the
Credit Agreement, the Company has agreed to issue the Warrants (as hereinafter
defined) to the Initial Holder upon the occurrence of certain events;
WHEREAS, the Company has authorized the issuance of the Warrants which
are exercisable, pursuant to the terms and conditions thereof, for Class A
Common Stock of the Company; and
WHEREAS, the Initial Holder now desires to subscribe for, and the
Company now desires to issue to the Initial Holder, upon the terms and
conditions set forth herein, the Warrants substantially in the form of Exhibit A
hereto (the "Warrants");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
-----------
1.01 Definitions. The following terms, as used herein, shall have the
-----------
following respective meanings:
<PAGE>
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, or is under common control with, or is
controlled by, such Person, it being understood that in any event the Borrower
and its Affiliates shall be considered Affiliates of the Company. As used in
this definition, "control" (including, with its correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of power to direct
or cause the direction of the management and policies of such Person (whether
through ownership of securities or partnership or other ownership interests,
contract or otherwise), provided that, in any event (other than for purposes of
--------
Section 4.05 hereof), any Person which owns, directly or indirectly, more than
10% of the securities having ordinary voting power for the election of directors
or other governing body of a corporation or more than 10% of the partnership or
other ownership interests of any Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, neither the Initial Holder nor any of its
Affiliates shall be deemed to be an Affiliate of the Company.
"Bank Holder" shall mean the Initial Holder and any other Holder that
becomes a "Bank," as such term is defined in the Credit Agreement or is an
Affiliate of a Bank.
"Borrower" shall have the meaning provided in the first recital hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which commercial banks are required by law or authorized to close
in New York City.
"Class A Common Stock" shall mean and include the Company's authorized
Class A Common Stock, $.01 par value, as constituted on the date hereof.
"Company" shall have the meaning provided in the first recital hereof.
"Credit Agreement" shall have the meaning provided in the first recital
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
-2-
<PAGE>
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"Holder" initially shall mean the Initial Holder and each other holder
of any Warrant or Warrant Share that is a direct or indirect transferee of the
Initial Holder or any other Holder.
"Initial Holder" shall have the meaning provided in the first paragraph
hereof.
"Person" shall mean an individual, a corporation, a limited liability
company, a company, a voluntary association, a general partnership, a limited
partnership, a trust, an unincorporated organization or a government or any
agency, instrumentality or political subdivision thereof.
"Registration Agreement" shall mean the Registration Agreement, dated as
of November 17, 1995 among the Company and various holders of its capital stock,
as same may be amended, modified or supplemented from time to time.
"Regulation Y" shall mean the Regulation Y promulgated by the Board of
Governors of the Federal Reserve System or any successor regulation.
"Required Holders" shall mean the holders of more than 50% of all
Warrant Shares (assuming the full exercise thereof).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholders Agreement" shall mean the Stockholders Agreement dated as
of November 17, 1995 among the Company and various holders of its capital stock,
as same may be amended, modified or supplemented from time to time.
"Warrant" shall mean a Warrant substantially in the form of Exhibit A
hereto, and any Warrant or Warrants issued upon transfer thereof or in
substitution therefor.
"Warrantholder" shall mean the holder of any Warrant.
"Warrant Share" shall mean any share of Class A Common Stock issued or
issuable upon exercise of any Warrant. For purposes of this Agreement, a
Warrant Share shall be
-3-
<PAGE>
"outstanding" from and after the date hereof until the redemption or
cancellation of such Warrant Share (or, if the related Warrant has not been
exercised, the expiration, repurchase or cancellation of such Warrant) by the
Company.
1.02 Accounting Terms and Determinations. Unless otherwise specified
-----------------------------------
herein, all accounting terms used herein shall be interpreted, all determination
with respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matter required to be
delivered hereunder shall be prepared, in accordance with GAAP.
Section 2. Terms and Conditions of Issuance of Warrants.
--------------------------------------------
2.01 Issuance of the Warrants. In consideration of the premises and
------------------------
other good and valuable consideration, the Company hereby agrees to issue on the
date hereof to the Initial Holder Warrants to purchase 2671.51 shares of Class A
Common Stock (as such number may be adjusted as provided in the Warrants).
Section 3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to each Holder as follows:
3.01 Authorization. The Company has all necessary power and authority
-------------
to execute, deliver and perform its obligations under this Agreements and the
Warrants and to issue and deliver the Warrants and Warrant Shares; the
execution, delivery and performance by the Company of this Agreement and the
Warrants have been duly authorized by all necessary action; each of this
Agreement and the Warrants has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to creditors' rights generally and to
general equitable principles.
3.02 Valid Issuance. The Warrants, when issued and delivered pursuant
--------------
hereto, and the Warrant Shares when issued and delivered pursuant to the
Warrants, will be validly issued, fully paid and non-assessable, with no
liability on the part of the holders thereof, and are not subject to any
preemptive rights, rights of first refusal or rights of first offer. Except for
the registration rights as
- 4 -
<PAGE>
set forth in the Registration Agreement, the Company is not under any obligation
to cause the registration of any of its presently outstanding securities or any
of its securities which hereafter may be issued.
3.03 No Breach. None of the execution and delivery of this Agreement
---------
and the Warrants, the consummation of the transactions herein or therein
contemplated, including the issuance and delivery of the Warrants and, upon the
exercise of the Warrants, the Warrant Shares, or compliance with the terms and
provisions hereof or thereof will conflict with or result in a breach of, or
require any consent under, the Certificate of Incorporation or By-Laws of the
Company, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or
instrument to which the Company is a party or by which it is bound or to which
any of its properties or assets is subject, or constitute a default under any
such agreement or instrument or result in the creation or imposition of any lien
upon any of the revenues or assets of the Company pursuant to the terms of any
such agreement of instrument.
3.04 Approvals. No authorization, approvals or consents of, and no
---------
filings or registrations with, any governmental or regulatory authority or
agency, which have not already been made or obtained, are necessary for the
execution, delivery or performance by the Company of this Agreement and the
Warrants, the consummation of the transactions contemplated herein and therein
or the validity or enforceability hereof or thereof.
3.05 Capitalization. The authorized capital stock of the Company on
--------------
the date hereof consists of (i) 200,000 shares of Class A Common Stock, $.01 par
value, of which 55,000 shares are issued and outstanding, (ii) 29,000 shares of
Class L Common Stock, $.01 par value, of which 25,000 shares are issued and
outstanding, (iii) 45,000 shares of Class P Common Stock, $.01 par value, of
which 45,000 shares are issued and outstanding and (iv) 1,000 shares of
preferred stock, of which 1,000 shares are issued and outstanding. There are no
other outstanding shares of capital stock of the Company and, except for the
Warrants and other options and warrants disclosed in writing to the Initial
Holder prior to the date hereof, no outstanding options or warrants to acquire
any shares of capital stock of the Company.
-5-
<PAGE>
3.06 Offer of Warrants. Neither the Company nor any Person acting on
-----------------
its behalf has directly or indirectly offered the Warrants or any part thereof
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Initial Holder. Neither the Company nor any Person acting
on its behalf has taken or will take any action which would subject the issuance
and sale of the Warrants to the provisions of Section 5 of the Securities Act,
or to the provisions of any state securities law requiring registration of
securities, notification of the issuance or sale thereof or confirmation of the
availability of any exemption from such registration except pursuant to this
Agreement, the Stockholders Agreement and the Registration Agreement.
Section 4. Covenants.
---------
4.01 Maintenance of Existence; Conduct of Business. The Company will
---------------------------------------------
preserve and maintain its corporate existence as a corporation under the
Delaware General Corporation Law and all of its rights, privileges and
franchises necessary in the ordinary course of its business, and will conduct
its business in a regular manner.
4.02 Inspection. The Company covenants and agrees that it will
----------
permit each Holder and its representatives to inspect the properties of the
Company, to examine and make extracts and copies from the books and records of
the Company during normal business hours and to discuss with management the
business and affairs of the Company.
4.03 Information. The Company covenants and agrees that it will
-----------
deliver to each Holder such financial statements and other information regarding
the Company or any of its subsidiaries that the Company is obligated to prepare
and deliver to any shareholder of the Company, in each case at the same time
such financial statements and other information are delivered to any such
shareholder. The Company hereby acknowledges and agrees that each Holder may
share with any of its Affiliates any information related to the Company and any
of its subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of the Company and its subsidiaries).
4.04 Transactions with Affiliates. The Company will not, directly or
----------------------------
indirectly, enter into any transaction with or for the benefit of any Affiliate;
provided that this Section 4.04 shall not prohibit (i) any such transaction
- - --------
-6-
<PAGE>
entered into on an arm's length basis containing terms which are no less
favorable to the Company than those terms that would be obtained in a similar
transaction with a Person which is not an Affiliate and (ii) any such
transaction between the Company and any subsidiary or affiliate thereof or any
stockholder which is permitted pursuant to, and conducted in accordance with,
the terms and provisions of the Credit Agreement.
4.05 Repurchase of Common Stock. The Company covenants and agrees
--------------------------
that it will not, without the prior written consent of each affected Bank
Holder, to the extent that such Bank Holder is subject to the provisions of the
Bank Holding Company Act of 1956, as amended (including Regulation Y promulgated
thereunder), directly or indirectly, purchase, redeem, retire or otherwise
acquire any shares of capital stock of the Company if, as a result of such
purchase, redemption, retirement or other acquisition, any Bank Holder, together
with its Affiliates, will own, or be deemed to own, Warrant Shares or other
shares of capital stock of the Company representing capital equal to 5% or more
of the aggregate shares of capital stock of the Company then outstanding
(assuming the full exercise of all Warrants then held by such Bank Holder and
its Affiliates).
4.06 Regulatory Matters. The Company agrees to cooperate in good
------------------
faith with and assist any Bank Holder or any of the Bank Holder's Affiliates as
such Bank Holder may reasonably request in connection with any United States
regulatory issues that may arise with respect to the Company. Anything herein or
in the Warrants to the contrary notwithstanding, in the event that any Bank
Holder or any of such Bank Holder's Affiliates shall determine that it is
illegal or unduly burdensome, by reason of regulatory restriction, for such Bank
Holder or such Affiliate to continue to hold some or all of the Warrants or its
Warrant Shares or any other securities of the Company held by it, such Bank
Holder or such Affiliate, as the case may be, may sell or otherwise dispose of
that portion of its Warrants or Warrant Shares, as the case may be, that such
Bank Holder or such Affiliate determines to be appropriate in light of such
regulatory restrictions in as prompt and orderly a manner as is reasonably
necessary. The Company shall cooperate with and assist such Bank Holder or such
Affiliate, as the case may be, in disposing of such Warrants or Warrant Shares,
and (without limiting the foregoing) at the request of such Bank Holder or such
Affiliate, as the case may be, the Company shall provide (and authorize such
Bank Holder or such Affiliate, as the case may be, to provide) financial and
other information concerning
-7-
<PAGE>
the Company to any prospective purchaser of the Warrants or Warrant Shares
owned by such Bank Holder or such Affiliate, as the case may be, subject to
appropriate confidentiality arrangements. The provisions of this Section 4.06
shall inure solely to the benefit of such Bank Holders and their Affiliates
which are subject to the provisions of the Bank Holding Company Act of 1956, as
amended (including Regulation Y promulgated thereunder).
Section 5. Compliance with the Securities Act.
----------------------------------
5.01 Representations and Warranties. Each Holder by its acceptance of
------------------------------
the Warrants represents and warrants as follows:
(a) Such Holder is acquiring the Warrants and the related Warrant
Shares for its own account and not as nominee or agent for any other Person
and not for offer or sale in any manner that would be in violation of the
securities laws of the United States of America or any state thereof,
without prejudice, however, to its right at all times to sell or otherwise
dispose of all or any part of said Warrants or Warrant Shares under a
registration under the Securities Act or any applicable state securities
laws or under an exemption from such registration available under such act
or any applicable state securities laws.
(b) Such Holder is an "accredited" investor within the meaning of
Regulation D promulgated under the Securities act.
5.02 Transfer Restriction; Legend. No Holder will sell, transfer or
----------------------------
otherwise dispose of any warrant or Warrant Share other than to an Affiliate of
such Holders or in transaction that complies with the registration requirements
of Section 5 of the Securities Act or pursuant to an exemption (including,
without limitation, sales under Rules 144 and 144A promulgated under the
Securities Act) therefrom. Each Warrant or certificate or instrument (if any)
representing the Warrant Shares issued upon exercise of the Warrants (and each
Warrant or certificate or instrument (if any) representing the Warrant Shares
issued to transferees of such Warrant or certificate or instrument (if any)),
unless at such time as the same is no longer required under the applicable
requirements of the Securities Act, shall bear the following legends:
-8-
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT."
Section 6. Miscellaneous.
-------------
6.01 Expenses. The Company agrees to pay all fees and
--------
disbursements of the Initial Holder (including the reasonable fees and expenses
of its counsel) in connection with the purchase and sale of the Warrants as
contemplated by this Agreement or any amendments thereto and the fees and
disbursements of the Initial Holder (including the reasonable fees and expenses
of its counsel) in connection with the negotiation, execution, delivery and
enforcement of this Agreement, the Stockholders Agreement, the Registration
Agreement and/or the Warrants or any waiver or consent hereunder or thereunder
or any amendment hereof or thereof. In addition, the Company agrees to pay any
and all stamp, transfer and other similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement any
Warrants or the issuance or transfer of the Warrants.
6.02 Notices. All notices and other communications provided
-------
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof; or, as to any party, at
such other address as shall be designated by such party in a notice to the
Company given in accordance with this Section 6.02. All such communications
shall be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
6.03 Exclusion. This Agreement and the Warrants shall be
---------
binding upon, and inure solely to the benefit of the Company and the Holders,
and no other Person shall acquire or have any right under or by virtue of this
Agreement or the Warrants (other than any such Person to whom such Holders have
transferred an interest in the Warrants pursuant to the terms thereof and
hereof).
-9-
<PAGE>
6.04 Specific Performance. The Company acknowledges and agrees that in
--------------------
the event of any breach of this Agreement or the Warrants by the Company, the
Holders would be irreparably harmed and could not be made whole by monetary
damages. The Company accordingly agrees (i) to waive the defense in any action
for specific performance that a remedy at law would be adequate, and (ii) that
the Holders, in addition to any other remedy to which they may be entitled at
law or in equity, shall be entitled to compel specific performance of this
Agreement or the Warrants in any action instituted in the United States
District Court for the Southern District of New York, or, in any court of the
United States or any state thereof having subject matter jurisdiction for such
action.
6.05 Warrantholder Not a Stockholder. Prior to the exercise of any of its
-------------------------------
Warrants, no Warrantholder shall, except as specifically provided herein, be
entitled to any of the rights of, or be deemed to be, a stockholder in the
Company.
6.06 No Waivers. No failure or delay by any party in exercising any
----------
rights, power or privilege hereunder or under the Warrants shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
6.07 Amendments and Waivers. Any provision of this Agreement or the
----------------------
Warrants may be amended or waived if, but only if, such amendment or waiver is
in writing and signed by the Company, the Required Holders and, until such time
as the Initial Holder (or any Affiliate thereof) no longer holds any Warrants or
Warrant Shares, the Initial Holder (or such Affiliates).
6.08 Governing Law. This Agreement and the Warrants shall be governed by
-------------
and construed in accordance with the laws of the State of New York, without
giving effect to the principles of conflict of laws thereof.
6.09 Counterparts. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatories thereto and hereto were upon the same instrument,
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
CAMBRIDGE INDUSTRIES HOLDINGS,
INC.
By /s/ Richard S. Crawford
-----------------------------
Title: President
Address for Notices:
c/o Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, Michigan 48701
Telephone No.: (810) 616-0500
Telecopier No.: (810) 616-0530
Attention: Richard S. Crawford
BANKERS TRUST COMPANY
By /s/ Mary Kay Coyle
-----------------------------
Title: Managing Director
Address for Notices:
130 Liberty Street
New York, New York 10006
Telephone No. : (212) 250-9094
Telecopier No.: (212) 250-7218
Attention: Mary Kay Coyle
-11-
<PAGE>
EXHIBIT 10.7
AMENDMENT TO THE WARRANT AGREEMENT
----------------------------------
This Amendment to the Warrant Agreement, dated as of December 12, 1995
(the "Amendment"), is by and between CAMBRIDGE INDUSTRIES HOLDINGS, INC., a
corporation incorporated under the laws of the State of Delaware (the "Company")
and Bankers Trust Company (the "Initial Holder").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company and the Initial Holder are parties to a Warrant
Agreement dated as of November 17, 1995 (the "Warrant Agreement");
WHEREAS, pursuant to the Warrant Agreement, the Company issued a Warrant
to the Initial Holder entitling the Initial Holder to purchase from the Company,
at any time or from time to time during the Exercise Period (as defined in the
Warrant), up to a total of 2,671.51 shares of Common Stock, subject to the
provisions of the Warrant (the "Warrant"); and
WHEREAS, the parties hereto wish to further amend the Warrant Agreement
and Warrant as herein provided;
NOW, THEREFORE, it is agreed:
1. Section 6.05 of the Warrant Agreement is hereby amended by inserting
in line 3 thereof the phrase "or in the Warrant" directly after the phrase
"except as specifically provided herein".
2. The Warrant is hereby amended by inserting the following new Section
4.8 immediately following Section 4.7 thereof:
"4.8 Certain Rights Regarding Dividends. If the Company pays a dividend
----------------------------------
or distribution upon the Common Stock, other than dividends or distributions
described in Section 4.1(a), then the Company shall pay to the Holder of this
Warrant, at the time of
-1-
<PAGE>
payment thereof, such dividend or distribution which would have been
paid to such Holder had this Warrant been fully exercised immediately
prior to the date on which a record is taken for such dividend or
distribution or, if no record is taken, the date as of which the
record holders of Common Stock entitled to said dividends or
distributions are to be determined."
3. Section 7 of the Warrant is hereby amended by deleting the
first sentence of such Section in its entirety and inserting the following
sentence in lieu thereof: "Prior to exercise, this Warrant will not entitle the
Holder to any voting rights or other rights as a stockholder of the Company,
except as provided in Section 4.8."
4. On the Amendment Effective Date (as defined below), the
Company shall issue to the Initial Holder a new Warrant reflecting the
modifications set forth in Sections 2 and 3 above, which new Warrant will be
issued in exchange for the existing Warrant held by the Initial Holder.
5. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Warrant Agreement or Warrant.
6. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and the Initial Holder.
7. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
8. This Amendment shall become effective on the date (the
"Amendment Effective Date") when each of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Initial Holder at its New York Office.
-2-
<PAGE>
9. From and after the Amendment Effective Date, all references in the
Warrant Agreement to the Warrant and the Warrant Agreement shall be deemed to be
references to the Warrant and Warrant Agreement as modified hereby.
10. From and after the Amendment Effective Date, all references in the
Warrant to the Warrant and the Warrant Agreement shall be deemed to be
references to the Warrant and Warrant Agreement as modified hereby.
* * * * * * * * * *
-3-
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered by the parties hereto by their duly authorized officers as of the date
first above written.
CAMBRIDGE INDUSTRIES HOLDINGS,
INC.
By: /s/ Bruce Wilson
---------------------------------
Name: Bruce Wilson
Title: Secretary/Treasurer
BANKERS TRUST COMPANY
By:
---------------------------------
Name:
Title:
-4-
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by
the parties hereto by their duly authorized officers as of the date first above
written.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
BANKERS TRUST COMPANY
By: /s/ Mary Kay Coyle
--------------------------------
Name: Mary Kay Coyle
Title: Managing Director
-4-
<PAGE>
EXHIBIT 10.8
WARRANT AGREEMENT
-----------------
WARRANT AGREEMENT (the "Agreement") dated as of December 14, 1995, by
---------
and between Bain Capital V Mezzanine Fund, L.P., a Delaware limited partnership,
BCIP Trust Associates, L.P., a Delaware limited partnership, (collectively, the
"Purchasers"), and Cambridge Industries Holdings, Inc., a Delaware corporation
----------
("Holdings"). Capitalized terms used herein shall have the meanings given to
--------
such terms in Article VII hereof.
WHEREAS, on the date hereof, pursuant to that certain Senior
Subordinated Credit Agreement dated as of the date hereof (the "Credit
------
Agreement") by and among the Purchasers, as lenders, Holdings and Cambridge
- - ---------
Industries, Inc., a Delaware corporation and a wholly-owned subsidiary of
Holdings (the "Company"), the Purchasers are purchasing notes of the Company in
-------
the aggregate principal amount of $11,900,000 (the "Notes").
-----
WHEREAS, the Purchasers are acquiring from Holdings warrants in the
form attached as Exhibit 1 hereto (the "Class A Warrants") and warrants in the
----------------
form attached as Exhibit 2 hereto (the "Class L Warrants" and collectively with
--------- ----------------
the Class A Warrants, the "Warrants"), representing the right to purchase from
--------
Holdings Warrant Shares on the terms and conditions set forth in the Warrants.
WHEREAS, the Warrants are being issued as an inducement and partial
consideration for the Purchasers to enter into the Credit Agreement and to
purchase the Notes.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
I. Closing.
-------
A. Closing. The closing of the issuance of the Warrants to the
-------
Purchasers (the "Closing") shall take place simultaneously with the closing
-------
pursuant to the Credit Agreement. The date of such Closing is hereinafter
referred to as the "Closing Date."
------------
B. Transactions on Closing Date. At the Closing, Holdings shall
----------------------------
deliver to the Purchasers the duly issued Warrants.
II. Representations and Warranties of Holdings. Holdings represents and
------------------------------------------
warrants to the Purchasers as follows:
A. Good Standing. Holdings is a corporation duly organized, validly
-------------
existing and in good standing under the laws of the State of Delaware.
B. Authority Relative to this Agreement. Holdings has all requisite
------------------------------------
corporate power and authority to enter into and perform this Agreement and to
issue and deliver the Warrants to the Purchasers. The execution, delivery and
performance by Holdings of this Agreement, including the
<PAGE>
issuance and delivery of the Warrants to the Purchasers, have been duly
authorized by all necessary corporate action on the part of Holdings. This
Agreement has been duly executed and delivered by Holdings and is a legal, valid
and binding obligation of Holdings and is enforceable against Holdings in
accordance with its terms.
C. No Conflict or Violation. The execution and delivery of this
------------------------
Agreement by Holdings, the performance by Holdings of its terms and the issuance
and delivery of the Warrants to the Purchasers will not on the Closing Date
conflict with or result in a violation of (i) the Certificate of Incorporation
or By-Laws of Holdings as in effect on the Closing Date, or (ii) any agreement,
instrument, law, rule, regulation, order, writ, judgment or decree to which
Holdings is a party or is subject, except for such conflicts and violations
which will not, in the aggregate, have a material adverse effect on the
business, operations, assets or condition (financial or otherwise) of Holdings
and will not deprive the Purchasers of any material benefit under this
Agreement.
D. Validity of Issuance. The Warrants to be issued to the Purchasers
--------------------
pursuant to this Agreement and the Warrant Shares issued upon exercise of the
Warrants will, when issued, be duly and validly issued, fully paid and
nonassessable (assuming in the case of the Warrant Shares, payment of the
exercise price is made in accordance with the terms of the Warrants).
E. Capital Structure and Subsidiaries. As of the Closing, the
----------------------------------
authorized capital stock of Holdings consists of (i) 1,000 shares of Preference
Stock, par value $.01 per share, (ii) 200,000 shares of Class A Common Stock,
par value $.01 per share, of which 55,000 shares shall be issued and outstanding
and 4,723.01 shares shall be reserved for issuance upon exercise of the Class A
Warrants, (iii) 29,000 shares of Class L Common Stock, par value $.01 per share,
of which 25,000 shares shall be issued and outstanding and 1,180.75 shares shall
be reserved for issuance upon exercise of the Class L Warrants, and (iv) 45,000
shares of Class P Common Stock, par value $.01 per share.
III. Representations and Warranties of the Purchasers. The Purchasers
------------------------------------------------
each hereby represent and warrant severally and not jointly to Holdings as
follows:
A. Investment Intention. Each Purchaser is acquiring its Warrant, and
--------------------
if the Warrant is exercised, the Warrant Shares, for investment solely for its
own account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof. Such Purchaser agrees and
acknowledges that it will not, directly or indirectly, offer, transfer or sell
its Warrant or any Warrant Shares, or solicit any offers to purchase or acquire
the Warrant or any Warrant Shares, unless the transfer or sale is (i) pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act") and has
been registered under any applicable state securities or "blue sky" laws or (ii)
pursuant to an exemption from registration under the Securities Act and
applicable state securities or "blue sky" laws.
B. Legends. (a) Each Purchaser acknowledges that each Warrant and each
-------
Warrant Share will contain a legend substantially to the following effect:
-2-
<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
Upon reasonable request of Holdings in connection with any transfer of
the Warrant or the Warrant Shares (other than a transfer pursuant to a public
offering registered under the Securities Act, pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or any similar rules then in effect), or
to an affiliate of the Purchasers), the Purchasers will deliver, if requested by
Holdings, an opinion of counsel knowledgeable in securities laws reasonably
satisfactory to Holdings to the effect that such transfer may be effected
without registration under the Securities Act. Holdings agrees to issue
certificates evidencing the Warrant Shares that do not contain such legend upon
receipt of an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to Holdings, to the effect that such legend no longer applies to
Warrant Shares.
(b) Each Purchaser acknowledges that each Warrant and each Warrant
Share will contain a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT DATED
AS OF NOVEMBER 17, 1995 AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY")
AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON
WRITTEN REQUEST.
This legend may be removed upon termination of the Stockholders
Agreement.
C. Additional Investment Representations. Each Purchaser is an
-------------------------------------
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act.
IV. Inspection Rights. So long as the Purchasers own at least 50% of any
-----------------
class of Warrant Shares issued on the date hereof (assuming, for purposes of
this Article IV, full exercise of the Warrants), Holdings shall permit one
representative of any holder of the Warrants or the Warrant Shares selected by
the holders of the majority of the Warrant Shares (assuming for purposes of
this section that the Warrants have been fully exercised), upon reasonable
notice and during normal business hours and such other times as any such holder
may reasonably request, to (i) visit and inspect any of the properties of
Holdings and its subsidiaries (ii) examine the corporate and financial records
of Holdings and its subsidiaries and make copies thereof or extracts therefrom
and (iii) discuss the affairs, finances and accounts of any such corporations
with the directors,
-3-
<PAGE>
officers, key employees and independent accountants of Holdings and its
subsidiaries (it being understood that such representative will keep all non-
public information confidential).
V. Management Rights.
-----------------
A. VCOC Status. Holdings acknowledges that Bain Capital V Mezzanine
-----------
Fund, L.P. (the "MezFund") is a "venture capital operating company" as such
-------
term is used in the "plan assets" regulation (29 CFR 2510.3-101) issued by the
Department of Labor under the Employee Retirement Income Security Act of 1974,
as amended, and that the MezFund's investment in the Notes and Warrants is
intended to be a "venture capital investment" within the meaning of regulation
29 CFR 2510.3-101(d)(3)(i). Holdings further acknowledges that the contractual
provisions, contained in this Section V and elsewhere in this Agreement and the
other Documents (as defined in the Credit Agreement) provide the MezFund with
the opportunity and right to substantially participate in, or substantially
influence the conduct of, the management of Holdings.
B. Participation Rights. Upon reasonable notice to Holdings' chief
--------------------
executive officer and chief financial officer, as long as the MezFund holds a
Warrant, Holdings agrees to cause such of Holdings' key executive officers as
are designated by the MezFund to meet with representatives of the MezFund at
mutually convenient times and locations in order to discuss the conduct of
Holdings' business and affairs, and to receive the MezFund's recommendations and
advice in connection therewith. It is anticipated that such meetings and
discussions will occur periodically (but not, in general, more than once in any
30-day period absent unusual circumstances) as requested by the MezFund. Such
meetings and discussions may, at the MezFund's option, be conducted in person or
by use of telephonic means.
C. Attendance Rights. Holdings and the Company shall give the
-----------------
MezFund (so long as the MezFund holds any Warrant) written notice of each
meeting of its board of directors and each committee thereof at least three
business days prior to the date of each such meeting, and Holdings and the
Company shall permit a representative of the MezFund to attend as an observer
all meetings of their boards of directors and all committees thereof. Such
representative shall be entitled to receive all written materials and other
information (including, without limitation, copies of meeting minutes) given to
directors in connection with such meetings at the same time such materials and
information are given to the directors. If Holdings or the Company proposes to
take any action by written consent in lieu of a meeting of its board of
directors or of any committee thereof, Holdings or the Company, as applicable,
shall give written notice thereof to such representative prior to the effective
date of such consent describing in reasonable detail the nature and substance of
such action. Holdings or the Company, as applicable, shall pay the reasonable
out-of-pocket expenses of the representative incurred in connection with
attending such board and committee meetings.
D. Holdings' Rights. Without limiting the generality of the
----------------
foregoing, nothing contained in this Section V will obligate or require Holdings
(or any of its officers, directors, agents or employees) to (i) engage or
participate in any inequitable conduct or (ii) breach, or participate in any
breach of, any duty or obligation owed to any Person.
-4-
<PAGE>
VI. Other Documents. Holdings and the Purchasers acknowledge that at the
---------------
Closing, each Purchaser will execute counterparts and become parties to the
Stockholders Agreement and the Registration Rights Agreement dated as of
November 17, 1995 by and among Holdings, certain of the Purchasers and certain
stockholders of Holdings, as the same may be amended, restated or modified from
time to time, in accordance with the terms thereof.
VII. Miscellaneous
-------------
A. Definitions. For the purposes of this Agreement, the following
-----------
terms shall have the following meanings:
"Common Stock" means collectively, Holdings' Class A Common Stock, par
------------
value $.01 per share, Holdings' Class L Common Stock, par value $.01 per share,
and Holdings' Class P Common Stock, par value $.01 per share, or any securities
into which such Common Stock is hereafter converted or exchanged.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 by and among Holdings, certain of the Purchasers and certain
other stockholders of Holdings, as may be amended, restated or modified from
time to time.
"Warrant Shares" means shares of the Common Stock obtained or
--------------
obtainable upon exercise of the Warrants; provided, that if there is a change
--------
such that the securities issuable upon exercise of the Warrants are issued by an
entity other than Holdings or there is a change in the class of securities so
issuable, then the term "Warrant Shares" shall mean shares of the security
issuable upon exercise of the Warrants if such security is issuable in shares,
or shall mean the equivalent units in which such security is issuable if such
security is not issuable in shares.
B. Notices. All notices and other communications provided for herein
-------
shall be dated and in writing and shall be deemed to have been duly given (i)
when delivered, if delivered personally, sent by registered or certified mail,
return receipt requested and postage prepaid, or sent via nationally recognized
overnight courier or via facsimile with confirmation of receipt and (ii) when
received if delivered otherwise, to the party to whom it is directed:
Holdings:
Cambridge Industries Holdings, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Attention: Chief Financial Officer
Facsimile No.: (810) 616-0530
-5-
<PAGE>
with a copy to:
Jaffe, Raitt, Heuer & Weiss
One Woodward
Suite 2400
Detroit, MI 48226
Attention: Ira J. Jaffe
Facsimile No.: (313) 961-8358
Purchasers:
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Joshua Bekenstein
Mark Wolpow
Ronald Mika
Facsimile No.: (617) 572-3274
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: James L. Learner
Facsimile No.: (312) 861-2200
or to such other address as either party hereto shall have specified by notice
in writing to the others.
C. Assignment. This Agreement and all the provisions hereof shall be
----------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any rights or obligations hereunder shall be assigned by Holdings without
the prior written consent of the Purchasers.
D. Amendment. This Agreement may be amended only by a written
---------
instrument signed by Holdings and the Purchasers.
E. Waiver. Any party hereto may (a) extend the time for the
------
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the represent ations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid as to such party if
set forth in an instrument in writing signed by such party.
-6-
<PAGE>
F. Severability. In the event that any one or more of the provisions
------------
hereof, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
G. Applicable Law. The corporate law of the State of Delaware shall
--------------
govern all issues and questions concerning the relative rights of the Purchasers
and Holdings. All other issues and questions concerning the construction,
validity, interpretation and enforceability of this Agreement and the exhibits
and schedules hereto shall be governed by and construed in accordance with, the
laws of the State of New York, without giving effect to any choice of law or
conflict of law provisions (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
H. Expenses. All reasonable fees and expenses incurred by the
--------
Purchasers in connection with the preparation of this Agreement and the
transactions referred to herein, including the reasonable fees of the
Purchasers' counsel, shall be paid by Holdings, whether or not the issuance of
the Warrants, the execution and delivery of the Credit Agreement or any other
transaction contemplated hereby is consummated.
I. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
J. Descriptive Headings. The headings in this Agreement are for
--------------------
convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
* * * * *
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to
be signed and attested by its duly authorized officers under its corporate seal
and to be dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Bruce Wilson
-----------------------------------
Its: Secretary/Treasurer
BAIN CAPITAL V MEZZANINE FUND, L.P.
By: Bain Capital V Mezzanine Partners, L.P.
Its: General Partner
By: Bain Capital Investors V, Inc.
Its: General Partner
By:
-----------------------------------
Its: Managing Director
BCIP TRUST ASSOCIATES, L.P.
By:
-----------------------------------
Its: General Partner
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to
be signed and attested by its duly authorized officers under its corporate seal
and to be dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By:
-----------------------------------
Its:
BAIN CAPITAL V MEZZANINE FUND, L.P.
By: Bain Capital V Mezzanine Partners, L.P.
Its: General Partner
By: Bain Capital Investors V, Inc.
Its: General Partner
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Its: Managing Director
BCIP TRUST ASSOCIATES, L.P.
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Its: General Partner
<PAGE>
EXHIBIT 10.9
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN TRANSFER AND VOTING RESTRICTIONS
PURSUANT TO A STOCKHOLDERS AGREEMENT DATED AS OF
NOVEMBER 17, 1995 AMONG THE ISSUER OF SUCH
SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE
HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS A WARRANT
---------------
Date of Issuance: December 14, 1995 Certificate No. W-A1
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BAIN CAPITAL V MEZZANINE FUND,
-------
L.P. , a Delaware limited partnership, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
-------
Company a total of 4,676.2477 Warrant Shares (as defined herein) at a price of
$3.30 per Warrant Share (the "Initial Exercise Price"). The exercise price and
----------------------
number of Warrant Shares (and the amount and kind of other securities) for which
this Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all
of the following items have been delivered to the Company (the "Exercise Time"):
-------------
(a) a completed Exercise Agreement, as described in Section
1C below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount
equal to the Aggregate Exercise Price (as defined), (y) the surrender to
the Company of securities of the Company having a value equal to the
Aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise (which value in the case of debt securities shall be the principal
amount thereof and in the case of shares of Common Stock shall be the Fair
Market Value thereof), or (z) the delivery of a notice to the Company that
the Purchaser is exercising this Warrant by authorizing the Company to
reduce the number of Warrant Shares subject to this Warrant by the number
of shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser within five
days after the date of the Exercise Time together with any cash payable in lieu
of a fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
-------- -------
any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the
transfer of this Warrant or of any Warrant Shares issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as may
be necessary to assure that the par value per share of the unissued Warrant
Shares acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price
-2-
<PAGE>
then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
public offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
-3-
<PAGE>
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares Upon Issuance
---------------------------------------------------------------
of Common Stock. If and whenever, on or after the date hereof, the Company
- - ---------------
issues or sells, or in accordance with Section 2B is deemed to have issued or
sold, other than pursuant to a Permitted Issuance, any shares of Class A Common
for a consideration per share less than the Exercise Price in effect immediately
prior to such time, then immediately upon such issuance or sale the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (1) the number of shares of
Class A Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (2) the consideration, if any, received by the Company
----
upon such issuance or sale, and the denominator of which will be the product
derived by multiplying such Exercise Price by the number of shares of Class A
Common Stock Deemed Outstanding immediately after such issuance or sale. Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable upon exercise of this Warrant shall be adjusted to equal the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
-4-
<PAGE>
(i) Issuance of Rights or Options. If the Company in any manner
-----------------------------
grants any rights or options (other than the Purchase Rights covered by Section
4 hereof or a Permitted Issuance) to subscribe for or to purchase Class A Common
or any stock or other securities convertible into or exchangeable for Class A
Common (including, without limitation, convertible common stock) (such rights or
options being herein called "Options" and such convertible or exchangeable stock
-------
or securities being herein called "Convertible Securities") and the price per
----------------------
share for which Class A Common is issuable upon the exercise of such Options or
upon conversion or exchange of such Convertible Securities is less than the
Exercise Price in effect immediately prior to the time of the granting or the
sale of such Options, then the total maximum number of shares of Class A Common
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For purposes of this paragraph,
the "price per share for which Class A Common is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any, received or receivable by
--------
the Company as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Class A Common issuable upon exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such Class A Common or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Class A Common upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
----------------------------------
issues or sells any Convertible Securities and the price per share for which
Class A Common is issuable upon such conversion or exchange is less than the
Exercise Price in effect immediately prior to the terms of such issuance or
sale, then the maximum number of shares of Class A Common issuable upon
conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which Class
A Common is issuable upon such conversion or exchange" is determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Class A Common issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Class A Common upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
-5-
<PAGE>
(iii) Change in Option Price or Conversion Rate. If either the
-----------------------------------------
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Class A Common shall change at any time, the Exercise Price
in effect at the time of such change shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased. For purposes of this paragraph
2B, if the terms of any Option or Convertible Security which was outstanding as
of the date of issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Exercise Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option which, when issued, caused an
- - ----------
adjustment to the Exercise Price or number of Warrant Shares acquirable
hereunder or the termination of any right to convert or exchange any Convertible
Securities which, when issued, caused an adjustment to the Exercise Price or
number of Warrant Shares acquirable hereunder, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. Notwithstanding the foregoing, the expiration or termination of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant pursuant to paragraph 2B(iii) above.
(v) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount of cash received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than the net amount of
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of marketable securities, in which case
the amount of consideration received by the Company shall be the market price
thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger or other business combination in which the Company is
the surviving entity, the amount of consideration therefor shall be deemed to be
the fair value of such portion of the net assets and business of the non-
surviving entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or marketable securities shall be determined by the Company in good faith,
unless such
-6-
<PAGE>
consideration is paid by an Affiliate of the Company, in which case fair value
of such consideration shall be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of Warrants
(as defined in Section 8 below). The fees and expenses of such appraiser shall
be paid by the Company.
(vi) Integrated Transactions. Other than in connection with and
-----------------------
to the extent of Permitted Issuances, in case any Option is issued in connection
with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which no specific consideration is allocated to
such Options by the parties thereto, the Option shall be deemed to have been
issued for no consideration; provided, if such other securities are debt
--------
securities (such debt securities so issued are herein referred to as the "Debt")
----
of the Company or any of its subsidiaries, the Option shall be deemed to have
been issued for consideration equal to the excess, if any, of (a) the aggregate
face amount (the "Estimated Face Amount") of debt securities with terms
---------------------
identical to the terms of the Debt (other than the increase to face value
described in this proviso) which the Company or such subsidiary would have had
to issue had no Option been issued in connection therewith, given the prevailing
market conditions at the time of the issuance of the Debt, in order to receive
the same aggregate net proceeds as is actually received from the issuance of the
Debt, over (b) the aggregate face amount of the Debt. The Estimated Face Amount
shall be as mutually agreed between the Company and the Registered Holder or, if
no such mutual agreement is reached, as set forth in the written opinion,
addressed to the Registered Holder, of an investment bank of national
recognition, retained by the Company and reasonably acceptable to the Registered
Holder; provided, that if no such mutual agreement is reached or written opinion
--------
is received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
- - -------- -------
borne by the Company.
Example: If the Company issues $20 million aggregate principal amount of
-------
10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi), the Company and the Registered Holder mutually
agree or an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms otherwise
identical to the securities issued) would have been $21 million
(i.e., to yield aggregate net proceeds of $20 million to the
Company), had the warrants not been issued, then the warrants
would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(viii) Record Date. If the Company takes a record of the
-----------
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in
-7-
<PAGE>
Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class A Common into a greater number of shares or pays a
dividend or makes a distribution to holders of the Class A Common in the form of
shares of Class A Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
A Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without
-8-
<PAGE>
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of Directors shall
make in good faith an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder of this Warrant.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
-9-
<PAGE>
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class A Common Stock Deemed Outstanding" means, at any given time,
---------------------------------------
the number of shares of Class A Common actually outstanding at such time, plus
the number of shares of Class A Common deemed to be outstanding pursuant to
Section 2B(i) or 2B(ii) hereof.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment.
-10-
<PAGE>
The Required Holders shall have the right to require that an independent
investment banking firm mutually acceptable to the Company and the Required
Holders determine Fair Market Value, which firm shall submit to the Company and
the Warrant holders a written report setting forth such determination. The
expenses of such firm will be borne by the Company, and the determination of
such firm will be final and binding upon all parties. Notwithstanding any of the
foregoing, with respect to any issuance of any shares of Class A Common or
Options by the Company to members of management or directors of the Company and
its Subsidiaries (which is not a Permitted Issuance) within 90 days of the date
of issuance hereof, the Fair Market Value of each share of Class A Common shall
be presumed to be $3.30 per share.
"Permitted Issuance" means any issuance by the Company of shares of
------------------
Class A Common or Options (a) upon exercise of this Warrant and (b) to members
of management and directors of the Company and its Subsidiaries pursuant to
Section 7 of the Stockholders Agreement.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 by and among the Company and its stockholders, as such
agreement may be amended or modified from time to time.
"Warrant Shares" means shares of the Class A Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
-11-
<PAGE>
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
-12-
<PAGE>
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Bruce Wilson
----------------------------
Name: Bruce Wilson
Title:Secretary/Treasurer
Attest:
- - ---------------------------
Treasurer
-14-
<PAGE>
Exhibit 10.10
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER
HEREOF UPON WRITTEN REQUEST.
CLASS A WARRANT
---------------
Date of Issuance: December 14, 1995 Certificate No. W-A2
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BCIP TRUST ASSOCIATES, L.P., a
-------
Delaware limited partnership, or its permitted transferees and assigns, this
warrant (this "Warrant"), representing the right to purchase from the Company a
-------
total of 46.7623 Warrant Shares (as defined herein) at a price of $3.30 per
Warrant Share (the "Initial Exercise Price"). The exercise price and number of
----------------------
Warrant Shares (and the amount and kind of other securities) for which this
Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all
of the following items have been delivered to the Company (the "Exercise Time"):
-------------
(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount
equal to the Aggregate Exercise Price (as defined), (y) the surrender to
the Company of securities of the Company having a value equal to the
Aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise (which value in the case of debt securities shall be the principal
amount thereof and in the case of shares of Common Stock shall be the Fair
Market Value thereof), or (z) the delivery of a notice to the Company that
the Purchaser is exercising this Warrant by authorizing the Company to
reduce the number of Warrant Shares subject to this Warrant by the number
of shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the Registered
Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise
of this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
-------- -------
or taxes which may be payable in respect of this Warrant or any Warrant Shares,
with respect to any transfer of this Warrant, which taxes shall be paid by the
transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer of
this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price
- 2 -
<PAGE>
then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or securities
of the Company, the Company shall, at the Purchaser's option and upon surrender
of this Warrant by such Purchaser as provided above together with any notice,
statement or payment required to effect such conversion or exchange of Warrant
Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser)
a certificate or certificates representing the stock or securities into which
the Warrant Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
- 3 -
<PAGE>
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance
---------------------------------------------------------------
of Common Stock. If and whenever, on or after the date hereof, the Company
- - ---------------
issues or sells, or in accordance with Section 2B is deemed to have issued or
sold, other than pursuant to a Permitted Issuance, any shares of Class A Common
for a consideration per share less than the Exercise Price in effect immediately
prior to such time, then immediately upon such issuance or sale the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (1) the number of shares of
Class A Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (2) the consideration, if any, received by the Company
----
upon such issuance or sale, and the denominator of which will be the product
derived by multiplying such Exercise Price by the number of shares of Class A
Common Stock Deemed Outstanding immediately after such issuance or sale. Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable upon exercise of this Warrant shall be adjusted to equal the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
- 4 -
<PAGE>
(i) Issuance of Rights or Options. If the Company in any manner
-----------------------------
grants any rights or options (other than the Purchase Rights covered by Section
4 hereof or a Permitted Issuance) to subscribe for or to purchase Class A Common
or any stock or other securities convertible into or exchangeable for Class A
Common (including, without limitation, convertible common stock) (such rights or
options being herein called "Options" and such convertible or exchangeable stock
-------
or securities being herein called "Convertible Securities") and the price per
----------------------
share for which Class A Common is issuable upon the exercise of such Options or
upon conversion or exchange of such Convertible Securities is less than the
Exercise Price in effect immediately prior to the time of the granting or the
sale of such Options, then the total maximum number of shares of Class A Common
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For purposes of this paragraph,
the "price per share for which Class A Common is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any, received or receivable by
--------
the Company as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Class A Common issuable upon exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such Class A Common or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Class A Common upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
----------------------------------
issues or sells any Convertible Securities and the price per share for which
Class A Common is issuable upon such conversion or exchange is less than the
Exercise Price in effect immediately prior to the terms of such issuance or
sale, then the maximum number of shares of Class A Common issuable upon
conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which
Class A Common is issuable upon such conversion or exchange" is determined by
dividing (A) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (B) the total maximum number
of shares of Class A Common issuable upon the conversion or exchange of all such
Convertible Securities. No further adjustment of the Exercise Price shall be
made upon the actual issue of such Class A Common upon conversion or exchange of
such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
- 5 -
<PAGE>
(iii) Change in Option Price or Conversion Rate. If either the
-----------------------------------------
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Class A Common shall change at any time, the Exercise Price
in effect at the time of such change shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased. For purposes of this paragraph
2B, if the terms of any Option or Convertible Security which was outstanding as
of the date of issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Exercise Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option which, when issued, caused an
- - ----------
adjustment to the Exercise Price or number of Warrant Shares acquirable
hereunder or the termination of any right to convert or exchange any Convertible
Securities which, when issued, caused an adjustment to the Exercise Price or
number of Warrant Shares acquirable hereunder, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. Notwithstanding the foregoing, the expiration or termination of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant pursuant to paragraph 2B(iii) above.
(v) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount of cash received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than the net amount of
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of marketable securities, in which case
the amount of consideration received by the Company shall be the market price
thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger or other business combination in which the Company is
the surviving entity, the amount of consideration therefor shall be deemed to be
the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or marketable securities shall be determined by the Company in
good faith, unless such
- 6 -
<PAGE>
consideration is paid by an Affiliate of the Company, in which case fair value
of such consideration shall be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of Warrants
(as defined in Section 8 below). The fees and expenses of such appraiser shall
be paid by the Company.
(vi) Integrated Transactions. Other than in connection with and
-----------------------
to the extent of Permitted Issuances, in case any Option is issued in connection
with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which no specific consideration is allocated to
such Options by the parties thereto, the Option shall be deemed to have been
issued for no consideration; provided, if such other securities are debt
--------
securities (such debt securities so issued are herein referred to as the "Debt")
----
of the Company or any of its subsidiaries, the Option shall be deemed to have
been issued for consideration equal to the excess, if any, of (a) the aggregate
face amount (the "Estimated Face Amount") of debt securities with terms
---------------------
identical to the terms of the Debt (other than the increase to face value
described in this proviso) which the Company or such subsidiary would have had
to issue had no Option been issued in connection therewith, given the prevailing
market conditions at the time of the issuance of the Debt, in order to receive
the same aggregate net proceeds as is actually received from the issuance of the
Debt, over (b) the aggregate face amount of the Debt. The Estimated Face Amount
shall be as mutually agreed between the Company and the Registered Holder or, if
no such mutual agreement is reached, as set forth in the written opinion,
addressed to the Registered Holder, of an investment bank of national
recognition, retained by the Company and reasonably acceptable to the Registered
Holder; provided, that if no such mutual agreement is reached or written opinion
--------
is received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
- - -------- -------
borne by the Company.
Example: If the Company issues $20 million aggregate principal amount of
------- 10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi), the Company and the Registered Holder mutually
agree or an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms otherwise
identical to the securities issued) would have been $21 million
(i.e., to yield aggregate net proceeds of $20 million to the
Company), had the warrants not been issued, then the warrants
would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(viii) Record Date. If the Company takes a record of the
-----------
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in
- 7 -
<PAGE>
Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class A Common into a greater number of shares or pays a
dividend or makes a distribution to holders of the Class A Common in the form of
shares of Class A Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
A Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without
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<PAGE>
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of Directors shall
make in good faith an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder of this Warrant.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
- 9 -
<PAGE>
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class A Common Stock Deemed Outstanding" means, at any given time,
---------------------------------------
the number of shares of Class A Common actually outstanding at such time, plus
the number of shares of Class A Common deemed to be outstanding pursuant to
Section 2B(i) or 2B(ii) hereof.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment.
- 10 -
<PAGE>
The Required Holders shall have the right to require that an independent
investment banking firm mutually acceptable to the Company and the Required
Holders determine Fair Market Value, which firm shall submit to the Company and
the Warrant holders a written report setting forth such determination. The
expenses of such firm will be borne by the Company, and the determination of
such firm will be final and binding upon all parties. Notwithstanding any of the
foregoing, with respect to any issuance of any shares of Class A Common or
Options by the Company to members of management or directors of the Company and
its Subsidiaries (which is not a Permitted Issuance) within 90 days of the date
of issuance hereof, the Fair Market Value of each share of Class A Common shall
be presumed to be $3.30 per share.
"Permitted Issuance" means any issuance by the Company of shares of
------------------
Class A Common or Options (a) upon exercise of this Warrant and (b) to members
of management and directors of the Company and its Subsidiaries pursuant to
Section 7 of the Stockholders Agreement.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 by and among the Company and its stockholders, as such
agreement may be amended or modified from time to time.
"Warrant Shares" means shares of the Class A Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this
------------
Section 7, this Warrant and all rights hereunder are transferable, in whole or
in part, without charge to the Registered Holder (subject to the provisions of
paragraph 1B(iv) hereof), upon surrender of this Warrant with a properly
executed Assignment (in the form of Exhibit II hereto) at the principal office
----------
of the
- 11 -
<PAGE>
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
- 12 -
<PAGE>
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
New York.
* * * * *
- 13 -
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Bruce Wilson
------------------------------
Name: Bruce Wilson
Title: Secretary / Treasurer
Attest:
- - -----------------------------
Treasurer
- 14 -
<PAGE>
EXHIBIT 10.11
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER
HEREOF UPON WRITTEN REQUEST.
CLASS L WARRANT
---------------
Date of Issuance: December 14, 1995 Certificate No. W-L1
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BAIN CAPITAL V MEZZANINE FUND,
-------
L.P., a Delaware limited partnership, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
-------
Company a total of 1169.0594 Warrant Shares (as defined herein) at a price of
$1,306.80 per Warrant Share (the "Initial Exercise Price"). The exercise price
----------------------
and number of Warrant Shares (and the amount and kind of other securities) for
which this Warrant is exercisable shall be subject to adjustment as provided
herein. Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all
of the following items have been delivered to the Company (the "Exercise Time"):
-------------
(a) a completed Exercise Agreement, as described in Section
1C below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount
equal to the Aggregate Exercise Price (as defined), (y) the surrender to
the Company of securities of the Company having a value equal to the
Aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise (which value in the case of debt securities shall be the principal
amount thereof and in the case of shares of Common Stock shall be the Fair
Market Value thereof), or (z) the delivery of a notice to the Company that
the Purchaser is exercising this Warrant by authorizing the Company to
reduce the number of Warrant Shares subject to this Warrant by the number
of shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
-------- -------
any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer of
this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant
-2-
<PAGE>
Shares acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect. In the event that the Company fails to
comply with its obligations set forth in the foregoing sentence, the Purchaser
may (but shall not be obligated to) purchase Warrant Shares hereunder at par
value, and the Company shall be obligated to reimburse the Purchaser for the
aggregate amount of consideration paid in connection with such exercise in
excess of the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or securities
of the Company, the Company shall, at the Purchaser's option and upon surrender
of this Warrant by such Purchaser as provided above together with any notice,
statement or payment required to effect such conversion or exchange of Warrant
Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser)
a certificate or certificates representing the stock or securities into which
the Warrant Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory
-3-
<PAGE>
body having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class L Common into a greater number of shares or pays a dividend
or makes a distribution to holders of the Class L Common in the form of shares
of Class L Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
L Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2B. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered
-4-
<PAGE>
Holder of Warrants shall thereafter have the right to acquire and receive upon
exercise thereof, in lieu of the Warrant Shares immediately theretofore
acquirable and receivable upon exercise of such Registered Holder's Warrants,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of Warrant Shares immediately
theretofore acquirable and receivable upon exercise of such Registered Holder's
Warrants had such Organic Change not taken place. In any such case, the Company
shall make appropriate provision with respect to such Registered Holder's rights
and interests to insure that the provisions hereof (including this Section 2)
shall thereafter be applicable to the Warrants (including, in the case of any
such Organic Change in which the successor entity or purchasing entity is other
than the Company, an immediate adjustment of the Exercise Price to the value for
the Common Stock reflected by the terms of such Organic Change and a
corresponding immediate adjustment in the number of Warrant Shares acquirable
and receivable upon exercise of the Warrants, if the value so reflected is less
than the Fair Market Value of the Common Stock in effect immediately prior to
such Organic Change). The Company shall not effect any such Organic Change
unless, prior to the consummation thereof, the successor entity (if other than
the Company) resulting from such Organic Change (including a purchaser of all or
substantially all the Company's assets) assumes by written instrument the
obligation to deliver to each Registered Holder of Warrants such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Registered Holder may be entitled to acquire upon exercise of Warrants.
2C. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2D. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
-5-
<PAGE>
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2A, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
-6-
<PAGE>
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment. The Required Holders shall have
the right to require that an independent investment banking firm mutually
acceptable to the Company and the Required Holders determine Fair Market Value,
which firm shall submit to the Company and the Warrant holders a written report
setting forth such determination. The expenses of such firm will be borne by
the Company, and the determination of such firm will be final and binding upon
all parties.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 by and among the Company and its stockholders, as such
agreement may be amended or modified from time to time.
"Warrant Shares" means shares of the Class L Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if
-7-
<PAGE>
such security is issuable in shares, or shall mean the equivalent units in which
such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
-8-
<PAGE>
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-9-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Bruce Wilson
--------------------------------
Name: Bruce Wilson
Title: Secretary/Treasurer
Attest:
- - ----------------------------
Treasurer
-10-
<PAGE>
Exhibit 10.12
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER
HEREOF UPON WRITTEN REQUEST.
CLASS L WARRANT
---------------
Date of Issuance: December 14, 1995 Certificate No. W-L2
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BCIP TRUST ASSOCIATES, L.P., a
-------
Delaware limited partnership, or its permitted transferees and assigns, this
warrant (this "Warrant"), representing the right to purchase from the Company a
-------
total of 11.6906 Warrant Shares (as defined herein) at a price of $1,306.80 per
Warrant Share (the "Initial Exercise Price"). The exercise price and number of
----------------------
Warrant Shares (and the amount and kind of other securities) for which this
Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all of
the following items have been delivered to the Company (the "Exercise Time"):
-------------
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an Assignment
or Assignments in the form set forth in Exhibit II hereto evidencing the
----------
assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount equal
to the Aggregate Exercise Price (as defined), (y) the surrender to the
Company of securities of the Company having a value equal to the Aggregate
Exercise Price of the Warrant Shares being purchased upon such exercise
(which value in the case of debt securities shall be the principal amount
thereof and in the case of shares of Common Stock shall be the Fair Market
Value thereof), or (z) the delivery of a notice to the Company that the
Purchaser is exercising this Warrant by authorizing the Company to reduce
the number of Warrant Shares subject to this Warrant by the number of
shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the Registered
Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise of
this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
-------- -------
or taxes which may be payable in respect of this Warrant or any Warrant Shares,
with respect to any transfer of this Warrant, which taxes shall be paid by the
transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer of this
Warrant or of any Warrant Shares issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
The Company shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant
-2-
<PAGE>
Shares acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect. In the event that the Company fails to
comply with its obligations set forth in the foregoing sentence, the Purchaser
may (but shall not be obligated to) purchase Warrant Shares hereunder at par
value, and the Company shall be obligated to reimburse the Purchaser for the
aggregate amount of consideration paid in connection with such exercise in
excess of the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a public offering
or a sale of the Company (pursuant to a merger, sale of stock or otherwise),
such exercise may at the election of the Registered Holder be conditioned upon
the consummation of such transaction, in which case such exercise shall not be
deemed to be effective until immediately prior to the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued Common Stock solely for the purpose of issuance
upon the exercise of this Warrant, the maximum number of Warrant Shares issuable
upon the exercise of this Warrant. All Warrant Shares which are so issuable
shall, when issued and upon the payment of the Exercise Price, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to ensure
that all such Warrant Shares may be so issued without violation by the Company
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or securities
of the Company, the Company shall, at the Purchaser's option and upon surrender
of this Warrant by such Purchaser as provided above together with any notice,
statement or payment required to effect such conversion or exchange of Warrant
Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser)
a certificate or certificates representing the stock or securities into which
the Warrant Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory
-3-
<PAGE>
body having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
(xi) No stockholder of the Company has or shall have any preemptive
right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class L Common into a greater number of shares or pays a dividend
or makes a distribution to holders of the Class L Common in the form of shares
of Class L Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
L Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2B. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered
-4-
<PAGE>
Holder of Warrants shall thereafter have the right to acquire and receive upon
exercise thereof, in lieu of the Warrant Shares immediately theretofore
acquirable and receivable upon exercise of such Registered Holder's Warrants,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of Warrant Shares immediately
theretofore acquirable and receivable upon exercise of such Registered Holder's
Warrants had such Organic Change not taken place. In any such case, the Company
shall make appropriate provision with respect to such Registered Holder's rights
and interests to insure that the provisions hereof (including this Section 2)
shall thereafter be applicable to the Warrants (including, in the case of any
such Organic Change in which the successor entity or purchasing entity is other
than the Company, an immediate adjustment of the Exercise Price to the value for
the Common Stock reflected by the terms of such Organic Change and a
corresponding immediate adjustment in the number of Warrant Shares acquirable
and receivable upon exercise of the Warrants, if the value so reflected is less
than the Fair Market Value of the Common Stock in effect immediately prior to
such Organic Change). The Company shall not effect any such Organic Change
unless, prior to the consummation thereof, the successor entity (if other than
the Company) resulting from such Organic Change (including a purchaser of all or
substantially all the Company's assets) assumes by written instrument the
obligation to deliver to each Registered Holder of Warrants such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Registered Holder may be entitled to acquire upon exercise of Warrants.
2C. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2D. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder
at least 30 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of Common
Stock, or (C) for determining rights to vote with respect to any Organic Change,
dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holder at least 30 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
-5-
<PAGE>
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2A, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
-6-
<PAGE>
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment. The Required Holders shall have
the right to require that an independent investment banking firm mutually
acceptable to the Company and the Required Holders determine Fair Market Value,
which firm shall submit to the Company and the Warrant holders a written report
setting forth such determination. The expenses of such firm will be borne by
the Company, and the determination of such firm will be final and binding upon
all parties.
"Person" means any individual, partnership, joint venture, corporation,
------
trust, unincorporated organization or government or department or agency
thereof.
"Registered Holder" means the holder of this Warrant as reflected in the
-----------------
records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 by and among the Company and its stockholders, as such
agreement may be amended or modified from time to time.
"Warrant Shares" means shares of the Class L Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if
-7-
<PAGE>
such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section 7, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the Registered Holder (subject to the provisions of paragraph 1B(iv)
hereof), upon surrender of this Warrant with a properly executed Assignment (in
the form of Exhibit II hereto) at the principal office of the Company. The
----------
Registered Holder agrees that it will not sell, transfer or otherwise dispose of
this Warrant or any Warrant Shares of restricted Common Stock, in whole or in
part, except pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or an exemption from registration thereunder
and then only in accordance with the terms of the Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued upon
such transfer shall bear the restrictive legends required by the Stockholders
Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
-8-
<PAGE>
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-9-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By:/s/ Bruce Wilson
------------------------------
Name: Bruce Wilson
Title: Secretary/Treasurer
Attest:
- - -----------------------
Treasurer
-10-
<PAGE>
EXHIBIT 10.13
WARRANT AGREEMENT
-----------------
WARRANT AGREEMENT (the "Agreement") dated as of March 1, 1996, by and
---------
between Bain Capital V Mezzanine Fund, L.P., a Delaware limited partnership,
BCIP Trust Associates, L.P., a Delaware limited partnership, Crawford Investment
Group, L.L.C., a Michigan limited liability company (collectively, the
"Purchasers"), and Cambridge Industries Holdings, Inc., a Delaware corporation
- - -----------
("Holdings"). Capitalized terms used herein shall have the meanings given to
--------
such terms in Article VII hereof.
WHEREAS, on the date hereof, pursuant to that certain Junior
Subordinated Credit Agreement dated as of the date hereof (the "Credit
------
Agreement") by and among the Purchasers, as lenders, and Holdings, the
- - ---------
Purchasers are purchasing notes of Holdings in the aggregate principal amount of
$5,100,000 (the "Notes").
-----
WHEREAS, the Purchasers are acquiring from Holdings warrants in the
form attached as Exhibit 1 hereto (the "Class A Warrants") and warrants in the
--------- ----------------
form attached as Exhibit 2 hereto (the "Class L Warrants" and collectively with
--------- ----------------
the Class A Warrants, the "Warrants"), representing the right to purchase from
--------
Holdings Warrant Shares on the terms and conditions set forth in the Warrants.
WHEREAS, the Warrants are being issued as an inducement and partial
consideration for the Purchasers to enter into the Credit Agreement and to
purchase the Notes.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
I. Closing.
-------
A. Closing. The closing of the issuance of the Warrants to the
-------
Purchasers (the "Closing") shall take place simultaneously with the closing
-------
pursuant to the Credit Agreement. The date of such Closing is hereinafter
referred to as the "Closing Date."
------------
B. Transactions on Closing Date. At the Closing, Holdings shall
----------------------------
deliver to the Purchasers the duly issued Warrants.
II. Representations and Warranties of Holdings. Holdings represents and
------------------------------------------
warrants to the Purchasers as follows:
A. Good Standing. Holdings is a corporation duly organized, validly
-------------
existing and in good standing under the laws of the State of Delaware.
B. Authority Relative to this Agreement. Holdings has all requisite
------------------------------------
corporate power and authority to enter into and perform this Agreement and to
issue and deliver the Warrants to the
<PAGE>
Purchasers. The execution, delivery and performance by Holdings of this
Agreement, including the issuance and delivery of the Warrants to the
Purchasers, have been duly authorized by all necessary corporate action on the
part of Holdings. This Agreement has been duly executed and delivered by
Holdings and is a legal, valid and binding obligation of Holdings and is
enforceable against Holdings in accordance with its terms.
C. No Conflict or Violation. The execution and delivery of this
------------------------
Agreement by Holdings, the performance by Holdings of its terms and the issuance
and delivery of the Warrants to the Purchasers will not on the Closing Date
conflict with or result in a violation of (i) the Certificate of Incorporation
or By-Laws of Holdings as in effect on the Closing Date, or (ii) any agreement,
instrument, law, rule, regulation, order, writ, judgment or decree to which
Holdings is a party or is subject, except for such conflicts and violations
which will not, in the aggregate, have a material adverse effect on the
business, operations, assets or condition (financial or otherwise) of Holdings
and will not deprive the Purchasers of any material benefit under this
Agreement.
D. Validity of Issuance. The Warrants to be issued to the Purchasers
--------------------
pursuant to this Agreement and the Warrant Shares issued upon exercise of the
Warrants will, when issued, be duly and validly issued, fully paid and
nonassessable (assuming in the case of the Warrant Shares, payment of the
exercise price is made in accordance with the terms of the Warrants).
E. Capital Structure and Subsidiaries. As of the Closing, the
----------------------------------
authorized capital stock of Holdings consists of (i) 1,000 shares of Preference
Stock, par value $.01 per share, (ii) 200,000 shares of Class A Common Stock,
par value $.01 per share, of which 55,000 shares shall be issued and outstanding
and 6,883.28 shares shall be reserved for issuance upon exercise of the Class A
Warrants, (iii) 29,000 shares of Class L Common Stock, par value $.01 per share,
of which 25,000 shares shall be issued and outstanding and 1,720.82 shares shall
be reserved for issuance upon exercise of the Class L Warrants, and (iv) 45,000
shares of Class P Common Stock, par value $.01 per share.
F. Charter Amendment. The amendment to Holdings' Amended and
-----------------
Restated Certificate of Incorporation attached hereto as Exhibit A has been
---------
filed by the Delaware Secretary of State on February 29, 1996 and is in effect
as of the date hereof.
III. Representations and Warranties of the Purchasers. The Purchasers
------------------------------------------------
each hereby represent and warrant severally and not jointly to Holdings as
follows:
A. Investment Intention. Each Purchaser is acquiring its Warrant,
--------------------
and if the Warrant is exercised, the Warrant Shares, for investment solely for
its own account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof. Such Purchaser agrees and
acknowledges that it will not, directly or indirectly, offer, transfer or sell
its Warrant or any Warrant Shares, or solicit any offers to purchase or acquire
the Warrant or any Warrant Shares, unless the transfer or sale is (i) pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act") and has
--------------
been registered under any applicable state securities or "blue sky" laws or (ii)
pursuant to an exemption from registration under the Securities Act and
applicable state securities or "blue sky" laws.
-2-
<PAGE>
B. Legends. (i) Each Purchaser acknowledges that each Warrant and
-------
each Warrant Share will contain a legend substantially to the following effect:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
Upon reasonable request of Holdings in connection with any transfer of
the Warrant or the Warrant Shares (other than a transfer pursuant to a public
offering registered under the Securities Act, pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or any similar rules then in effect), or
to an affiliate of the Purchasers), the Purchasers will deliver, if requested by
Holdings, an opinion of counsel knowledgeable in securities laws reasonably
satisfactory to Holdings to the effect that such transfer may be effected
without registration under the Securities Act. Holdings agrees to issue
certificates evidencing the Warrant Shares that do not contain such legend upon
receipt of an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to Holdings, to the effect that such legend no longer applies to
Warrant Shares.
(ii) Each Purchaser acknowledges that each Warrant and each Warrant
Share will contain a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT DATED
AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG THE ISSUER OF
SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS.
A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO
THE HOLDER HEREOF UPON WRITTEN REQUEST.
This legend may be removed upon termination of the Stockholders
Agreement.
C. Additional Investment Representations. Each Purchaser is an
-------------------------------------
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act.
IV. Inspection Rights. So long as the Purchasers own at least 50% of any
-----------------
class of Warrant Shares issued on the date hereof (assuming, for purposes of
this Article IV, full exercise of the Warrants), Holdings shall permit one
representative of any holder of the Warrants or the Warrant Shares selected by
the holders of the majority of the Warrant Shares (assuming for purposes of
this section that the Warrants have been fully exercised), upon reasonable
notice and during
-3-
<PAGE>
normal business hours and such other times as any such holder may reasonably
request, to (a) visit and inspect any of the properties of Holdings and its
subsidiaries (b) examine the corporate and financial records of Holdings and its
subsidiaries and make copies thereof or extracts therefrom and (c) discuss the
affairs, finances and accounts of any such corporations with the directors,
officers, key employees and independent accountants of Holdings and its
subsidiaries (it being understood that such representative will keep all non-
public information confidential).
V. Management Rights.
-----------------
A. VCOC Status. Holdings acknowledges that Bain Capital V Mezzanine
-----------
Fund, L.P. (the "MezFund") is a "venture capital operating company" as such
-------
term is used in the "plan assets" regulation (29 CFR 2510.3-101) issued by the
Department of Labor under the Employee Retirement Income Security Act of 1974,
as amended, and that the MezFund's investment in the Notes and Warrants is
intended to be a "venture capital investment" within the meaning of regulation
29 CFR 2510.3-101(d)(3)(i). Holdings further acknowledges that the contractual
provisions, contained in this Section V and elsewhere in this Agreement and the
other Documents (as defined in the Credit Agreement) provide the MezFund with
the opportunity and right to substantially participate in, or substantially
influence the conduct of, the management of Holdings.
B. Participation Rights. Upon reasonable notice to Holdings' chief
--------------------
executive officer and chief financial officer, as long as the MezFund holds a
Warrant, Holdings agrees to cause such of Holdings' key executive officers as
are designated by the MezFund to meet with representatives of the MezFund at
mutually convenient times and locations in order to discuss the conduct of
Holdings' business and affairs, and to receive the MezFund's recommendations and
advice in connection therewith. It is anticipated that such meetings and
discussions will occur periodically (but not, in general, more than once in any
30-day period absent unusual circumstances) as requested by the MezFund. Such
meetings and discussions may, at the MezFund's option, be conducted in person or
by use of telephonic means.
C. Attendance Rights. Holdings shall give the MezFund (so long as
-----------------
the MezFund holds any Warrant) written notice of each meeting of its board of
directors and each committee thereof at least three business days prior to the
date of each such meeting, and Holdings shall permit a representative of the
MezFund to attend as an observer all meetings of their boards of directors and
all committees thereof. Such representative shall be entitled to receive all
written materials and other information (including, without limitation, copies
of meeting minutes) given to directors in connection with such meetings at the
same time such materials and information are given to the directors. If
Holdings proposes to take any action by written consent in lieu of a meeting of
its board of directors or of any committee thereof, Holdings shall give written
notice thereof to such representative prior to the effective date of such
consent describing in reasonable detail the nature and substance of such action.
Holdings shall pay the reasonable out-of-pocket expenses of the representative
incurred in connection with attending such board and committee meetings.
D. Holdings' Rights. Without limiting the generality of the
----------------
foregoing, nothing contained in this Section V will obligate or require Holdings
(or any of its officers, directors, agents
-4-
<PAGE>
or employees) to (i) engage or participate in any inequitable conduct or (ii)
breach, or participate in any breach of, any duty or obligation owed to any
Person.
VI. Other Documents. Holdings and the Purchasers acknowledge that at the
---------------
Closing, each Purchaser will execute counterparts and become party to the
Stockholders Agreement and the Registration Rights Agreement.
VII. Miscellaneous
-------------
A. Definitions. For the purposes of this Agreement, the following
-----------
terms shall have the following meanings:
"Common Stock" means collectively, Holdings' Class A Common Stock, par
------------
value $.01 per share, Holdings' Class L Common Stock, par value $.01 per share,
and Holdings' Class P Common Stock, par value $.01 per share, or any securities
into which such Common Stock is hereafter converted or exchanged.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of November 17, 1995 and amended as of March 1, 1996 by and
among Holdings, certain of the Purchasers and certain stockholders of Holdings,
as the same may be amended, restated or modified from time to time in accordance
with the terms thereof.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among Holdings, certain
of the Purchasers and certain other stockholders of Holdings, as may be amended,
restated or modified from time to time.
"Warrant Shares" means shares of the Common Stock obtained or
--------------
obtainable upon exercise of the Warrants; provided, that if there is a change
--------
such that the securities issuable upon exercise of the Warrants are issued by an
entity other than Holdings or there is a change in the class of securities so
issuable, then the term "Warrant Shares" shall mean shares of the security
issuable upon exercise of the Warrants if such security is issuable in shares,
or shall mean the equivalent units in which such security is issuable if such
security is not issuable in shares.
B. Notices. All notices and other communications provided for herein
-------
shall be dated and in writing and shall be deemed to have been duly given (i)
when delivered, if delivered personally, sent by registered or certified mail,
return receipt requested and postage prepaid, or sent via nationally recognized
overnight courier or via facsimile with confirmation of receipt and (ii) when
received if delivered otherwise, to the party to whom it is directed:
-5-
<PAGE>
Holdings:
Cambridge Industries Holdings, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Attention: Chief Financial Officer
Facsimile No.: (810) 616-0530
with a copy to:
Jaffe, Raitt, Heuer & Weiss
One Woodward
Suite 2400
Detroit, MI 48226
Attention: Ira J. Jaffe
Facsimile No.: (313) 961-8358
Purchasers:
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Joshua Bekenstein
Mark Wolpow
Ronald Mika
Facsimile No.: (617) 572-3274
and to:
Crawford Investment Group, L.L.C.
c/o Cambridge Industries Holdings, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Attn: President
Facsimile No.: (810) 616-0530
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: James L. Learner
Facsimile No.: (312) 861-2200
or to such other address as either party hereto shall have specified by notice
in writing to the others.
-6-
<PAGE>
C. Assignment. This Agreement and all the provisions hereof shall be
----------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any rights or obligations hereunder shall be assigned by Holdings without
the prior written consent of the Purchasers.
D. Amendment. This Agreement may be amended only by a written
---------
instrument signed by Holdings and the Purchasers.
E. Waiver. Any party hereto may (a) extend the time for the
------
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid as to such party if
set forth in an instrument in writing signed by such party.
F. Severability. In the event that any one or more of the provisions
------------
hereof, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
G. Applicable Law. The corporate law of the State of Delaware shall
--------------
govern all issues and questions concerning the relative rights of the Purchasers
and Holdings. All other issues and questions concerning the construction,
validity, interpretation and enforceability of this Agreement and the exhibits
and schedules hereto shall be governed by and construed in accordance with, the
laws of the State of New York, without giving effect to any choice of law or
conflict of law provisions (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
H. Expenses. All reasonable fees and expenses incurred by the
--------
Purchasers in connection with the preparation of this Agreement and the
transactions referred to herein, including the reasonable fees of the
Purchasers' counsel, shall be paid by Holdings, whether or not the issuance of
the Warrants, the execution and delivery of the Credit Agreement or any other
transaction contemplated hereby is consummated.
I. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
J. Descriptive Headings. The headings in this Agreement are for
--------------------
convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
* * * * *
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be signed and attested by its duly authorized officers under its corporate
seal and to be dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Its:
BAIN CAPITAL V MEZZANINE FUND, L.P.
By: Bain Capital V Mezzanine Partners, L.P.
Its: General Partner
By: Bain Capital Investors V, Inc.
Its: General Partner
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its: Managing Director
BCIP TRUST ASSOCIATES, L.P.
By: [SIGNATURE APPEARS HERE]
----------------------------------
Its: General Partner
CRAWFORD INVESTMENT GROUP, L.L.C.
By:
----------------------------------
Its:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be signed and attested by its duly authorized officers under its corporate
seal and to be dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Its:
BAIN CAPITAL V MEZZANINE FUND, L.P.
By: Bain Capital V Mezzanine Partners, L.P.
Its: General Partner
By: Bain Capital Investors V, Inc.
Its: General Partner
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Its: Managing Director
BCIP TRUST ASSOCIATES, L.P.
By: [SIGNATURE APPEARS HERE]
-----------------------------------
Its: General Partner
CRAWFORD INVESTMENT GROUP, L.L.C.
By: [SIGNATURE APPEARS HERE]
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Its: Manager
<PAGE>
EXHIBIT 10.14
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS A WARRANT
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Date of Issuance: March 1, 1996 Certificate No. W-A3
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BAIN CAPITAL V MEZZANINE FUND,
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L.P., a Delaware limited partnership, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
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Company a total of 1,176.39 Warrant Shares (as defined herein) at a price of
$3.30 per Warrant Share (the "Initial Exercise Price"). The exercise price and
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number of Warrant Shares (and the amount and kind of other securities) for which
this Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
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1A. Exercise Period. The purchase rights represented by this Warrant
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may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
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1B. Exercise Procedure.
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(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the "Exercise
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Time"):
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(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
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(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
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evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an
amount equal to the Aggregate Exercise Price (as defined), (y) the
surrender to the Company of securities of the Company having a value equal
to the Aggregate Exercise Price of the Warrant Shares being purchased upon
such exercise (which value in the case of debt securities shall be the
principal amount thereof and in the case of shares of Common Stock shall be
the Fair Market Value thereof), or (z) the delivery of a notice to the
Company that the Purchaser is exercising this Warrant by authorizing the
Company to reduce the number of Warrant Shares subject to this Warrant by
the number of shares having an aggregate Fair Market Value equal to the
Aggregate Exercise Price. For purposes hereof, "Aggregate Exercise Price"
------------------------
means an amount equal to the product of the Exercise Price (as defined in
Section 2) multiplied by the number of Warrant Shares being purchased and
being surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
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any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer
of this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price
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then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
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(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
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Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
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not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
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order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
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number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
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number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance
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of Common Stock. If and whenever, on or after the date hereof, the Company
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issues or sells, or in accordance with Section 2B is deemed to have issued or
sold, other than pursuant to a Permitted Issuance, any shares of Class A Common
for a consideration per share less than the Exercise Price in effect immediately
prior to such time, then immediately upon such issuance or sale the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (1) the number of shares of
Class A Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (2) the consideration, if any, received by the Company
----
upon such issuance or sale, and the denominator of which will be the product
derived by multiplying such Exercise Price by the number of shares of Class A
Common Stock Deemed Outstanding immediately after such issuance or sale. Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable upon exercise of this Warrant shall be adjusted to equal the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
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determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
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(i) Issuance of Rights or Options. If the Company in any
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manner grants any rights or options (other than the Purchase Rights covered by
Section 4 hereof or a Permitted Issuance) to subscribe for or to purchase Class
A Common or any stock or other securities convertible into or exchangeable for
Class A Common (including, without limitation, convertible common stock) (such
rights or options being herein called "Options" and such convertible or
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exchangeable stock or securities being herein called "Convertible Securities")
----------------------
and the price per share for which Class A Common is issuable upon the exercise
of such Options or upon conversion or exchange of such Convertible Securities is
less than the Exercise Price in effect immediately prior to the time of the
granting or the sale of such Options, then the total maximum number of shares of
Class A Common issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For purposes of
this paragraph, the "price per share for which Class A Common is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities" is determined by dividing (A) the total amount, if any, received or
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receivable by the Company as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Class A Common issuable upon exercise
of such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further adjustment of
the Exercise Price shall be made upon the actual issuance of such Class A Common
or of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Class A Common upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in
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any manner issues or sells any Convertible Securities and the price per share
for which Class A Common is issuable upon such conversion or exchange is less
than the Exercise Price in effect immediately prior to the terms of such
issuance or sale, then the maximum number of shares of Class A Common issuable
upon conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which Class
A Common is issuable upon such conversion or exchange" is determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Class A Common issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Class A Common upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
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(iii) Change in Option Price or Conversion Rate. If either the
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purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Class A Common shall change at any time, the Exercise Price
in effect at the time of such change shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased. For purposes of this paragraph
2B, if the terms of any Option or Convertible Security which was outstanding as
of the date of issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Exercise Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible
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Securities. Upon the expiration of any Option which, when issued, caused an
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adjustment to the Exercise Price or number of Warrant Shares acquirable
hereunder or the termination of any right to convert or exchange any Convertible
Securities which, when issued, caused an adjustment to the Exercise Price or
number of Warrant Shares acquirable hereunder, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. Notwithstanding the foregoing, the expiration or termination of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant pursuant to paragraph 2B(iii) above.
(v) Calculation of Consideration Received. If any Common
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Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount of cash received by the Company therefor. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than the
net amount of cash received by the Company shall be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
shall be the market price thereof as of the date of receipt. In case any Common
Stock, Options or Convertible Securities are issued to the owners of the non-
surviving entity in connection with any merger or other business combination in
which the Company is the surviving entity, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or marketable securities shall be determined by
the Company in good faith, unless such
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consideration is paid by an Affiliate of the Company, in which case fair value
of such consideration shall be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of Warrants
(as defined in Section 8 below). The fees and expenses of such appraiser shall
be paid by the Company.
(vi) Integrated Transactions. Other than in connection with
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and to the extent of Permitted Issuances, in case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Option shall be deemed to
have been issued for no consideration; provided, if such other securities are
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debt securities (such debt securities so issued are herein referred to as the
"Debt") of the Company or any of its subsidiaries, the Option shall be deemed
----
to have been issued for consideration equal to the excess, if any, of (a) the
aggregate face amount (the "Estimated Face Amount") of debt securities with
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terms identical to the terms of the Debt (other than the increase to face value
described in this proviso) which the Company or such subsidiary would have had
to issue had no Option been issued in connection therewith, given the prevailing
market conditions at the time of the issuance of the Debt, in order to receive
the same aggregate net proceeds as is actually received from the issuance of the
Debt, over (b) the aggregate face amount of the Debt. The Estimated Face Amount
shall be as mutually agreed between the Company and the Registered Holder or, if
no such mutual agreement is reached, as set forth in the written opinion,
addressed to the Registered Holder, of an investment bank of national
recognition, retained by the Company and reasonably acceptable to the Registered
Holder; provided, that if no such mutual agreement is reached or written opinion
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is received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
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borne by the Company.
Example: If the Company issues $20 million aggregate principal amount of
------- 10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi), the Company and the Registered Holder mutually
agree or an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms otherwise
identical to the securities issued) would have been $21 million
(i.e., to yield aggregate net proceeds of $20 million to the
Company), had the warrants not been issued, then the warrants
would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
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outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(viii) Record Date. If the Company takes a record of the
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holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in
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<PAGE>
Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at
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any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class A Common into a greater number of shares or pays a
dividend or makes a distribution to holders of the Class A Common in the form of
shares of Class A Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
A Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
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reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
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to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
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the provisions of this Section 2 but not expressly provided for by such
provisions (including, without
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limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of Directors shall
make in good faith an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder of this Warrant.
2F. Notices.
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(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
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dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
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forth below:
"Affiliate," as applied to any Person, means any other Person directly
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or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
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indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class A Common Stock Deemed Outstanding" means, at any given time,
---------------------------------------
the number of shares of Class A Common actually outstanding at such time, plus
the number of shares of Class A Common deemed to be outstanding pursuant to
Section 2B(i) or 2B(ii) hereof.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
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of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment.
-10-
<PAGE>
The Required Holders shall have the right to require that an independent
investment banking firm mutually acceptable to the Company and the Required
Holders determine Fair Market Value, which firm shall submit to the Company and
the Warrant holders a written report setting forth such determination. The
expenses of such firm will be borne by the Company, and the determination of
such firm will be final and binding upon all parties. Notwithstanding any of the
foregoing, with respect to any issuance of any shares of Class A Common or
Options by the Company to members of management or directors of the Company and
its Subsidiaries (which is not a Permitted Issuance) within 90 days of the date
of issuance hereof, the Fair Market Value of each share of Class A Common shall
be presumed to be $3.30 per share.
"Permitted Issuance" means any issuance by the Company of shares of
------------------
Class A Common or Options (a) upon exercise of this Warrant and (b) to members
of management and directors of the Company and its Subsidiaries pursuant to
Section 7 of the Stockholders Agreement.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
"Warrant Shares" means shares of the Class A Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
-11-
<PAGE>
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
-12-
<PAGE>
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
------------------------------
Name:
Title:
Attest:
- - ----------------------------
Treasurer
-14-
<PAGE>
EXHIBIT 10.15
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS A WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-A4
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BCIP TRUST ASSOCIATES, L.P., a
-------
Delaware limited partnership, or its permitted transferees and assigns, this
warrant (this "Warrant"), representing the right to purchase from the Company a
-------
total of 11.76 Warrant Shares (as defined herein) at a price of $3.30 per
Warrant Share (the "Initial Exercise Price"). The exercise price and number of
----------------------
Warrant Shares (and the amount and kind of other securities) for which this
Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
---------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all
of the following items have been delivered to the Company (the "Exercise Time"):
-------------
(a) a completed Exercise Agreement, as described in Section
1C below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount
equal to the Aggregate Exercise Price (as defined), (y) the surrender to
the Company of securities of the Company having a value equal to the
Aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise (which value in the case of debt securities shall be the principal
amount thereof and in the case of shares of Common Stock shall be the Fair
Market Value thereof), or (z) the delivery of a notice to the Company that
the Purchaser is exercising this Warrant by authorizing the Company to
reduce the number of Warrant Shares subject to this Warrant by the number
of shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
-------- -------
any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer
of this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price
-2-
<PAGE>
then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
-3-
<PAGE>
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance
---------------------------------------------------------------
of Common Stock. If and whenever, on or after the date hereof, the Company
- - ---------------
issues or sells, or in accordance with Section 2B is deemed to have issued or
sold, other than pursuant to a Permitted Issuance, any shares of Class A Common
for a consideration per share less than the Exercise Price in effect immediately
prior to such time, then immediately upon such issuance or sale the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (1) the number of shares of
Class A Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (2) the consideration, if any, received by the Company
----
upon such issuance or sale, and the denominator of which will be the product
derived by multiplying such Exercise Price by the number of shares of Class A
Common Stock Deemed Outstanding immediately after such issuance or sale. Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable upon exercise of this Warrant shall be adjusted to equal the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
-4-
<PAGE>
(i) Issuance of Rights or Options. If the Company in any
-----------------------------
manner grants any rights or options (other than the Purchase Rights covered by
Section 4 hereof or a Permitted Issuance) to subscribe for or to purchase Class
A Common or any stock or other securities convertible into or exchangeable for
Class A Common (including, without limitation, convertible common stock) (such
rights or options being herein called "Options" and such convertible or
-------
exchangeable stock or securities being herein called "Convertible Securities")
----------------------
and the price per share for which Class A Common is issuable upon the exercise
of such Options or upon conversion or exchange of such Convertible Securities is
less than the Exercise Price in effect immediately prior to the time of the
granting or the sale of such Options, then the total maximum number of shares of
Class A Common issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For purposes of
this paragraph, the "price per share for which Class A Common is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities" is determined by dividing (A) the total amount, if any, received or
--------
receivable by the Company as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Class A Common issuable upon exercise
of such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further adjustment of
the Exercise Price shall be made upon the actual issuance of such Class A Common
or of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Class A Common upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any
----------------------------------
manner issues or sells any Convertible Securities and the price per share for
which Class A Common is issuable upon such conversion or exchange is less than
the Exercise Price in effect immediately prior to the terms of such issuance or
sale, then the maximum number of shares of Class A Common issuable upon
conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which Class
A Common is issuable upon such conversion or exchange" is determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Class A Common issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Class A Common upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
-5-
<PAGE>
(iii) Change in Option Price or Conversion Rate. If either the
-----------------------------------------
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Class A Common shall change at any time, the Exercise Price
in effect at the time of such change shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased. For purposes of this paragraph
2B, if the terms of any Option or Convertible Security which was outstanding as
of the date of issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Exercise Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option which, when issued, caused an
- - ----------
adjustment to the Exercise Price or number of Warrant Shares acquirable
hereunder or the termination of any right to convert or exchange any Convertible
Securities which, when issued, caused an adjustment to the Exercise Price or
number of Warrant Shares acquirable hereunder, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. Notwithstanding the foregoing, the expiration or termination of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant pursuant to paragraph 2B(iii) above.
(v) Calculation of Consideration Received. If any Common
-------------------------------------
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount of cash received by the Company therefor. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than the
net amount of cash received by the Company shall be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
shall be the market price thereof as of the date of receipt. In case any Common
Stock, Options or Convertible Securities are issued to the owners of the non-
surviving entity in connection with any merger or other business combination in
which the Company is the surviving entity, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or marketable securities shall be determined by
the Company in good faith, unless such
-6-
<PAGE>
consideration is paid by an Affiliate of the Company, in which case fair value
of such consideration shall be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of Warrants
(as defined in Section 8 below). The fees and expenses of such appraiser shall
be paid by the Company.
(vi) Integrated Transactions. Other than in connection with
-----------------------
and to the extent of Permitted Issuances, in case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Option shall be deemed to
have been issued for no consideration; provided, if such other securities are
--------
debt securities (such debt securities so issued are herein referred to as the
"Debt") of the Company or any of its subsidiaries, the Option shall be deemed to
----
have been issued for consideration equal to the excess, if any, of (a) the
aggregate face amount (the "Estimated Face Amount") of debt securities with
---------------------
terms identical to the terms of the Debt (other than the increase to face value
described in this proviso) which the Company or such subsidiary would have had
to issue had no Option been issued in connection therewith, given the prevailing
market conditions at the time of the issuance of the Debt, in order to receive
the same aggregate net proceeds as is actually received from the issuance of the
Debt, over (b) the aggregate face amount of the Debt. The Estimated Face Amount
shall be as mutually agreed between the Company and the Registered Holder or, if
no such mutual agreement is reached, as set forth in the written opinion,
addressed to the Registered Holder, of an investment bank of national
recognition, retained by the Company and reasonably acceptable to the Registered
Holder; provided, that if no such mutual agreement is reached or written opinion
--------
is received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
- - -------- -------
borne by the Company.
Example: If the Company issues $20 million aggregate principal amount of
-------
10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi), the Company and the Registered Holder mutually
agree or an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms otherwise
identical to the securities issued) would have been $21 million
(i.e., to yield aggregate net proceeds of $20 million to the
Company), had the warrants not been issued, then the warrants
would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(viii) Record Date. If the Company takes a record of the holders
-----------
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in
-7-
<PAGE>
Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class A Common into a greater number of shares or pays a
dividend or makes a distribution to holders of the Class A Common in the form of
shares of Class A Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
A Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without
-8-
<PAGE>
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of Directors shall
make in good faith an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder of this Warrant.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
-9-
<PAGE>
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class A Common Stock Deemed Outstanding" means, at any given time,
---------------------------------------
the number of shares of Class A Common actually outstanding at such time, plus
the number of shares of Class A Common deemed to be outstanding pursuant to
Section 2B(i) or 2B(ii) hereof.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment.
-10-
<PAGE>
The Required Holders shall have the right to require that an independent
investment banking firm mutually acceptable to the Company and the Required
Holders determine Fair Market Value, which firm shall submit to the Company and
the Warrant holders a written report setting forth such determination. The
expenses of such firm will be borne by the Company, and the determination of
such firm will be final and binding upon all parties. Notwithstanding any of the
foregoing, with respect to any issuance of any shares of Class A Common or
Options by the Company to members of management or directors of the Company and
its Subsidiaries (which is not a Permitted Issuance) within 90 days of the date
of issuance hereof, the Fair Market Value of each share of Class A Common shall
be presumed to be $3.30 per share.
"Permitted Issuance" means any issuance by the Company of shares of
------------------
Class A Common or Options (a) upon exercise of this Warrant and (b) to members
of management and directors of the Company and its Subsidiaries pursuant to
Section 7 of the Stockholders Agreement.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
"Warrant Shares" means shares of the Class A Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
-11-
<PAGE>
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
-12-
<PAGE>
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Edward Conard
------------------------------
Name:
Title:
Attest:
- - ----------------------------
Treasurer
-14-
<PAGE>
EXHIBIT 10.16
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS
AGREEMENT DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1,
1996 AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND
CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.
CLASS A WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-A5
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to CRAWFORD INVESTMENT GROUP, L.L.C.,
-------
a Michigan limited liability company, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
-------
Company a total of 972.12 Warrant Shares (as defined herein) at a price of $3.30
per Warrant Share (the "Initial Exercise Price"). The exercise price and number
----------------------
of Warrant Shares (and the amount and kind of other securities) for which this
Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the "Exercise
--------
Time"):
- - ------
(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an
amount equal to the Aggregate Exercise Price (as defined), (y) the
surrender to the Company of securities of the Company having a value equal
to the Aggregate Exercise Price of the Warrant Shares being purchased upon
such exercise (which value in the case of debt securities shall be the
principal amount thereof and in the case of shares of Common Stock shall be
the Fair Market Value thereof), or (z) the delivery of a notice to the
Company that the Purchaser is exercising this Warrant by authorizing the
Company to reduce the number of Warrant Shares subject to this Warrant by
the number of shares having an aggregate Fair Market Value equal to the
Aggregate Exercise Price. For purposes hereof, "Aggregate Exercise Price"
------------------------
means an amount equal to the product of the Exercise Price (as defined in
Section 2) multiplied by the number of Warrant Shares being purchased and
being surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser within five
days after the date of the Exercise Time together with any cash payable in lieu
of a fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
-------- -------
any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the
transfer of this Warrant or of any Warrant Shares issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as may
be necessary to assure that the par value per share of the unissued Warrant
Shares acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price
-2-
<PAGE>
then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
public offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
-3-
<PAGE>
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance
---------------------------------------------------------------
of Common Stock. If and whenever, on or after the date hereof, the Company
- - ---------------
issues or sells, or in accordance with Section 2B is deemed to have issued or
sold, other than pursuant to a Permitted Issuance, any shares of Class A Common
for a consideration per share less than the Exercise Price in effect immediately
prior to such time, then immediately upon such issuance or sale the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (1) the number of shares of
Class A Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (2) the consideration, if any, received by the Company
----
upon such issuance or sale, and the denominator of which will be the product
derived by multiplying such Exercise Price by the number of shares of Class A
Common Stock Deemed Outstanding immediately after such issuance or sale. Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable upon exercise of this Warrant shall be adjusted to equal the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
-4-
<PAGE>
(i) Issuance of Rights or Options. If the Company in any manner
-----------------------------
grants any rights or options (other than the Purchase Rights covered by Section
4 hereof or a Permitted Issuance) to subscribe for or to purchase Class A Common
or any stock or other securities convertible into or exchangeable for Class A
Common (including, without limitation, convertible common stock) (such rights or
options being herein called "Options" and such convertible or exchangeable stock
-------
or securities being herein called "Convertible Securities") and the price per
----------------------
share for which Class A Common is issuable upon the exercise of such Options or
upon conversion or exchange of such Convertible Securities is less than the
Exercise Price in effect immediately prior to the time of the granting or the
sale of such Options, then the total maximum number of shares of Class A Common
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For purposes of this paragraph,
the "price per share for which Class A Common is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any, received or receivable by
--------
the Company as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Class A Common issuable upon exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such Class A Common or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Class A Common upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
----------------------------------
issues or sells any Convertible Securities and the price per share for which
Class A Common is issuable upon such conversion or exchange is less than the
Exercise Price in effect immediately prior to the terms of such issuance or
sale, then the maximum number of shares of Class A Common issuable upon
conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which Class
A Common is issuable upon such conversion or exchange" is determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Class A Common issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Class A Common upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
-5-
<PAGE>
(iii) Change in Option Price or Conversion Rate. If either the
-----------------------------------------
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Class A Common shall change at any time, the Exercise Price
in effect at the time of such change shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased. For purposes of this paragraph
2B, if the terms of any Option or Convertible Security which was outstanding as
of the date of issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Exercise Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option which, when issued, caused an
- - ----------
adjustment to the Exercise Price or number of Warrant Shares acquirable
hereunder or the termination of any right to convert or exchange any Convertible
Securities which, when issued, caused an adjustment to the Exercise Price or
number of Warrant Shares acquirable hereunder, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. Notwithstanding the foregoing, the expiration or termination of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant pursuant to paragraph 2B(iii) above.
(v) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount of cash received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than the net amount of
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of marketable securities, in which case
the amount of consideration received by the Company shall be the market price
thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger or other business combination in which the Company is
the surviving entity, the amount of consideration therefor shall be deemed to be
the fair value of such portion of the net assets and business of the non-
surviving entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or marketable securities shall be determined by the Company in good faith,
unless such
-6-
<PAGE>
consideration is paid by an Affiliate of the Company, in which case fair value
of such consideration shall be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of Warrants
(as defined in Section 8 below). The fees and expenses of such appraiser shall
be paid by the Company.
(vi) Integrated Transactions. Other than in connection with and to
-----------------------
the extent of Permitted Issuances, in case any Option is issued in connection
with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which no specific consideration is allocated to
such Options by the parties thereto, the Option shall be deemed to have been
issued for no consideration; provided, if such other securities are debt
--------
securities (such debt securities so issued are herein referred to as the "Debt")
----
of the Company or any of its subsidiaries, the Option shall be deemed to have
been issued for consideration equal to the excess, if any, of (a) the aggregate
face amount (the "Estimated Face Amount") of debt securities with terms
---------------------
identical to the terms of the Debt (other than the increase to face value
described in this proviso) which the Company or such subsidiary would have had
to issue had no Option been issued in connection therewith, given the prevailing
market conditions at the time of the issuance of the Debt, in order to receive
the same aggregate net proceeds as is actually received from the issuance of the
Debt, over (b) the aggregate face amount of the Debt. The Estimated Face Amount
shall be as mutually agreed between the Company and the Registered Holder or, if
no such mutual agreement is reached, as set forth in the written opinion,
addressed to the Registered Holder, of an investment bank of national
recognition, retained by the Company and reasonably acceptable to the Registered
Holder; provided, that if no such mutual agreement is reached or written opinion
--------
is received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
- - -------- -------
borne by the Company.
Example: If the Company issues $20 million aggregate principal amount of
-------
10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi), the Company and the Registered Holder mutually
agree or an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms otherwise
identical to the securities issued) would have been $21 million
(i.e., to yield aggregate net proceeds of $20 million to the
Company), had the warrants not been issued, then the warrants
would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(viii) Record Date. If the Company takes a record of the holders of
-----------
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in
-7-
<PAGE>
Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be .
2C. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class A Common into a greater number of shares or pays a
dividend or makes a distribution to holders of the Class A Common in the form of
shares of Class A Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
A Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without
-8-
<PAGE>
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of Directors shall
make in good faith an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder of this Warrant.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
-9-
<PAGE>
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class A Common Stock Deemed Outstanding" means, at any given time,
---------------------------------------
the number of shares of Class A Common actually outstanding at such time, plus
the number of shares of Class A Common deemed to be outstanding pursuant to
Section 2B(i) or 2B(ii) hereof.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment.
-10-
<PAGE>
The Required Holders shall have the right to require that an independent
investment banking firm mutually acceptable to the Company and the Required
Holders determine Fair Market Value, which firm shall submit to the Company and
the Warrant holders a written report setting forth such determination. The
expenses of such firm will be borne by the Company, and the determination of
such firm will be final and binding upon all parties. Notwithstanding any of the
foregoing, with respect to any issuance of any shares of Class A Common or
Options by the Company to members of management or directors of the Company and
its Subsidiaries (which is not a Permitted Issuance) within 90 days of the date
of issuance hereof, the Fair Market Value of each share of Class A Common shall
be presumed to be $3.30 per share.
"Permitted Issuance" means any issuance by the Company of shares of
------------------
Class A Common or Options (a) upon exercise of this Warrant and (b) to members
of management and directors of the Company and its Subsidiaries pursuant to
Section 7 of the Stockholders Agreement.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
"Warrant Shares" means shares of the Class A Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
-11-
<PAGE>
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
-12-
<PAGE>
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By:[Signature Appears Here]
-----------------------------
Name:
Title:
Attest:
- - -----------------------
Treasurer
-14-
<PAGE>
EXHIBIT 10.17
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS A WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-A6
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BAIN CAPITAL V MEZZANINE FUND,
-------
L.P., a Delaware limited partnership, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
-------
Company a total of 962.50 Warrant Shares (as defined herein) at a price of $3.30
per Warrant Share (the "Initial Exercise Price"). The exercise price and number
----------------------
of Warrant Shares (and the amount and kind of other securities) for which this
Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the "Exercise
--------
Time"):
- - ----
(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an
amount equal to the Aggregate Exercise Price (as defined), (y) the
surrender to the Company of securities of the Company having a value equal
to the Aggregate Exercise Price of the Warrant Shares being purchased upon
such exercise (which value in the case of debt securities shall be the
principal amount thereof and in the case of shares of Common Stock shall be
the Fair Market Value thereof), or (z) the delivery of a notice to the
Company that the Purchaser is exercising this Warrant by authorizing the
Company to reduce the number of Warrant Shares subject to this Warrant by
the number of shares having an aggregate Fair Market Value equal to the
Aggregate Exercise Price. For purposes hereof, "Aggregate Exercise Price"
------------------------
means an amount equal to the product of the Exercise Price (as defined in
Section 2) multiplied by the number of Warrant Shares being purchased and
being surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
-------- -------
any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer
of this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price
-2-
<PAGE>
then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
-3-
<PAGE>
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance
---------------------------------------------------------------
of Common Stock. If and whenever, on or after the date hereof, the Company
- - ---------------
issues or sells, or in accordance with Section 2B is deemed to have issued or
sold, other than pursuant to a Permitted Issuance, any shares of Class A Common
for a consideration per share less than the Exercise Price in effect immediately
prior to such time, then immediately upon such issuance or sale the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (1) the number of shares of
Class A Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (2) the consideration, if any, received by the Company
----
upon such issuance or sale, and the denominator of which will be the product
derived by multiplying such Exercise Price by the number of shares of Class A
Common Stock Deemed Outstanding immediately after such issuance or sale. Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable upon exercise of this Warrant shall be adjusted to equal the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
-4-
<PAGE>
(i) Issuance of Rights or Options. If the Company in any
-----------------------------
manner grants any rights or options (other than the Purchase Rights covered by
Section 4 hereof or a Permitted Issuance) to subscribe for or to purchase Class
A Common or any stock or other securities convertible into or exchangeable for
Class A Common (including, without limitation, convertible common stock) (such
rights or options being herein called "Options" and such convertible or
-------
exchangeable stock or securities being herein called "Convertible Securities")
----------------------
and the price per share for which Class A Common is issuable upon the exercise
of such Options or upon conversion or exchange of such Convertible Securities is
less than the Exercise Price in effect immediately prior to the time of the
granting or the sale of such Options, then the total maximum number of shares of
Class A Common issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For purposes of
this paragraph, the "price per share for which Class A Common is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities" is determined by dividing (A) the total amount, if any, received or
--------
receivable by the Company as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Class A Common issuable upon exercise
of such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further adjustment of
the Exercise Price shall be made upon the actual issuance of such Class A Common
or of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Class A Common upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in
----------------------------------
any manner issues or sells any Convertible Securities and the price per share
for which Class A Common is issuable upon such conversion or exchange is less
than the Exercise Price in effect immediately prior to the terms of such
issuance or sale, then the maximum number of shares of Class A Common issuable
upon conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which Class
A Common is issuable upon such conversion or exchange" is determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Class A Common issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Class A Common upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
-5-
<PAGE>
(iii) Change in Option Price or Conversion Rate. If either the
-----------------------------------------
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Class A Common shall change at any time, the Exercise Price
in effect at the time of such change shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased. For purposes of this paragraph
2B, if the terms of any Option or Convertible Security which was outstanding as
of the date of issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Exercise Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option which, when issued, caused an
- - ----------
adjustment to the Exercise Price or number of Warrant Shares acquirable
hereunder or the termination of any right to convert or exchange any Convertible
Securities which, when issued, caused an adjustment to the Exercise Price or
number of Warrant Shares acquirable hereunder, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. Notwithstanding the foregoing, the expiration or termination of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant pursuant to paragraph 2B(iii) above.
(v) Calculation of Consideration Received. If any Common
-------------------------------------
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount of cash received by the Company therefor. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than the
net amount of cash received by the Company shall be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
shall be the market price thereof as of the date of receipt. In case any Common
Stock, Options or Convertible Securities are issued to the owners of the non-
surviving entity in connection with any merger or other business combination in
which the Company is the surviving entity, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or marketable securities shall be determined by
the Company in good faith, unless such
-6-
<PAGE>
consideration is paid by an Affiliate of the Company, in which case fair value
of such consideration shall be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of Warrants
(as defined in Section 8 below). The fees and expenses of such appraiser shall
be paid by the Company.
(vi) Integrated Transactions. Other than in connection with
-----------------------
and to the extent of Permitted Issuances, in case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Option shall be deemed to
have been issued for no consideration; provided, if such other securities are
--------
debt securities (such debt securities so issued are herein referred to as the
"Debt") of the Company or any of its subsidiaries, the Option shall be deemed
----
to have been issued for consideration equal to the excess, if any, of (a) the
aggregate face amount (the "Estimated Face Amount") of debt securities with
---------------------
terms identical to the terms of the Debt (other than the increase to face value
described in this proviso) which the Company or such subsidiary would have had
to issue had no Option been issued in connection therewith, given the prevailing
market conditions at the time of the issuance of the Debt, in order to receive
the same aggregate net proceeds as is actually received from the issuance of the
Debt, over (b) the aggregate face amount of the Debt. The Estimated Face Amount
shall be as mutually agreed between the Company and the Registered Holder or, if
no such mutual agreement is reached, as set forth in the written opinion,
addressed to the Registered Holder, of an investment bank of national
recognition, retained by the Company and reasonably acceptable to the Registered
Holder; provided, that if no such mutual agreement is reached or written opinion
--------
is received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
- - -------- -------
borne by the Company.
Example: If the Company issues $20 million aggregate principal amount of
------- 10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi), the Company and the Registered Holder mutually
agree or an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms otherwise
identical to the securities issued) would have been $21 million
(i.e., to yield aggregate net proceeds of $20 million to the
Company), had the warrants not been issued, then the warrants
would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(viii) Record Date. If the Company takes a record of the
-----------
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in
-7-
<PAGE>
Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class A Common into a greater number of shares or pays a
dividend or makes a distribution to holders of the Class A Common in the form of
shares of Class A Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
A Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without
-8-
<PAGE>
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of Directors shall
make in good faith an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder of this Warrant.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
-9-
<PAGE>
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class A Common Stock Deemed Outstanding" means, at any given time,
---------------------------------------
the number of shares of Class A Common actually outstanding at such time, plus
the number of shares of Class A Common deemed to be outstanding pursuant to
Section 2B(i) or 2B(ii) hereof.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment.
-10-
<PAGE>
The Required Holders shall have the right to require that an independent
investment banking firm mutually acceptable to the Company and the Required
Holders determine Fair Market Value, which firm shall submit to the Company and
the Warrant holders a written report setting forth such determination. The
expenses of such firm will be borne by the Company, and the determination of
such firm will be final and binding upon all parties. Notwithstanding any of the
foregoing, with respect to any issuance of any shares of Class A Common or
Options by the Company to members of management or directors of the Company and
its Subsidiaries (which is not a Permitted Issuance) within 90 days of the date
of issuance hereof, the Fair Market Value of each share of Class A Common shall
be presumed to be $3.30 per share.
"Permitted Issuance" means any issuance by the Company of shares of
------------------
Class A Common or Options (a) upon exercise of this Warrant and (b) to members
of management and directors of the Company and its Subsidiaries pursuant to
Section 7 of the Stockholders Agreement.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
"Warrant Shares" means shares of the Class A Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
-11-
<PAGE>
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
-12-
<PAGE>
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Richard S. Crawford
------------------------------
Name: Richard S. Crawford
Title: President & CEO
Attest:
/s/ Bruce Wilson
- - ------------------------------
Treasurer
-14-
<PAGE>
EXHIBIT 10.18
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE TRANSFERRED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT
OR STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN TRANSFER AND VOTING
RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF
MARCH 1, 1996 AMONG THE ISSUER OF SUCH
SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS A WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-A7
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BCIP TRUST ASSOCIATES, L.P., a
-------
Delaware limited partnership, or its permitted transferees and assigns, this
warrant (this "Warrant"), representing the right to purchase from the Company a
-------
total of 9.62 Warrant Shares (as defined herein) at a price of $3.30 per Warrant
Share (the "Initial Exercise Price"). The exercise price and number of Warrant
----------------------
Shares (and the amount and kind of other securities) for which this Warrant is
exercisable shall be subject to adjustment as provided herein. Certain
capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the
"Exercise Time"):
-------------
(a) a completed Exercise Agreement, as described in Section
1C below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
---------
<PAGE>
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount
equal to the Aggregate Exercise Price (as defined), (y) the surrender to
the Company of securities of the Company having a value equal to the
Aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise (which value in the case of debt securities shall be the principal
amount thereof and in the case of shares of Common Stock shall be the Fair
Market Value thereof), or (z) the delivery of a notice to the Company that
the Purchaser is exercising this Warrant by authorizing the Company to
reduce the number of Warrant Shares subject to this Warrant by the number
of shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the Registered
Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise
of this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
-------- -------
or taxes which may be payable in respect of this Warrant or any Warrant Shares,
with respect to any transfer of this Warrant, which taxes shall be paid by the
transferee prior to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer of this
Warrant or of any Warrant Shares issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
The Company shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares acquirable
upon exercise of this Warrant is at all times equal to or less than the Exercise
Price
-2-
<PAGE>
then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
public offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
-3-
<PAGE>
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance
---------------------------------------------------------------
of Common Stock. If and whenever, on or after the date hereof, the Company
- - ---------------
issues or sells, or in accordance with Section 2B is deemed to have issued or
sold, other than pursuant to a Permitted Issuance, any shares of Class A Common
for a consideration per share less than the Exercise Price in effect immediately
prior to such time, then immediately upon such issuance or sale the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (1) the number of shares of
Class A Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, plus (2) the consideration, if any, received by the Company
----
upon such issuance or sale, and the denominator of which will be the product
derived by multiplying such Exercise Price by the number of shares of Class A
Common Stock Deemed Outstanding immediately after such issuance or sale. Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares acquirable upon exercise of this Warrant shall be adjusted to equal the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.
2B. Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 2A, the following shall be
applicable:
-4-
<PAGE>
(i) Issuance of Rights or Options. If the Company in any manner
-----------------------------
grants any rights or options (other than the Purchase Rights covered by Section
4 hereof or a Permitted Issuance) to subscribe for or to purchase Class A Common
or any stock or other securities convertible into or exchangeable for Class A
Common (including, without limitation, convertible common stock) (such rights or
options being herein called "Options" and such convertible or exchangeable stock
-------
or securities being herein called "Convertible Securities") and the price per
----------------------
share for which Class A Common is issuable upon the exercise of such Options or
upon conversion or exchange of such Convertible Securities is less than the
Exercise Price in effect immediately prior to the time of the granting or the
sale of such Options, then the total maximum number of shares of Class A Common
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For purposes of this paragraph,
the "price per share for which Class A Common is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any, received or receivable by
--------
the Company as consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Class A Common issuable upon exercise of such
Options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such Class A Common or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Class A Common upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any
----------------------------------
manner issues or sells any Convertible Securities and the price per share for
which Class A Common is issuable upon such conversion or exchange is less than
the Exercise Price in effect immediately prior to the terms of such issuance or
sale, then the maximum number of shares of Class A Common issuable upon
conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of this paragraph, the "price per share for which Class
A Common is issuable upon such conversion or exchange" is determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Class A Common issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Class A Common upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
-5-
<PAGE>
(iii) Change in Option Price or Conversion Rate. If either the
-----------------------------------------
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Class A Common shall change at any time, the Exercise Price
in effect at the time of such change shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted; provided that no such change shall at any time cause
the Exercise Price hereunder to be increased. For purposes of this paragraph
2B, if the terms of any Option or Convertible Security which was outstanding as
of the date of issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Exercise Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option which, when issued, caused an
- - ----------
adjustment to the Exercise Price or number of Warrant Shares acquirable
hereunder or the termination of any right to convert or exchange any Convertible
Securities which, when issued, caused an adjustment to the Exercise Price or
number of Warrant Shares acquirable hereunder, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued. Notwithstanding the foregoing, the expiration or termination of
any Option or Convertible Security which was outstanding as of the date of
issuance of this Warrant shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms of such
Option or Convertible Security caused it to be deemed to have been issued after
the date of issuance of this Warrant pursuant to paragraph 2B(iii) above.
(v) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount of cash received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than the net amount of
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of marketable securities, in which case
the amount of consideration received by the Company shall be the market price
thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger or other business combination in which the Company is
the surviving entity, the amount of consideration therefor shall be deemed to be
the fair value of such portion of the net assets and business of the non-
surviving entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or marketable securities shall be determined by the Company in good faith,
unless such
-6-
<PAGE>
consideration is paid by an Affiliate of the Company, in which case
fair value of such consideration shall be determined jointly by the Company and
the Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of Warrants
(as defined in Section 8 below). The fees and expenses of such appraiser shall
be paid by the Company.
(vi) Integrated Transactions. Other than in connection with and
-----------------------
to the extent of Permitted Issuances, in case any Option is issued in connection
with the issue or sale of other securities of the Company, together comprising
one integrated transaction in which no specific consideration is allocated to
such Options by the parties thereto, the Option shall be deemed to have been
issued for no consideration; provided, if such other securities are debt
--------
securities (such debt securities so issued are herein referred to as the "Debt")
----
of the Company or any of its subsidiaries, the Option shall be deemed to have
been issued for consideration equal to the excess, if any, of (a) the aggregate
face amount (the "Estimated Face Amount") of debt securities with terms
---------------------
identical to the terms of the Debt (other than the increase to face value
described in this proviso) which the Company or such subsidiary would have had
to issue had no Option been issued in connection therewith, given the prevailing
market conditions at the time of the issuance of the Debt, in order to receive
the same aggregate net proceeds as is actually received from the issuance of the
Debt, over (b) the aggregate face amount of the Debt. The Estimated Face Amount
shall be as mutually agreed between the Company and the Registered Holder or, if
no such mutual agreement is reached, as set forth in the written opinion,
addressed to the Registered Holder, of an investment bank of national
recognition, retained by the Company and reasonably acceptable to the Registered
Holder; provided, that if no such mutual agreement is reached or written opinion
--------
is received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
- - -------- -------
borne by the Company.
Example: If the Company issues $20 million aggregate principal amount of
-------
10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi), the Company and the Registered Holder mutually
agree or an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms otherwise
identical to the securities issued) would have been $21 million
(i.e., to yield aggregate net proceeds of $20 million to the
Company), had the warrants not been issued, then the warrants
would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
---------------
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(viii) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in
-7-
<PAGE>
Common Stock, Options or Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class A Common into a greater number of shares or pays a
dividend or makes a distribution to holders of the Class A Common in the form of
shares of Class A Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
A Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without
-8-
<PAGE>
limitation, the granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of Directors shall
make in good faith an appropriate adjustment in the Exercise Price and the
number of Warrant Shares obtainable upon exercise of this Warrant so as to
protect the rights of the Registered Holder of this Warrant.
2F. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2C, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
-9-
<PAGE>
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class A Common Stock Deemed Outstanding" means, at any given time,
---------------------------------------
the number of shares of Class A Common actually outstanding at such time, plus
the number of shares of Class A Common deemed to be outstanding pursuant to
Section 2B(i) or 2B(ii) hereof.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment.
-10-
<PAGE>
The Required Holders shall have the right to require that an independent
investment banking firm mutually acceptable to the Company and the Required
Holders determine Fair Market Value, which firm shall submit to the Company and
the Warrant holders a written report setting forth such determination. The
expenses of such firm will be borne by the Company, and the determination of
such firm will be final and binding upon all parties. Notwithstanding any of the
foregoing, with respect to any issuance of any shares of Class A Common or
Options by the Company to members of management or directors of the Company and
its Subsidiaries (which is not a Permitted Issuance) within 90 days of the date
of issuance hereof, the Fair Market Value of each share of Class A Common shall
be presumed to be $3.30 per share.
"Permitted Issuance" means any issuance by the Company of shares of
------------------
Class A Common or Options (a) upon exercise of this Warrant and (b) to members
of management and directors of the Company and its Subsidiaries pursuant to
Section 7 of the Stockholders Agreement.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
"Warrant Shares" means shares of the Class A Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
-11-
<PAGE>
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
-12-
<PAGE>
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
* * * * *
-13-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Richard S. Crawford
-----------------------------------
Name: Richard S. Crawford
Title: President & CEO
Attest:
/s/ Bruce Wilson
- - ----------------------------
Treasurer
-14-
<PAGE>
EXHIBIT 10.19
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS L WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-L3
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BAIN CAPITAL V MEZZANINE FUND,
-------
L.P., a Delaware limited partnership, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
-------
Company a total of 294.10 Warrant Shares (as defined herein) at a price of
$1,306.80 per Warrant Share (the "Initial Exercise Price"). The exercise price
----------------------
and number of Warrant Shares (and the amount and kind of other securities) for
which this Warrant is exercisable shall be subject to adjustment as provided
herein. Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all of
the following items have been delivered to the Company (the "Exercise Time"):
-------------
<PAGE>
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
---------
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an Assignment
or Assignments in the form set forth in Exhibit II hereto evidencing the
----------
assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount equal
to the Aggregate Exercise Price (as defined), (y) the surrender to the
Company of securities of the Company having a value equal to the Aggregate
Exercise Price of the Warrant Shares being purchased upon such exercise
(which value in the case of debt securities shall be the principal amount
thereof and in the case of shares of Common Stock shall be the Fair Market
Value thereof), or (z) the delivery of a notice to the Company that the
Purchaser is exercising this Warrant by authorizing the Company to reduce
the number of Warrant Shares subject to this Warrant by the number of
shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the Registered
Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise of
this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
-------- -------
or taxes which may be payable in respect of this Warrant or any Warrant Shares,
with respect to any transfer of this Warrant, which taxes shall be paid by the
transferee prior to the issuance of such Warrant Shares.
-2-
<PAGE>
(v) The Company shall not close its books against the transfer of this
Warrant or of any Warrant Shares issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
The Company shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares acquirable
upon exercise of this Warrant is at all times equal to or less than the Exercise
Price then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a public offering
or a sale of the Company (pursuant to a merger, sale of stock or otherwise),
such exercise may at the election of the Registered Holder be conditioned upon
the consummation of such transaction, in which case such exercise shall not be
deemed to be effective until immediately prior to the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued Common Stock solely for the purpose of issuance
upon the exercise of this Warrant, the maximum number of Warrant Shares issuable
upon the exercise of this Warrant. All Warrant Shares which are so issuable
shall, when issued and upon the payment of the Exercise Price, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to ensure
that all such Warrant Shares may be so issued without violation by the Company
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or securities
of the Company, the Company shall, at the Purchaser's option and upon surrender
of this Warrant by such Purchaser as provided above together with any notice,
statement or payment required to effect such conversion or exchange of Warrant
Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser)
a certificate or certificates representing the stock or securities into which
the Warrant Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such Purchaser has specified.
-3-
<PAGE>
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
(xi) No stockholder of the Company has or shall have any preemptive
right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class L Common into a greater number of shares or pays a dividend
or makes a distribution to holders of the Class L Common in the form of shares
of Class L Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
L Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2B. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
-4-
<PAGE>
or upon subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2C. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2D. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
-5-
<PAGE>
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2A, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
-6-
<PAGE>
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment. The Required Holders shall have
the right to require that an independent investment banking firm mutually
acceptable to the Company and the Required Holders determine Fair Market Value,
which firm shall submit to the Company and the Warrant holders a written report
setting forth such determination. The expenses of such firm will be borne by
the Company, and the determination of such firm will be final and binding upon
all parties.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
-7-
<PAGE>
"Warrant Shares" means shares of the Class L Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own
-8-
<PAGE>
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other
-9-
<PAGE>
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
* * * * *
-10-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ [SIGNATURE APPEARS HERE]
------------------------------------
Name:
Title:
Attest:
- - ---------------------------
Treasurer
-11-
<PAGE>
EXHIBIT 10.20
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS L WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-L4
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BCIP TRUST ASSOCIATES, L.P., a
-------
Delaware limited partnership, or its permitted transferees and assigns, this
warrant (this "Warrant"), representing the right to purchase from the Company a
-------
total of 2.94 Warrant Shares (as defined herein) at a price of $1,306.80 per
Warrant Share (the "Initial Exercise Price"). The exercise price and number of
----------------------
Warrant Shares (and the amount and kind of other securities) for which this
Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all of
the following items have been delivered to the Company (the "Exercise Time"):
-------------
<PAGE>
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
---------
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an Assignment
or Assignments in the form set forth in Exhibit II hereto evidencing the
----------
assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount equal
to the Aggregate Exercise Price (as defined), (y) the surrender to the
Company of securities of the Company having a value equal to the Aggregate
Exercise Price of the Warrant Shares being purchased upon such exercise
(which value in the case of debt securities shall be the principal amount
thereof and in the case of shares of Common Stock shall be the Fair Market
Value thereof), or (z) the delivery of a notice to the Company that the
Purchaser is exercising this Warrant by authorizing the Company to reduce
the number of Warrant Shares subject to this Warrant by the number of
shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the Registered
Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise of
this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
-------- -------
or taxes which may be payable in respect of this Warrant or any Warrant Shares,
with respect to any transfer of this Warrant, which taxes shall be paid by the
transferee prior to the issuance of such Warrant Shares.
-2-
<PAGE>
(v) The Company shall not close its books against the transfer of this
Warrant or of any Warrant Shares issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
The Company shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares acquirable
upon exercise of this Warrant is at all times equal to or less than the Exercise
Price then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a public offering
or a sale of the Company (pursuant to a merger, sale of stock or otherwise),
such exercise may at the election of the Registered Holder be conditioned upon
the consummation of such transaction, in which case such exercise shall not be
deemed to be effective until immediately prior to the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued Common Stock solely for the purpose of issuance
upon the exercise of this Warrant, the maximum number of Warrant Shares issuable
upon the exercise of this Warrant. All Warrant Shares which are so issuable
shall, when issued and upon the payment of the Exercise Price, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to ensure
that all such Warrant Shares may be so issued without violation by the Company
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or securities
of the Company, the Company shall, at the Purchaser's option and upon surrender
of this Warrant by such Purchaser as provided above together with any notice,
statement or payment required to effect such conversion or exchange of Warrant
Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser)
a certificate or certificates representing the stock or securities into which
the Warrant Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such Purchaser has specified.
-3-
<PAGE>
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class L Common into a greater number of shares or pays a dividend
or makes a distribution to holders of the Class L Common in the form of shares
of Class L Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
L Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2B. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
-4-
<PAGE>
or upon subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2C. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2D. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
-5-
<PAGE>
(iii) The Company shall also give written notice to the Registered
Holder at least 30 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2A, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
-6-
<PAGE>
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment. The Required Holders shall have
the right to require that an independent investment banking firm mutually
acceptable to the Company and the Required Holders determine Fair Market Value,
which firm shall submit to the Company and the Warrant holders a written report
setting forth such determination. The expenses of such firm will be borne by
the Company, and the determination of such firm will be final and binding upon
all parties.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
-7-
<PAGE>
"Warrant Shares" means shares of the Class L Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own
-8-
<PAGE>
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other
-9-
<PAGE>
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
* * * * *
-10-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ [SIGNATURE APPEARS HERE]
----------------------------
Name:
Title:
Attest:
- - ----------------------------
Treasurer
-11-
<PAGE>
EXHIBIT 10.21
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS
OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCK-
HOLDERS AGREEMENT DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS
OF MARCH 1, 1996 AMONG THE ISSUER OF SUCH SECURITIES (THE
"COMPANY") AND CERTAIN OF THE COMPANY'S STOCKHOLDERS. A COPY
OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS L WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-L5
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to CRAWFORD INVESTMENT GROUP, L.L.C.,
-------
a Michigan limited liability company, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
-------
Company a total of 243.03 Warrant Shares (as defined herein) at a price of
$1,306.80 per Warrant Share (the "Initial Exercise Price"). The exercise price
----------------------
and number of Warrant Shares (and the amount and kind of other securities) for
which this Warrant is exercisable shall be subject to adjustment as provided
herein. Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when all
of the following items have been delivered to the Company (the "Exercise Time"):
-------------
<PAGE>
(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
---------
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount
equal to the Aggregate Exercise Price (as defined), (y) the surrender to
the Company of securities of the Company having a value equal to the
Aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise (which value in the case of debt securities shall be the principal
amount thereof and in the case of shares of Common Stock shall be the Fair
Market Value thereof), or (z) the delivery of a notice to the Company that
the Purchaser is exercising this Warrant by authorizing the Company to
reduce the number of Warrant Shares subject to this Warrant by the number
of shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
-------- -------
any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
-2-
<PAGE>
(v) The Company shall not close its books against the
transfer of this Warrant or of any Warrant Shares issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as may
be necessary to assure that the par value per share of the unissued Warrant
Shares acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect. In the event that the Company fails to
comply with its obligations set forth in the foregoing sentence, the Purchaser
may (but shall not be obligated to) purchase Warrant Shares hereunder at par
value, and the Company shall be obligated to reimburse the Purchaser for the
aggregate amount of consideration paid in connection with such exercise in
excess of the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any
reasonable request by the Registered Holder or any Purchaser which is required
to make any governmental filings or obtain any governmental approvals prior to
or in connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is to be made in connection with a
public offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
-3-
<PAGE>
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class L Common into a greater number of shares or pays a dividend
or makes a distribution to holders of the Class L Common in the form of shares
of Class L Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
L Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2B. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
-4-
<PAGE>
or upon subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2C. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2D. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
-5-
<PAGE>
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2A, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
-6-
<PAGE>
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment. The Required Holders shall have
the right to require that an independent investment banking firm mutually
acceptable to the Company and the Required Holders determine Fair Market Value,
which firm shall submit to the Company and the Warrant holders a written report
setting forth such determination. The expenses of such firm will be borne by
the Company, and the determination of such firm will be final and binding upon
all parties.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
-7-
<PAGE>
"Warrant Shares" means shares of the Class L Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own
-8-
<PAGE>
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other
-9-
<PAGE>
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
* * * * *
-10-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ [ILLEGIBLE SIGNATURE]
-----------------------------
Name:
Title:
Attest:
- - ----------------------------
Treasurer
-11-
<PAGE>
EXHIBIT 10.22
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS L WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-L6
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BAIN CAPITAL V MEZZANINE FUND,
-------
L.P., a Delaware limited partnership, or its permitted transferees and assigns,
this warrant (this "Warrant"), representing the right to purchase from the
-------
Company a total of 240.62 Warrant Shares (as defined herein) at a price of
$1,306.80 per Warrant Share (the "Initial Exercise Price"). The exercise price
----------------------
and number of Warrant Shares (and the amount and kind of other securities) for
which this Warrant is exercisable shall be subject to adjustment as provided
herein. Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the "Exercise
--------
Time"):
- - ----
<PAGE>
(a) a completed Exercise Agreement, as described in
Section 1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
---------
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an
amount equal to the Aggregate Exercise Price (as defined), (y) the
surrender to the Company of securities of the Company having a value equal
to the Aggregate Exercise Price of the Warrant Shares being purchased upon
such exercise (which value in the case of debt securities shall be the
principal amount thereof and in the case of shares of Common Stock shall be
the Fair Market Value thereof), or (z) the delivery of a notice to the
Company that the Purchaser is exercising this Warrant by authorizing the
Company to reduce the number of Warrant Shares subject to this Warrant by
the number of shares having an aggregate Fair Market Value equal to the
Aggregate Exercise Price. For purposes hereof, "Aggregate Exercise Price"
------------------------
means an amount equal to the product of the Exercise Price (as defined in
Section 2) multiplied by the number of Warrant Shares being purchased and
being surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, however, that the Company shall not be required to pay
-------- -------
any tax or taxes which may be payable in respect of this Warrant or any Warrant
Shares, with respect to any transfer of this Warrant, which taxes shall be paid
by the transferee prior to the issuance of such Warrant Shares.
-2-
<PAGE>
(v) The Company shall not close its books against the transfer
of this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect. In the event that the Company fails to comply
with its obligations set forth in the foregoing sentence, the Purchaser may (but
shall not be obligated to) purchase Warrant Shares hereunder at par value, and
the Company shall be obligated to reimburse the Purchaser for the aggregate
amount of consideration paid in connection with such exercise in excess of the
Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the Exercise Price, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
ensure that all such Warrant Shares may be so issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Shares, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Shares issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
-3-
<PAGE>
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
(xi) No stockholder of the Company has or shall have any
preemptive right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class L Common into a greater number of shares or pays a dividend
or makes a distribution to holders of the Class L Common in the form of shares
of Class L Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
L Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2B. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
-4-
<PAGE>
or upon subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place.
In any such case, the Company shall make appropriate provision with respect to
such Registered Holder's rights and interests to insure that the provisions
hereof (including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any
such Organic Change unless, prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change (including
a purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2C. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2D. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
-5-
<PAGE>
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2A, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
-6-
<PAGE>
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment. The Required Holders shall have
the right to require that an independent investment banking firm mutually
acceptable to the Company and the Required Holders determine Fair Market Value,
which firm shall submit to the Company and the Warrant holders a written report
setting forth such determination. The expenses of such firm will be borne by
the Company, and the determination of such firm will be final and binding upon
all parties.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
-7-
<PAGE>
"Warrant Shares" means shares of the Class L Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own
-8-
<PAGE>
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other
-9-
<PAGE>
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
* * * * *
-10-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Richard S. Crawford
------------------------------
Name: Richard S. Crawford
Title: President & CEO
Attest:
/s/ Bruce Wilson
- - ----------------------------
Treasurer
-11-
<PAGE>
EXHIBIT 10.23
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER AND VOTING RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT
DATED AS OF NOVEMBER 17, 1995 AND AMENDED AS OF MARCH 1, 1996 AMONG
THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
CLASS L WARRANT
---------------
Date of Issuance: March 1, 1996 Certificate No. W-L7
For value received, CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware
corporation (the "Company"), hereby grants to BCIP TRUST ASSOCIATES, L.P., a
-------
Delaware limited partnership, or its permitted transferees and assigns, this
warrant (this "Warrant"), representing the right to purchase from the Company a
-------
total of 2.41 Warrant Shares (as defined herein) at a price of $1,306.80 per
Warrant Share (the "Initial Exercise Price"). The exercise price and number of
----------------------
Warrant Shares (and the amount and kind of other securities) for which this
Warrant is exercisable shall be subject to adjustment as provided herein.
Certain capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
-------------------
1A. Exercise Period. The purchase rights represented by this Warrant
---------------
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on November 17, 2005
or, if such day is not a business day, on the next preceding business day (the
"Exercise Period").
- - ----------------
1B. Exercise Procedure.
------------------
(i) This Warrant shall be deemed to have been exercised when
all of the following items have been delivered to the Company (the "Exercise
--------
Time"):
- - ----
<PAGE>
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
---------
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an Assignment
or Assignments in the form set forth in Exhibit II hereto evidencing the
----------
assignment of this Warrant to the Purchaser; and
(d) either (x) a check payable to the Company in an amount equal
to the Aggregate Exercise Price (as defined), (y) the surrender to the
Company of securities of the Company having a value equal to the Aggregate
Exercise Price of the Warrant Shares being purchased upon such exercise
(which value in the case of debt securities shall be the principal amount
thereof and in the case of shares of Common Stock shall be the Fair Market
Value thereof), or (z) the delivery of a notice to the Company that the
Purchaser is exercising this Warrant by authorizing the Company to reduce
the number of Warrant Shares subject to this Warrant by the number of
shares having an aggregate Fair Market Value equal to the Aggregate
Exercise Price. For purposes hereof, "Aggregate Exercise Price" means an
------------------------
amount equal to the product of the Exercise Price (as defined in Section 2)
multiplied by the number of Warrant Shares being purchased and being
surrendered for payment at such time.
(ii) Certificates for Warrant Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to Section 13 hereof. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the Registered
Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise of
this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
-------- -------
or taxes which may be payable in respect of this Warrant or any Warrant Shares,
with respect to any transfer of this Warrant, which taxes shall be paid by the
transferee prior to the issuance of such Warrant Shares.
-2-
<PAGE>
(v) The Company shall not close its books against the transfer of this
Warrant or of any Warrant Shares issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
The Company shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares acquirable
upon exercise of this Warrant is at all times equal to or less than the Exercise
Price then in effect. In the event that the Company fails to comply with its
obligations set forth in the foregoing sentence, the Purchaser may (but shall
not be obligated to) purchase Warrant Shares hereunder at par value, and the
Company shall be obligated to reimburse the Purchaser for the aggregate amount
of consideration paid in connection with such exercise in excess of the Exercise
Price then in effect.
(vi) The Company shall assist and cooperate with any reasonable
request by the Registered Holder or any Purchaser which is required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of this Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a public offering
or a sale of the Company (pursuant to a merger, sale of stock or otherwise),
such exercise may at the election of the Registered Holder be conditioned upon
the consummation of such transaction, in which case such exercise shall not be
deemed to be effective until immediately prior to the consummation of such
transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued Common Stock solely for the purpose of issuance
upon the exercise of this Warrant, the maximum number of Warrant Shares issuable
upon the exercise of this Warrant. All Warrant Shares which are so issuable
shall, when issued and upon the payment of the Exercise Price, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to ensure
that all such Warrant Shares may be so issued without violation by the Company
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or securities
of the Company, the Company shall, at the Purchaser's option and upon surrender
of this Warrant by such Purchaser as provided above together with any notice,
statement or payment required to effect such conversion or exchange of Warrant
Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser)
a certificate or certificates representing the stock or securities into which
the Warrant Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such Purchaser has specified.
-3-
<PAGE>
(x) The Company shall at all times in good faith assist in the
carrying out of all terms of this Warrant. Without limiting the generality of
the foregoing, the Company shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
(xi) No stockholder of the Company has or shall have any preemptive
right to subscribe for the Warrant Shares issuable pursuant hereto.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth in Exhibit I hereto, except that if the Warrant Shares are
---------
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not include all of the Warrant Shares purchasable hereunder, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In
-------------------------------------------------
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (an "Adjustment")(as so adjusted, the "Exercise Price"), and the
---------- --------------
number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, that there shall be no Adjustment to the Exercise Price or to the
- - --------
number of Warrant Shares acquirable upon exercise of the Warrant, as provided in
this Section 2, unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Class L Common into a greater number of shares or pays a dividend
or makes a distribution to holders of the Class L Common in the form of shares
of Class L Common, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Company at any time combines (by reverse stock split or otherwise) the Class
L Common into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares obtainable upon exercise of this Warrant shall be
proportionately decreased.
2B. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
-4-
<PAGE>
or upon subsequent liquidation) stock, securities or assets with respect to or
in exchange for Common Stock is referred to herein as an "Organic Change." Prior
--------------
to the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of the
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants, such shares of stock, securities or assets
as may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such Registered Holder's Warrants had such Organic Change not taken place. In
any such case, the Company shall make appropriate provision with respect to such
Registered Holder's rights and interests to insure that the provisions hereof
(including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change and a corresponding immediate adjustment in the number of Warrant
Shares acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Fair Market Value of the Common Stock in effect
immediately prior to such Organic Change). The Company shall not effect any such
Organic Change unless, prior to the consummation thereof, the successor entity
(if other than the Company) resulting from such Organic Change (including a
purchaser of all or substantially all the Company's assets) assumes by written
instrument the obligation to deliver to each Registered Holder of Warrants such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Registered Holder may be entitled to acquire upon exercise of
Warrants.
2C. Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares obtainable upon exercise
of this Warrant so as to protect the rights of the Registered Holder of this
Warrant.
2D. Notices.
-------
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least 30 days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock, or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
-5-
<PAGE>
(iii) The Company shall also give written notice to the
Registered Holder at least 30 days prior to the date on which any Organic
Change, dissolution or liquidation shall take place.
SECTION 3. Certain Rights Regarding Dividends. If the Company pays a
----------------------------------
dividend or distribution upon the Common Stock, other than dividends or
distributions described in Section 2A, then the Company shall pay to the
Registered Holder of this Warrant, at the time of payment thereof, such dividend
or distribution which would have been paid to such Registered Holder had this
Warrant been fully exercised immediately prior to the date on which a record is
taken for such dividend or distribution or, if no record is taken, the date as
of which the record holders of Common Stock entitled to said dividends or
distributions are to be determined.
SECTION 4. Purchase Rights. If at any time the Company grants,
---------------
issues or sells any options, convertible securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
---------------
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set
-----------
forth below:
"Affiliate," as applied to any Person, means any other Person directly
---------
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, par value
--------------
$.01 per share, and any securities into which such Class A Common Stock is
hereafter converted or exchanged.
"Class L Common" means the Company's Class L Common Stock, par value
--------------
$.01 per share, and any securities into which such Class L Common Stock is
hereafter converted or exchanged.
"Class P Common" means the Company's Class P Common Stock, par value
--------------
$.01 per share, and any securities into which such Class P Common Stock is
hereafter converted or exchanged.
-6-
<PAGE>
"Common Stock" means, collectively, the Class A Common, the Class L
------------
Common and the Class P Common, and any securities into which such Common Stock
is hereafter converted or exchanged.
"Fair Market Value" means (i) the average of the closing sales prices
-----------------
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 p.m., New York time,
as reported on the Nasdaq National Market or, (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 p.m., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of 21 trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, and either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share of outstanding Common Stock in connection with a sale of the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Directors in its good faith judgment. The Required Holders shall have
the right to require that an independent investment banking firm mutually
acceptable to the Company and the Required Holders determine Fair Market Value,
which firm shall submit to the Company and the Warrant holders a written report
setting forth such determination. The expenses of such firm will be borne by
the Company, and the determination of such firm will be final and binding upon
all parties.
"Person" means any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization or government or department or
agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
-----------------
the records of the Company maintained pursuant to Section 12.
"Required Holders" means the holders of a majority of the purchase
----------------
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Stockholders Agreement" means the Stockholders Agreement dated as of
----------------------
November 17, 1995 and amended as of March 1, 1996 by and among the Company and
its stockholders, as such agreement may be amended or modified from time to
time.
-7-
<PAGE>
"Warrant Shares" means shares of the Class L Common issuable upon
--------------
exercise of each Warrant; provided, that if the securities issuable upon
--------
exercise of the Warrants are issued by an entity other than the Company or there
is a change in the class of securities so issuable, then the term "Warrant
Shares" shall mean shares of the security issuable upon exercise of the Warrants
if such security is issuable in shares, or shall mean the equivalent units in
which such security is issuable if such security is not issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Restrictions. Subject to the provisions of this Section
------------
7, this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
----------
Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any Warrant Shares of restricted Common
Stock, in whole or in part, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or an exemption from
registration thereunder and then only in accordance with the terms of the
Stockholders Agreement.
Each certificate evidencing Warrant Shares and each Warrant issued
upon such transfer shall bear the restrictive legends required by the
Stockholders Agreement.
SECTION 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued.
All Warrants representing portions of the rights hereunder are referred to
herein as the "Warrants."
--------
SECTION 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the Registered Holder is a financial institution or other
institutional investor its own
-8-
<PAGE>
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
-------
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices and (ii) to a Registered Holder,
at such Registered Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided
--------------------
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Registered Holder.
SECTION 12. Warrant Register. The Company shall maintain at its
----------------
principal executive offices books for the registration and the registration of
transfer of Warrants. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
law of the State of Delaware shall govern all issues and questions concerning
the relative rights of the Registered Holders and Holdings. All other issues
and questions concerning the construction, validity, interpretation and
enforceability of this Warrant and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provisions
(whether of the State of New York or any other
-9-
<PAGE>
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
* * * * *
-10-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ Richard S. Crawford
-------------------------------
Name: Richard S. Crawford
Title: President & CEO
Attest:
/s/ Bruce Wilson
- - --------------------------
Treasurer
-11-
<PAGE>
EXHIBIT 10.24
Execution Copy
ASSET PURCHASE AGREEMENT
DATED MARCH 1, 1996
AMONG
GENCORP, INC.,
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
AND
CAMBRIDGE INDUSTRIES, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Article I - Definitions.............................................. 1
Section 1.01 Definitions..................................... 1
Article II - Purchase and Sale....................................... 2
Section 2.01 Purchase and Sale............................... 2
Section 2.02 Excluded Assets................................. 3
Section 2.03 Assumption of Liabilities....................... 5
Section 2.04 Excluded Liabilities............................ 6
Section 2.05 Consents to Assignment.......................... 7
Section 2.06 Purchase Price; Payment......................... 7
Section 2.07 Purchase Price Adjustment....................... 9
Section 2.08 Purchase Price Allocation....................... 11
Section 2.09 Closing......................................... 12
Article III - Representations and Warranties of the Seller........... 15
Section 3.01 Organization and Existence...................... 15
Section 3.02 Corporate Authorization......................... 15
Section 3.03 Authorization................................... 15
Section 3.04 Non-contravention............................... 16
Section 3.05 Properties...................................... 16
Section 3.06 Litigation...................................... 17
Section 3.07 Material Contracts.............................. 17
Section 3.08 Compliance with Laws............................ 18
Section 3.09 Permits......................................... 18
Section 3.10 Labor and Employment Matters.................... 19
Section 3.11 Intellectual Property........................... 20
Section 3.12 Fees and Commissions............................ 20
Section 3.13 Investment Intent............................... 21
Section 3.14 Absence of Certain Changes...................... 21
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 3.15 Real Property Owned............................. 22
Section 3.16 Real Property Leased............................ 22
Section 3.17 Insurance....................................... 23
Section 3.18 Environmental Matters........................... 23
Section 3.19 Financial....................................... 25
Section 3.20 Taxes........................................... 25
Section 3.21 Tooling Receivables............................. 25
Section 3.22 Inspections; Limitation of Seller's Warranties.. 25
Article IV - Representations and Warranties of the Buyer............. 26
Section 4.01 Organization and Existence...................... 26
Section 4.02 Corporate Authorization......................... 26
Section 4.03 Organization and Good Standing of Company
Subsidiaries.................................... 26
Section 4.04 Authorization................................... 27
Section 4.05 Non-contravention............................... 27
Section 4.06 Litigation...................................... 27
Section 4.07 Compliance with Laws............................ 27
Section 4.08 Subordinated Debt............................... 28
Section 4.09 Offering of Securities.......................... 28
Section 4.10 Fees and Commission............................. 28
Section 4.11 Financial Statements............................ 29
Section 4.12 Inspections; Limitation of Seller's Warranties.. 29
Article V - Covenants of the Seller.................................. 30
Section 5.01 Further Conveyances............................. 30
Section 5.02 Non-Compete..................................... 30
Section 5.03 Non-Solicitation of Employees................... 31
Section 5.04 Taxes........................................... 31
Article VI - Covenants of the Buyer.................................. 31
Section 6.01 GenCorp Name.................................... 31
Section 6.02 Vacation of Shared Facility..................... 32
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 6.03 Vacation of Marion Facility..................... 32
Section 6.04 Non-Solicitation of Employees................... 34
Section 6.05 Title Insurance................................. 34
Section 6.06 Environmental Reports........................... 34
Section 6.07 Investigation Limitation........................ 35
Section 6.08 Rushville Lease Termination..................... 35
Article VII - Covenants of Both Parties.............................. 35
Section 7.01 Administration of Accounts...................... 35
Section 7.02 Transfer Taxes.................................. 36
Section 7.03 Access to Former Business Records............... 36
Section 7.04 Access to Former Employees...................... 36
Section 7.05 Inventory....................................... 36
Section 7.06 Reimbursement of Certain Costs.................. 37
Article VIII - Employee Matters...................................... 37
Section 8.01 Salaried Employees.............................. 37
Section 8.02 Union Employees................................. 42
Section 8.03 No Third Party Claims........................... 42
Section 8.04 Workers' Compensation........................... 42
Section 8.05 Plan Payments................................... 43
Article IX - Survival; Indemnification............................... 43
Section 9.01 Survival of Representations and Warranties...... 43
Section 9.02 Seller's Agreement to Indemnify................. 44
Section 9.03 Buyer's Agreement to Indemnify.................. 44
Section 9.04 Indemnification Limits; Exclusive Remedy........ 44
Section 9.05 Procedure for Third Party Claims................ 46
Section 9.06 Procedure for Direct Claims..................... 48
Section 9.07 Environmental Claims............................ 49
Article X - Miscellaneous............................................ 50
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
Section 10.01 Expenses........................................ 50
Section 10.02 Bulk Transfer Laws.............................. 50
Section 10.03 Assignment...................................... 50
Section 10.04 Severability.................................... 50
Section 10.05 Amendment and Waiver............................ 51
Section 10.06 Parties in Interest; Limitation on Rights of
Others.......................................... 51
Section 10.07 Counterparts; Effectiveness..................... 51
Section 10.08 Entire Agreement................................ 51
Section 10.09 Governing Law................................... 51
Section 10.10 Notices......................................... 52
Section 10.11 Interpretation.................................. 52
</TABLE>
iv
<PAGE>
Exhibit A - Definitions
Exhibit B - Working Capital Items
Exhibit C - Cambridge Benefits
Exhibit D - Environmental Reports
Exhibit E - Farmington Hills RPD Equipment
Exhibit F - GenCorp Accounting Principles
Exhibit G - Marion RPD Equipment
Exhibit H _ Closing Liability List
V
<PAGE>
Execution Copy
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") dated March 1, 1996, among
CAMBRIDGE INDUSTRIES HOLDINGS, INC., a Delaware corporation (the "Parent")
CAMBRIDGE INDUSTRIES, INC., a Delaware corporation ("Cambridge") (Parent and
Cambridge collectively, "Buyer"), and GENCORP, INC., an Ohio corporation (the
"Seller").
WHEREAS, the Seller, among other things, conducts a business through its
Reinforced Plastics Division which manufactures and sells reinforced plastics
components for automobile and truck applications; and
WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Buyer desires to purchase from the Seller and Seller desires to sell to
Buyer substantially all of the assets associated with such business, and the
Seller desires to transfer to the Buyer, and the Buyer has agreed to assume,
certain liabilities associated with such business.
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements herein set forth, the
parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01. Definitions. Defined terms used in this Agreement have the
-----------
meanings ascribed to them by definition in this Agreement or in Exhibit A.
<PAGE>
ARTICLE II
PURCHASE AND SALE
-----------------
SECTION 2.01. Purchase and Sale. Upon the terms and subject to the
-----------------
conditions of this Agreement, Cambridge hereby purchases from Seller and Seller
hereby sells, transfers, assigns and delivers to Cambridge, all of its right,
title and interest in and to the assets and properties of Seller which are
Attributable to the RPD Business, wherever located, whether tangible or
intangible, real or personal, whether owned directly or indirectly, other than
the Excluded Assets (all the assets and properties to be transferred to
Cambridge by Seller pursuant to this Agreement are referred to collectively
herein as the "Purchases Assets"). Without limiting the foregoing, the Purchased
Assets include all of Seller's right, title and interest in, to and under the
following (expect as otherwise specified herein and other than those which are
Excluded Assets):
(a) the Shelbyville Facility together with all buildings, fixtures and
improvements erected thereon and appurtenances thereto (the "Shelbyville Real
Property");
(b) the Shadeland Lease and the Rushville Lease (the "Leased Property");
(c) (i) all machinery, equipment, tooling, dies, furniture, office
equipment, communications equipment, vehicles, spare and replacement parts and
other similar tangible personal property Attributable to the RPD Business
(collectively, the "Equipment") including, without limitation, all such property
used or held for use by Seller at the RPD Facilities and (ii) the Marion RPD
Equipment and Farmingtion Hills RPD Equipment;
(d) (i) all raw materials, work-in-process, finished goods, supplies,
spare parts, samples and stores Attributable to the RPD Business (collectively,
the "Inventory") including, without limitation, all such items used or held for
use by Seller at the RPD Facilities, and (ii) the Marion RPD Inventory;
(e) all contracts, agreements, options, personal property leases,
licenses, sales and purchase orders, commitments and other instruments of any
kind, whether
2
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written or oral, to which Seller is a party and which are Attributable to the
RPD Business (collectively, the "Contracts");
(f) all quotations, bids and proposals made or received by Seller and
Attributable to the RPD Business (collectively, "Bids");
(g) all accounts receivable and receivables of Seller with respect to
customer tooling ("Tooling Receivables") together with any unpaid interest or
fees accrued thereon or other amounts due with respect thereto, which are
Attributable to the RPD Business;
(h) all petty cash of Seller located at the RPD Facilities ("Petty
Cash");
(i) all rights, claims, credits, causes of action, rights of set off,
indemnity rights, defenses and warranty and other claims of Seller against third
parties which are Attributable to the RPD Business, whether accrued to or to
accrue, including, without limitation, claims under or pursuant to all
warranties, representations and guarantees made by suppliers, manufacturers,
contractors and other third parties;
(j) all prepaid charges and expenses of Seller Attributable to the RPD
Business;
(k) all licenses, permits, approvals, certificates, consents, orders or
other authorizations issued or granted to Seller by an Governmental Authority
and Attributable to the RPD Business (the "Permits");
(l) originals or copies of all books, records, files, books of account,
invoices, engineering information, sales and promotional literature, manuals,
sales and purchase correspondence, lists of suppliers and customers, personnel
and employment records of Transferred Employees, and accounting, marketing,
engineering and manufacturing documentation, whether in hard copy or computer
format, to the extent Attributable to the RPD Business; and
(m) subject to rights held by third parties that have been licensed by
the Seller prior to the Closing Time, the RPD Intellectual Property.
SECTION 2.02. Excluded Assets. Cambridge expressly understands and
---------------
3
<PAGE>
agrees that the following assets, properties and rights (the "Excluded Assets")
are excluded from, and shall not be counted among, the Purchased Assets:
(a) all of the Seller's cash, negotiable securities, letters of credit,
bonds and cash equivalents (whether or not Attributable to the RPD Business),
Petty Cash;
(b) all Intellectual Property which is not RPD Intellectual Property;
(c) the Ionia Facility and the Ionia Facility permits being retained by
Seller as described on Exhibit A to Section 3.09 of the Seller Disclosure
Schedule;
(d) (i) the Marion Facility, (ii) the CTC Facility, (iii) the Farmington
Hills Facility, (iv) all machinery, tooling, dies, equipment, furniture, office
equipment, communications equipment, vehicles, spare and replacement parts and
other similar tangible personal property and all raw materials, work-in-process,
finished goods, supplies, spare parts, samples and stores used or held for use
at the Marion Facility, the CTC Facility, or the Farmington Hills Facility
except for the Marion RPD Equipment, the Marion RPD Inventory and the Farmington
Hills RPD Equipment, and (v) The GenCorp Master Lease with GE Capital and all
cars leased thereunder.;
(e) The names and trademarks "GenCorp", and "GenCorp Automotive" and
related trademarks, corporate names, and trade names incorporating "GenCorp",
and all stylized logos incorporating the name "GenCorp";
(f) All rights, claims, credits, causes of action, rights of set off,
indemnity rights, refunds, rebates, defenses and warranty and other claims
against third parties, whether accrued or to accrue, to the extent relating to
any Excluded Assets or to any liability or obligation of Seller which is not an
Assumed Liability;
(g) All deposits, prepaid charges and advance payments to the extent
relating to Excluded Assets or to any liability or obligation of Seller which is
not an Assumed Liability;
(h) All rights or claims to Tax refunds and all Tax benefits;
(i) all policies of insurance and claims and rights under such policies
of
4
<PAGE>
insurance;
(j) Any item described in Section 2.01(1) which is subject to attorney
client privilege and copies of any of the items described in 2.01(1) and all
books and records pertaining to Seller's employee benefit plans;
(k) All employee benefit plans and any assets of any such plans;
(l) All bank checks, bank accounts, safety deposit boxes, lock boxes and
agreements with banks and other financial institutions; and
(m) All of Seller's rights under this Agreement and any other agreement
or instrument delivered by Seller in connection herewith.
SECTION 2.03. Assumption of Liabilities. Upon the terms and subject to the
-------------------------
conditions of this Agreement, Cambridge hereby assumes and becomes directly and
solely responsible for the payment, performance and discharge of the following
(collectively, the "Assumed Liabilities"):
(a) All liabilities and obligations to the extent reflected on the
Closing Liability List;
(b) Any liability of Seller for unpaid amounts for charges incurred,
goods received, or services rendered to the RPD Business in the ordinary course
prior to the Closing:
(c) All liabilities and obligations arising out of or resulting from any
obligation to accept return of, provide refunds for, or to repair, replace,
recall or service any RPD Business product produced by Seller before the
Closing or produced by Cambridge after the Closing;
(d) All liabilities and obligations arising out of or resulting from any
injury to person or damage to property resulting from RPD Business products
produced, or any RPD Business services performed by Cambridge after the Closing;
(e) All liabilities and obligations arising under or resulting from the
performance of or any nonperformance under any Contract or Bid (excluding: (i)
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the oral understanding described in Section 3.07(a)(ix) of the Seller Disclosure
Schedule and (ii) the COBRA obligations described in Section 3.07(a)(v) of the
Seller Disclosure Schedule) to the extent occurring after the Closing;
(f) All liabilities and obligations arising under or resulting from the
compliance with or any noncompliance under any Permit to the extent occurring
after the Closing, except as otherwise provided in the Ionia Lease as to the
Ionia Leased Facility;
(g) All liabilities and obligations arising out of or resulting from
violation of any Applicable Law in the conduct of the RPD Business by Cambridge
to the extent occurring after the Closing, except as otherwise provided in the
Ionia Lease as to the Ionia Leased Facility; and
(h) All liabilities and obligations arising out of or resulting from any
infringement or other misappropriation of the Intellectual Property rights of
third parties in the conduct of the RPD Business by Buyer to the extent
occurring after the Closing.
SECTION 2.04. Excluded Liabilities. Except for the Assumed Liabilities
--------------------
Cambridge does not hereby assume, and shall not as a result of the transactions
contemplated hereby at any time hereafter become liable for, any liability or
obligation of Seller or any nature whatsoever, whether accrued, liquidated,
unliquidated, known, unknown, or otherwise. Without limiting the foregoing the
Excluded Liabilities include the following liabilities and obligations of Seller
(other than those which are Assumed Liabilities): (a) any litigation in respect
of a liability or obligation of Seller arising from the conduct of the RPD
Business by Seller prior to the Closing Time, (b) any liability or obligation of
Seller to satisfy customer claim(s) reflected in Account 424 (Allowance for
Other Claims and Rebates) of Seller's account(s), (c) any liability or
obligation of Seller under the Environmental Laws in respect of solid waste or
Hazardous Materials which have been transported by or on behalf of Seller for
offsite disposal, (d) any liability or obligation of Seller for any violation of
the Environmental Laws to the extent arising from the operation of the RPD
Business by Seller prior to the Closing Time, including, without limitation, in
respect of any fine or penalty arising from any permit violation and (e) any
liability or obligation arising from an Environmental Claim (collectively, the
"Excluded Liabilities").
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<PAGE>
SECTION 2.05. Consents to Assignment. The following shall apply to all
----------------------
Contracts, Bids and Permits:
(a) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an assignment or agreement to assign any
Contract, Bid or any Permit (or any rights thereunder) if an attempted
assignment thereof, without the consent waiver, confirmation, novation or
approval (a "Consent") of a third party thereto, would constitute a breach or
other contravention thereof, be ineffective with respect to any party thereto or
in any way adversely affect the rights of Cambridge or Seller thereunder.
(b) With respect to any such Contract, Bid or Permit, after the Closing,
the Seller and Cambridge will use all reasonable good faith efforts to obtain as
expeditiously as possible the Consent of the other parties to such item for the
assignment thereof to Cambridge or, alternatively, written confirmation from
such parties reasonably satisfactory in form and substance to Cambridge and the
Seller that such Consent is not required; provided, however, that Seller will
not be obligated to pay any consideration therefor or to incur any other
obligation in connection therewith.
(c) To the extent that any such Consent is not obtained, Seller shall, to
the extent it may lawfully and without breach do so, use all reasonable efforts
to: (i) cooperate with Cambridge in any reasonable arrangement intended to
provide to Cambridge the benefits of any such Contract, Bid or Permit and
(ii) upon Cambridge's reasonable request enforce for the benefit of Cambridge,
any rights of Seller arising from any such Contract, Bid or Permit. Cambridge
will reimburse Seller for all reasonable out-of-pocket costs incurred by Seller
in using such reasonable efforts under this Section 2.05(c).
(d) Provided that Seller has complied with its obligations under
Section 2.05(b) and (c), then, notwithstanding the absence of any such Consents,
from and after the Closing, Buyer shall perform all obligations under such
Contracts, Bids and Permits on behalf of Seller.
SECTION 2.06. Purchase Price: Payment;
-----------------------
(a) For purposes of this Agreement, the term "Purchase Price" means:
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<PAGE>
(i) Twenty-Seven Million Five Hundred Sixty Thousand Dollars
($27,560,000);
(ii) minus Nine Million Dollars ($9,000,000) (the "Estimated
-----
Non-Tooling Accounts Receivable Amount");
(iii) minus the amount that (A) $10,600,000 exceeds (B) Fifteen
-----
Million Four Hundred Thousand Dollars ($15,400,000) (the "Estimated Trade
Accounts Receivable Amount") less Five Million Two Hundred Thousand ($5,200,000)
the ("Estimated Accounts Payable Amount");
(iv) plus The Subordinated Note; and
----
(v) plus or minus the amount of the Adjustment (as defined in
---- -----
Section 2.07).
For purposes of this Agreement, the "Estimated Cash Purchase Price" shall
be resulting amount of (i) through (iii) above and equals Eighteen Million One
Hundred Sixty Thousand Dollars ($18,160,000).
(b) At the Closing: (i) Cambridge shall pay to Seller by wire transfer
the Estimated Cash Purchase Price, and (ii) Parent shall deliver to Seller the
Subordinated Note. When finally determined in accordance with Section 2.07,
Cambridge shall pay to Seller or Seller shall pay to Cambridge, as the case may
be, the amount of the Adjustment.
(c) All payments of cash hereunder shall be made by delivery to the payee
as follows:
(i) Payments under this Agreement in excess of $10,000 shall be
made by wire transfer (in immediately available funds) to the account designated
by the payee.
(ii) In all other cases, the party obligated to make a payment
under this Agreement will do so by delivering to the payee a bank cashier's
check (in immediately available funds) payable to the order of the payee.
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<PAGE>
SECTION 2.07. Purchase Price Adjustment. The Adjustment (as defined below)
-------------------------
will be determined as follows:
(a) Cambridge and Seller agree that the Final Cash Purchase Price shall
be determined as follows:
(i) Twenty-Seven Million Five Hundred Sixty Thousand Dollars
($27,560,000);
(ii) minus the Actual Non-Tooling Accounts Receivable Amount; and
-----
(iii) plus any amount that (A) Actual Total Accounts Receivable
Amount less Actual Trade Accounts Payable amount exceeds (B) $10,600,000 or
--
minus any that (A) $10,600,000 exceeds (B) the Actual Total Accounts Receivables
Amount less the Actual Trade Accounts Payable Amount, as the case may be.
(b) As promptly as possible following the Closing Time, but in any event
within thirty (30) days following the Closing Time, Seller shall prepare and
deliver to Cambridge a closing statement (the "Closing Statement") setting
for the Actual Non-Tooling Accounts Receivable Amount, the Actual Total
Accounts Receivable Amount and the Actual Trade Accounts Payable Amount
(collectively, the "Actual Receivable and Payable Items") as of the Closing
Time. The Closing Statement shall be prepared in accordance with the GenCorp
Accounting Principles and, to the extent not described in the GenCorp Accounting
Principles, in accordance with GAAP consistently applied (for purposes of this
Section 2.07 collectively referred to as the "Accounting Principles").
Cambridge shall give Seller access to the data necessary to prepare the Closing
Statement and provide Seller with the reasonable assistance of Cambridge's
employees in connection therewith. Representatives of Cambridge shall have the
right to participate with the representatives of Seller in the process of
preparing the Closing Statement and shall have access to all data, schedules and
work papers used by Seller in preparing the Closing Statement. Cambridge shall
have the right to have the Closing Statement audited and Seller shall reasonably
cooperate with Cambridge and Cambridge's accountants in conducting such audit.
(c) The Closing Statement shall become final and binding upon Cambridge
unless on or before the (30th) day after Cambridge's receipt of the Closing
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<PAGE>
Statement Cambridge shall deliver to Seller a written notice of its objection to
the amount of any Actual Receivable and Payable Item on the Closing Statement,
together with proposed changes thereto and the reasons for such changes;
provided, however, that the only objection to the Closing Statement which
Cambridge may make is whether the Closing Statement accurately reflects, in
accordance with the Accounting Principles used to prepare the Closing Statement,
the book value or book amount of the Actual Receivable and Payable Items
included thereon. Cambridge may not object to any other matter pertaining to the
Closing Statement. All matters on which no notice of objection is given shall be
deemed final and binding. In no event may Cambridge submit a notice of objection
which suggests a change in the Closing Statement of less than $100,000 in the
aggregate.
(d) If Cambridge issues a notice of objection, Seller and Cambridge shall
meet and attempt to resolve the dispute within fifteen (15) days following
Cambridge's notice of objection. If the parties resolve all or some of the
matters in dispute within such fifteen (15) day period then the parties shall
prepare and sign an Adjusted Closing Statement reflecting such agreement which
shall be deemed final and binding. As to matters which remain in dispute after
such fifteen (15) day period ("Unresolved Matters"), the Closing Statement shall
be deemed final unless Cambridge shall within ten (10) days after the end of
such fifteen (15) day period request that the Closing Statement be reviewed by
the Accounting Firm.
(e) Cambridge shall give notice of its request for review by the Accounting
Firm to Seller in writing and shall within ten (10) days after such notice
submit a written statement of its position to the Accounting Firm and to Seller.
Seller may within ten (10) days of Cambridge submitting its written statement to
the Accounting Firm respond to such written statement with its own written
statement. The Accounting Firm shall consider both written statements as it
performs its duties. The authority of the Accounting Firm in reviewing the
Closing Statement shall be limited to determining whether, as to the Actual
Receivable and Payable Items included within the Unresolved Matters, the Closing
Statement accurately reflects, in accordance with the Accounting Principles used
to prepare the Closing Statement, the book value or book amount of such Actual
Receivable and Payable Items. The Accounting Firm shall not have the authority
to review or make a determination with respect to any matter except the Actual
Receivable and Payable Items included within Unresolved Matters, it being
understood that the Accounting Firm shall not be retained to conduct its own
independent audit or review, but rather shall be
10
<PAGE>
retained only to resolve specific differences between Seller and Cambridge
within the range of such difference and consistent with the Accounting
Principles. The Accounting Firm may request that each of the parties provide it
additional information in connection with its review of the Unresolved Matters.
The parties shall require the Accounting Firm to complete its review not later
than the thirtieth (30th) day following the submission of the matter to the
Accounting Firm. Cambridge and Seller shall bear the fees and expenses of review
by the Accounting Firm in the same proportion as the ratio of each parties'
position is to the final determination by the Accounting Firm, as determined by
the Accounting Firm, whose determination shall be final and binding on the
parties.
(f) The Accounting Firm shall prepare a report of any adjustments to such
Actual Receivable and Payable Items it deems necessary so that such Actual
Receivable and Payable Items are reflected on the Closing Statement in
accordance with the Accounting Principles. Such report shall contain an
explanation of any such adjustment and a description of why the Accounting
Principles required such adjustment. Promptly after its completion, the
Accounting Firm shall provide such report to Seller and Cambridge. Seller shall
incorporate all such adjustments into the Closing Statement within fifteen (15)
days after receipt of such adjustments, which shall thereupon become the
Adjusted Closing Statement and which shall be final and binding upon Cambridge
and Seller.
(g) Within ten (10) days after the date the Closing Statement or the
Adjusted Closing Statement becomes final in accordance with this Section 2.07
(such tenth day being referred to herein as the "Settlement Date"), Seller shall
pay to Cambridge the amount, if any, by which the Final Cash Purchase Price
Capital Amount is less than the Estimated Cash Purchase Price or Cambridge shall
pay to Seller the amount, if any, by which the Final Cash Purchase Price is more
than the Estimated Cash Purchase Price, together with, in either case, interest
from the Closing Time on the amount paid under this Section 2.07(g) calculated
at an annual rate equal to the prime rate as publicly announced by Citibank,
N.A., New York, New York as of the Closing Time (any amount so paid under this
Section 2.07(h) the "Adjustment").
SECTION 2.08 Purchase Price Allocation. Not later than sixty (60) days
-------------------------
after the Closing, Cambridge shall provide to the Seller proposed statements
(the "Allocation Statements") allocating, in accordance with generally accepted
appraisal
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<PAGE>
techniques, the total of the Purchase Price and the Assumed Liabilities pursuant
to this Agreement, to the different items of Purchased Assets and to the
Seller's obligations hereunder. Cambridge and the Seller agree to negotiate in
good faith definitive Allocation Statements within 10 calendar days following
the date of delivery of such proposed Allocation Statements. Any costs or
expenses incurred by Cambridge in connection with such Allocation Statements
(including appraisal fees) shall be borne by Cambridge. Cambridge and the Seller
agree to file all income, franchise and other Tax returns, and execute such
other documents as may be required by any Governmental Authority, in a manner
consistent with the Allocation Statements. Cambridge shall prepare the Form 8594
under Section 1060 of the Code relating to this transaction based on the
Allocation Statements and deliver such Form to the Seller within 30 calendar
days after finalization of the Allocation Statements as provided above.
Cambridge and the Seller agree to file such Form with each relevant taxing
authority, and to refrain from taking any position inconsistent with such Form
or Allocation Statements with any taxing authority unless otherwise required by
Applicable Law.
SECTION 2.09. Closing.
-------
(a) Closing. The closing (the "Closing") of the purchase and sale of the
-------
Purchased Assets and the assumption of the Assumed Liabilities hereunder shall
take place simultaneously with the execution and delivery of this Agreement at
the offices of Seller, 175 Ghent Road, Fairlawn, Ohio 44333-3300 and/or at such
other place as the parties may agree and shall be deemed to have occurred for
all purposes under this Agreement as of 11:59 p.m. on the day prior to the date
of this Agreement (such time the "Closing Time").
(b) Closing Deliveries.
------------------
(i) Deliveries by Buyer. At the Closing, Cambridge and/or Parent
-------------------
shall deliver to Seller the following:
(A) By wire transfer in immediately available funds the sum of
Eighteen Million One Hundred Sixty Thousand Dollars ($18,160,000);
(B) The Subordinated Note and Subordinated Note Credit
Agreement;
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<PAGE>
(C) A copy of resolutions of the Board of Directors of each
Buyer, certified by its Secretary authorizing the negotiation, execution,
delivery and performance of this Agreement and all related agreements, documents
and certificates;
(D) A Service Agreement covering the production of sheet
molding compound for Buyer (the "SMC Services Agreement");
(E) A side letter with respect to the supply of in-mold
coatings and adhesives to Buyer by Seller (the "IMC Side Letter");
(F) A lease of a portion of the Ionia Facility (the "Ionia
Lease");
(G) A legal opinion of Jaffe, Raitt, Heuer & Weiss as to
authority and enforceability;
(H) The Union Novation Agreements;
(I) Assignment and Assumption of the Rushville Lease and
Shadeland Lease;
(J) Transition Services Agreement.
(K) Offering Side Letter.
(ii) Deliveries by Seller. At the Closing, Seller shall deliver to
--------------------
Buyer the following;
(A) A deed with respect to the Shelbyville Real Property;
provided, however, any and all warranties, expressed or implied, from the use of
the works "grant" or "covey" in the deeds are hereby disclaimed and excluded.
(B) A Patent Assignment for the Patents.
(C) A copy of resolutions of the Board of Directors of Seller,
certified by its Secretary authorizing the negotiation, execution, delivery and
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<PAGE>
performance of this Agreement and all related agreements, documents and
certificates;
(D) The SMC Services Agreement;
(E) The IMC Side Letter;
(F) The Ionia Lease;
(G) A legal opinion of C. R. Ennis as to authority and
enforceability;
(H) The Union Novation Agreements;
(I) A Bill of Sale and Assignment of Intangibles;
(J) Assignment and Assumption of the Rushville Lease and
Shadeland Lease;
(K) A Responsible Party Transfer form with respect to the
Shelbyville Real Property;
(L) Transition Services Agreement;
(M) MESC Form;
(N) Consent and Estoppel Certificates relating to Leased Real
Property; and
(O) Offering Side Letter.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
Except as otherwise set forth on the Seller Disclosure Schedule, Seller
hereby represents and warrants to each Buyer as follows as of the date hereof:
SECTION 3.01. Organization and Existence. Seller is a corporation duly
--------------------------
incorporated, validly existing and in good standing under the laws of the State
of Ohio and has all corporate power and authority to own and operate its
properties and to carry on the RPD Business as now conducted. Seller is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the nature of its activities makes such qualification
necessary to carry on the RPD Business as now conducted.
SECTION 3.02. Corporate Authorization. The execution, delivery and
-----------------------
performance by Seller of this Agreement and each other agreement or instrument
executed and delivered or to be executed and delivered by Seller pursuant to
this Agreement and the consummation by Seller of the transactions contemplated
hereby and thereby are within Seller's corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement constitutes, and each other agreement or instrument executed and
delivered or to be executed and delivered by Seller pursuant to this Agreement
constitutes or will constitute, a legal, valid and binding obligation of Seller
enforceable against the Seller in accordance with its terms.
SECTION 3.03. Authorization. Except as set forth in Section 3.03 of the
-------------
Seller Disclosure Schedule, the execution, delivery and performance by the
Seller of this Agreement require no action by, consent or approval of, or filing
with, any Governmental Authority other than:
(a) compliance with any applicable requirements of any Antitrust Laws
(including the HSR Act); and
(b) any actions, consents, approvals or filings otherwise expressly
referred to in this Agreement (including the Seller Disclosure Schedule).
15
<PAGE>
SECTION 3.04. Non-contravention. Except as set forth in Section 3.04 of
-----------------
the Seller Disclosure Schedule, the execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions contemplated
hereby, do not and will not:
(a) conflict with the Articles of Incorporation or Code of Regulations of
the Seller;
(b) assuming compliance with the matters referred to in Section 3.03
conflict with or constitute a violation of any provision of any Applicable Law
binding upon or applicable to the RPD Business.
(c) conflict with or result in the breach of any material agreement or
instrument to which Seller is a party or by which it is bound or constitute a
default thereunder which Seller is a party or by which it is bound or constitute
a default thereunder which would result in the Purchased Assets being subject to
a lien or other encumbrance.
SECTION 3.05. Properties.
----------
(a) Except as set forth in Section 3.05 of the Seller Disclosure Schedule,
the Seller owns the Equipment, the Marion RPD Equipment, the Farmington Hills
RPD Equipment, the Inventory, the Marion RPD Inventory, and the Tooling
Receivables free and clear of all liens and encumbrances except for: (i)
Permitted Liens, and (ii) liens and encumbrances to secure the payment of
liabilities reflected on the Closing Liability List.
(b) Section 3.05 of the Seller Disclosure Schedule sets forth a true and
complete list of all real property owned by the Seller that is Attributable to
the RPD Business.
(c) Except for the Excluded Assets, the Contracts, Bids and Permits
described in Section 2.05(a), and as set forth in Section 3.05(c) of the Seller
Disclosure Schedule, the Purchased Assets, together with the SMC Services
Agreement and the IMC Side Letter, constitute or provide Cambridge with access
to (subject to the terms of such Agreements), all of the real property, tangible
personal property and Intellectual Property owned by Seller and used or held for
use by Seller in the operation of the RPD Business immediately prior to the
Closing.
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(d) To Seller's knowledge, and taking into account age, ordinary wear and
tear and current business requirements, the Equipment currently being operated
by Seller in the conduct of the RPD Business requires no major repairs. Section
3.05 of the Seller Disclosure Schedule lists any corrective action required as a
result of an inspection by OSHA, IOSHA or MIOSHA of the Shelbyville, Shadeland,
Rushville or Ionia Leased Facility which has not been completed by Seller.
SECTION 3.06 Litigation. Except as disclosed in Section 3.06 of the Seller
----------
Disclosure Schedule:
(a) there are no actions, suits, or proceedings by any Governmental
Authority or any other Person pending or, to the knowledge of Seller, threatened
against Seller in respect of the RPD Business;
(b) there are no existing orders, judgments or decrees (other than those
of general application) of any Governmental Authority adversely affecting the
RPD Business; and
(c) there are no actions, suits or proceedings by any Governmental
Authority or any other Person pending or, to the knowledge of Seller, threatened
against Seller which are reasonably likely to adversely affect Seller's ability
to perform its obligations hereunder or which seek to enjoin the transactions
contemplated by this Agreement.
SECTION 3.07 Material Contracts.
------------------
(a) Section 3.07 of the Seller Disclosure Schedule identifies by date and
the parties thereto the following (collectively, the "Scheduled Contracts"):
(i) each executory agreement between the Seller and any customer
of the RPD Business for a dollar volume of purchases of products or services
from the RPD Business which (together with all prior purchases under such
agreement) is reasonably expected to exceed $250,000;
(ii) each executory agreement between the Seller and any supplier
of products or services to the RPD Business for a dollar volume of sales to the
RPD Business which (together with all prior sales under such agreement) is
reasonably
17
<PAGE>
expected to exceed $250,000;
(iii) all leases of real property which are Attributable to the
RPD Business;
(iv) all leases of tangible personal property Attributable to the
RPD Business with annual leases payments in excess of $20,000;
(v) oral or written contracts with employees of the RPD
Business;
(vi) manufacturers' representative agreements Attributable to the
RPD Business;
(vii) agreements for the license of or requiring the payment of
royalties with respect to Intellectual Property Attributable to the RPD
Business;
(viii) consulting agreements Attributable to the RPD Business; and
(ix) any contract Attributable to the RPD Business not listed in
(i) through (viii) above which requires future expenditure of more than
$500,0000, excluding any such contract which may be terminated without material
penalty.
(b) Except as disclosed in Section 3.07 of the Seller Disclosure
Schedule neither Seller nor, to Seller's knowledge, any other party to any
Scheduled Contract is in material default or has failed to perform any material
obligation thereunder.
SECTION 3.08. Compliance with Laws. To the knowledge of Seller,
--------------------
expect as set forth in Section 3.08 of the Seller Disclosure Schedule, the
operation of the RPD Business as presently conducted by Seller does not violate,
in any material respect, and Applicable Law.
SECTION 3.09. Permits
-------
(a) Section 3.09 of the Seller Disclosure Schedule lists all
material licenses, permits and authorizations issued by a Governmental Authority
which are used or held for use by Seller with respect the RPD Business (the
"Scheduled Permits").
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(b) Except as set forth in Section 3.09 of the Seller Disclosure
Schedule, each Schedule Permit is valid and in full force and effect.
(c) Except as set forth in Section 3.09 of the Seller Disclosure
Schedule, there is no pending, or to the knowledge of Seller, threatened
proceeding by any Governmental Authority to cancel, modify or fail to renew any
Scheduled Permit.
(d) Except as set forth in Section 3.09 of the Seller Disclosure
Schedule, the Scheduled Permits represent all material licenses, permits and
authorizations of Governmental Authorities necessary to conduct the RPD Business
as currently conducted.
SECTION 3.10. Labor and Employment Matters. Except as set forth in Section
----------------------------
3.10 of the Seller Disclosure Schedule:
(a) Section 3.10 of the Seller Disclosure Schedule lists all employees of
the RPD Business.
(b) Section 3.10 of the Seller Disclosure Schedule lists each "employee
pension benefit plan", as such term is defined in Section 3(2) of ERISA, each
"employee welfare benefit plan", as such term is defined in Section 3(1) of
ERISA, and each compensation, vacation, insurance, disability, severance, or
other plan providing employee benefits maintained by the Seller in which any
employees of the RPD Business participate (collectively, the "Plans"). Seller
has provided Buyer true and correct copies of all current material documents
relating to the employee benefit plans listed in Section 3.10 of the Seller
Disclosure Schedule, including, but not limited to, with respect the employee
benefit plans covering the union employees of the RPD Business: (i) current plan
documents; (ii) current trust documents; (iii) current summary plan
descriptions; (iv) the most recent financial statements; (v) the most recent
actuarial valuation for the pension plan; (vi) the most recent annual report;
(vii) all Internal Revenue Service Rulings, if any; and (viii) the most recent
Internal Revenue Service determination letter. The defined benefit plans
included within the Union contracts are not multi-employer plans as defined in
Section 3(37) of ERISA.
(c) Section 3.10 of the Seller Disclosure Schedule lists each collective
bargaining agreement respecting employees of the RPD Business which is binding
19
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on the Seller. Except as set forth in Section 3.10 of the Seller Disclosure
Schedule: (i) there is no labor strike, slowdown or stoppage pending or, to
Seller's knowledge, threatened by employees of the RPD Business; and (ii) no
grievance or arbitration proceeding under any collective bargaining agreement
applicable to the RPD Business is pending or, to the knowledge of Seller,
threatened.
(d) Except as provided in Section 3.10 of the Seller Disclosure Schedule,
there are no severance payments which could become payable by Buyer under the
terms of any oral or written agreement or commitment between Seller and any
employee of Seller.
SECTION 3.11. Intellectual Property.
---------------------
(a) Except as set forth in Section 3.11 of the Seller Disclosure
Schedule:
(i) The Patents constitute all patents and patent applications
owned by Seller which are solely and exclusively useful in the RPD Business;
(ii) There are no registered trademarks or trademark registration
applications owned by Seller which are solely and exclusively useful in the RPD
Business.
(b) Except as set forth in Section 3.11 of the Seller Disclosure Schedule
the Seller has not, during the two years preceding the date of this Agreement,
been a party to any action, claim or proceeding, that involved a claim by any
Person that the conduct of the RPD Business by seller infringes on the
Intellectual Property rights of any Person and, to Seller's knowledge, no such
action, claim or proceeding has been threatened against Seller.
(c) To the knowledge of Seller, no Person is infringing on the RPD
Intellectual Property and the use by Seller of the RPD Intellectual Property
does not infringe upon the Intellectual Property rights of any other Person.
SECTION 3.12. Fees and Commissions. No agent, broker, investment banker,
person or firm acting on behalf of under the authority of Seller is or will be
entitled to any broker's, finder's or investment banker's fees or any other
commission or similar fee directly or indirectly in connection with the
transactions
20
<PAGE>
comtemplated hereby, and no such fees are or will be chargeable to or for the
account of Buyer nor have or will any such fees be paid or payable out of or in
any manner constitute a lien or charge against the Purchased Assets.
SECTION 3.13. Investment Intent. Seller is acquiring the Subordinated Note
-----------------
for investment solely for the account of Seller and not with a view to or for
resale in connection with the distribution or other disposition thereof in
violation of the Securities Act.
SECTION 3.14. Absence of Certain Changes. Except as contemplated by this
--------------------------
Agreement or as set forth in Section 3.14 of the Seller Disclosure Schedule and,
other than in the ordinary course of business, since November 30, 1995 Seller
has not;
(a) made or incurred any capital expenditures in excess of $100,000 in
any one transaction or series of related transactions for the RPD Business;
(b) made any change in the rate of compensation, commission, bonus or
other direct or indirect remuneration payable or to become payable to any RPD
Business employee;
(c) sold or transferred any of the assets Attributable to the RPD
Business;
(d) terminated or materially amended any Scheduled Contract;
(e) incurred or guaranteed any loan which would become a liability or
obligation of Buyer;
(f) subjected any of the Purchased Assets to any mortgage, pledge, lien
or other material encumbrance which would become a liability or obligation of
Buyer; or
(g) entered into any agreement or commitment (other than this Agreement
or any arrangement provided for or contemplated in this Agreement) to take any
of the types of action which would be required to be disclosed under subsections
(a) through (f) of this Section 3.14.
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SECTION 3.15 Real Property Owned. Except as set forth in Section 3.15 of
-------------------
the Seller Disclosure Schedule:
(a) Other than the Shelbyville Real Property and Ionia Facility, Seller
owns no real property Attributable to the RPD Business. Section 3.15 of the
Seller Disclosure contains a true and accurate legal description of the
Shelbyville Real Property. Seller has fee simple title to the Shelbyville Real
Property free and clear of all mortgages, liens, encumbrances, encroachments,
easements, restrictions, reservations and tenancies other than the Permitted
Liens.
(b) There is no pending or, to Seller's knowledge, threatened
condemnation or eminent domain proceeding with respect to the Shelbyville Real
Property.
(c) Except for the Permitted liens: (i) there are no real property taxes
or special assessments (other than ordinary real estate taxes) pending or
payable against the Shelbyville Real Property (ii) to Seller's knowledge there
are no contingencies existing under which any assessment for real estate taxes
may be retroactively filed against the Shelbyville Real Property; (iii) to
Seller's knowledge there are no proposed special real property taxes or
assessments that may be assessed against the Shelbyville Real Property or any
part thereof; (iv) there are no penalties due with respect to real estate taxes
and/or assessments in respect of the Shelbyville Real Property, and all real
estate taxes and/or assessments which are due and payable with respect to the
Shelbyville Real Property have been paid in full; and (v) there are no taxes,
permit fees or connection fees which must be paid respecting existing curb cuts,
sewer hookups, water-main hookups or services of a like nature in respect of the
Shelbyville Real Property.
(d) Except as set forth on Schedule 3.15, to Seller's knowledge, and
taking into account age and ordinary wear and tear, the structural components of
the buildings located at the Shelbyville Facility require no major repairs.
SECTION 3.16. Real Property Leased. Section 3.16 of the Seller Disclosure
--------------------
Schedule lists and briefly describes all real properties leased or subleased to
Seller for use solely in connection with the RPD business (the "Leases").
Seller has delivered to Buyer correct and complete copies of the Leases. With
respect to each such Lease:
22
<PAGE>
(a) to Seller's knowledge, each Lease is legal, valid, binding,
enforceable and in full force and effect except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and subject to the limitations imposed by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding at law or in equity);
(b) to Seller's knowledge, each Lease will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing except to the extent such terms are changed in connection with the
transactions contemplated hereby and except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding at law or in equity);
(c) Seller has not assigned, transferred, conveyed, mortgaged, deeded in
trust or encumbered any interest in any Lease.
SECTION 3.17. Insurance. Section 3.17 of the Seller Disclosure Schedule
---------
contains loss runs for the last five years setting forth all property, general
and products liability and workers compensation claim activity against the RPD
Business, including the date and place of occurrence, claimant's name, reserves,
amount paid, and whether the claim is open or closed. Except as set forth in
Section 3.17 of the Seller Disclosure Schedule, Seller knows of no occurrence or
event which could reasonably be expected to result in the claim against it of
the type covered by general or product liability insurance.
SECTION 3.18. Environmental Matters. Except as set forth in the
---------------------
Environmental Reports or Section 3.18 to the Seller Disclosure Schedule, to
Seller's knowledge:
(a) There are no pending proceedings or claims, and Seller does not have
any information which reasonably indicates that Seller will be receiving notice
of proceedings or claims, arising, in either case, from: (i) alleged violations
by the
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Seller of any Environmental Laws in respect of the conduct by it of the RPD
Business, or (ii) the presence, discharge, release or disposal of Hazardous
Materials in the soil or ground water of the Shelbyville Real Property or Leased
Property;
(b) Seller has not received notice under the Environmental Laws as a
potentially responsible party ("PRP") for any facility, site or location in
respect of the conduct by it of the RPD Business;
(c) Seller is in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and obligations
established under the requirements of Environmental Laws in respect of the
conduct by it of the RPD Business as currently conducted, except where such
noncompliance would not have any reasonable likelihood, singly or in the
aggregate, of materially adversely affecting the financial condition,
operations, assets, business or properties of the RPD Business, taken as a
whole;
(d) Seller has timely filed all notices, reports and other submissions
required under all Environmental laws in respect of the conduct by it of the
RPD Business, except for such notices, reports or other submissions with respect
to which the failure to so file would not have any reasonable likelihood, singly
or in the aggregate, of materially adversely affecting the financial condition,
operations, assets, business or properties of the RPD Business taken as a whole;
(e) Seller has been issued in respect of its current conduct of the RPD
Business all permits, certificates, approvals, licenses and other authorizations
required under all Environmental Laws and is, in respect of the current conduct
by it of the RPD Business, in compliance therewith except for such permits and
other authorizations with respect to which the failure to obtain or to comply
with would not have any reasonable likelihood, singly or in the aggregate, of
materially adversely affecting the financial condition, operations, assets,
business or properties of the RPD Business, taken as a whole;
(f) There is no contamination in soils or groundwater of or beneath the
Shelbyville Real Property or Leased Property above levels that exceed
remediation standards based on regulations, guidance or risk-based criteria
warranting studies or remediation or both which would have any reasonable
likelihood, singly or in the aggregate, of materially adversely affecting the
financial condition, operations,
24
<PAGE>
assets, business or properties of the RPD Business, taken as a whole;
(g) There have not been and there are no underground storage tanks,
active or abandoned, on or under the Shelbyville Real Property or the Leased
Property;
(h) There are no written environmental investigations, audits, reviews
or assessments prepared by Seller in respect of the Shelbyville Real Property or
Leased Property which have not been provided or made available to Buyer.
SECTION 3.19. Financial. The financial statements described in Section
---------
3.19 of the Seller Disclosure Schedule were prepared in accordance with the
GenCorp Accounting Principles, and, to the extent not described in the GenCorp
Accounting Principles, in accordance with GAAP, consistently applied, and fairly
present the income statement and balance sheet for Seller's Reinforced Plastics
Division taken as a whole.
SECTION 3.20. Taxes. Seller represents to Buyer that, with respect to the
-----
RPD Business, it is not a party to any agreement with any other person regarding
allocation or payment of Taxes or amounts in lieu of Taxes which would have a
material adverse effect on the Purchased Assets or the RPD Business.
SECTION 3.21. Tooling Receivables. The Tooling Receivables arose in the
-------------------
ordinary course of the RPD Business and have been accounted for consistent with
GenCorp's Accounting Principles.
SECTION 3.22. Inspections; Limitation of Seller's Warranties. Seller is
----------------------------------------------
an informed and sophisticated participant in the transactions contemplated by
this Agreement and has undertaken such investigation, and has been provided with
and has evaluated such documents and information, as it has deemed necessary in
connection with the execution, delivery and performance of this Agreement.
Seller acknowledges that, except for the representations and warranties
expressly set forth herein, neither Buyer or any Affiliate of Buyer makes any,
and does hereby disclaim all, representations or warranties, express or implied,
including, without limitation, any warranty of merchantability or fitness for a
particular purpose. In furtherance of the foregoing, and not in limitation
thereof, Seller acknowledges that no representation or warranty, express or
implied, has been made by the Buyer or any of its Affiliates, with respect to
any financial projection or forecast delivered to
25
<PAGE>
Seller with respect to the revenues or profitability which may arise from the
operation of the Buyer's business after the Closing Time. With respect to any
projection or forecast delivered by or on behalf of Buyer to Seller, Seller
acknowledges that (i) there are uncertainties inherent in attempting to make
such projections and forecasts and (ii) it is familiar with such uncertainties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
Except as set forth on the Buyer Disclosure Schedule, the Parent and
Cambridge hereby jointly and severally represent and warrant to Seller as
follows as of the date hereof:
SECTION 4.01. Organization and Existence. Each Buyer is a corporation duly
--------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power and authority to own and operate its
properties and to carry on its business as now conducted. Each Buyer is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the nature of its activities makes such qualification
necessary to carry on its business as now conducted.
SECTION 4.02. Corporate Authorization. The execution, delivery and
-----------------------
performance by each Buyer of this Agreement each other agreement or instrument
executed and delivered or to be executed and delivered by each Buyer pursuant to
this Agreement and the consummation by each Buyer of the transactions
contemplated hereby and thereby are within the corporate powers of each Buyer,
and have been duly authorized by all necessary corporate action on the part of
each Buyer. This Agreement constitutes, and each other agreement or instrument
executed and delivered or to be executed and delivered by a Buyer pursuant to
this Agreement constitutes or will constitute, a legal, valid and binding
obligation of such Buyer, enforceable against such Buyer in accordance with its
terms.
SECTION 4.03. Organization and Good Standing of Company Subsidiaries.
------------------------------------------------------
Section 4.03 of the Buyer Disclosure Schedule lists all Subsidiaries of Parent
and the
26
<PAGE>
respective jurisdictions of incorporation (collectively, the "Company
Subsidiaries" and individually a "Company Subsidiary"). Except as set forth in
Section 4.03 of the Buyer Disclosure Schedule, Parent owns, directly or
indirectly, all the shares of outstanding capital stock of each Company
Subsidiary.
SECTION 4.04. Authorization. The execution, delivery and performance by
-------------
each Buyer of this Agreement require no action by, consent or approval of, or
filing with, any Governmental Authority other than:
(a) compliance with any applicable requirements of any Antitrust Laws
(including the HSR Act); and
(b) any actions, consents, approvals or filings otherwise expressly
referred to in this Agreement (including the Buyer Disclosure Schedule).
SECTION 4.05. Non-contravention. Except as set forth in Section 4.05 of
-----------------
the Buyer Disclosure Schedule, the execution, delivery and performance by each
Buyer of this Agreement and the consummation of the transactions contemplated
hereby (including, without limitation, the Subordinated Note and the
Subordinated Note Credit Agreement) do not and will not:
(a) contravene or conflict with its Certificate of Incorporation and
Bylaws;
(b) assuming compliance with the matters referred to in Section 4.04
contravene or conflict with or constitute a violation of any provision of any
Applicable law binding upon or applicable to the its business; or
(c) conflict with or contravene any mortgage, note, indenture, deed of
trust, lease, loan agreement, warrant, registration rights agreement or other
agreement or instrument of Parent or any Company Subsidiary.
SECTION 4.06. Litigation. Except as disclosed in Section 4.06 of the Buyer
----------
Disclosure Schedule:
(a) there are no actions, suits, or proceeding by any Governmental
Authority or any other Person (collectively, "Proceedings") pending or, to the
knowledge of either Buyer, threatened against a Buyer;
27
<PAGE>
(b) there are no existing orders, judgments or decrees (other than those
of general application) of any Governmental Authority adversely affecting a
Buyer; and
(c) there are no actions, suits or proceedings by any Governmental
Authority or any other Person pending or, to the knowledge of either Buyer,
threatened against a Buyer which are reasonably likely to adversely effect a
Buyer's ability to perform its obligations hereunder or which seek to enjoin the
transactions contemplated by this Agreement.
SECTION 4.07. Compliance with Laws. To the knowledge of Buyer, except as
--------------------
set forth in Section 4.07 of the Buyer Disclosure Schedule, the operation by
each Buyer of its business as presently conducted by it does not violate, in any
material respect, any Applicable Law.
SECTION 4.08. Subordinated Debt. The Subordinated Note and the
-----------------
Subordinated Note Credit Agreement have been duly authorized by all necessary
corporate action. At the Closing Seller will receive valid title to the
Subordinated Note free and clear of any claim, lien, security interest or other
encumbrance.
SECTION 4.09. Offering of Securities. Except as set forth in Section 4.09
----------------------
of the Buyer Disclosure Schedule, neither Parent nor any Person acting on its
behalf has offered the Subordinated Note or any similar securities of the
Company for sale to, solicited any offers to buy any of the Subordinated Note or
any similar securities of the Company from or otherwise approached or negotiated
with respect to any of the Subordinated Note or any similar securities of the
Company with any Person other than Seller. Neither Parent nor any Person acting
on its behalf has taken or will take any action (including without limitation
any offering of any securities of Parent under circumstances which would require
the integration of such offering with the offering of any of the Subordinated
Note under the Securities Act and the rules and regulations of the SEC
thereunder) which might subject the offering, issuance or sale of any of the
Subordinated Note to the registration requirements of the Securities Act. The
offer, sale and issuance of the Subordinated Note by the Company under this
Agreement will not violate the Securities Act, the Exchange Act or any
applicable state securities or "blue sky" laws.
SECTION 4.10. Fees and Commission. Except as set forth in Section 4.10 of
-------------------
the Buyer Disclosure Schedule, no agent, broker, investment banker, person or
28
<PAGE>
firm acting on behalf of under the authority of Buyer is or will be entitled to
any broker's, finder's or investment banker's fees or any other commission or
similar fee directly or indirectly in connection with the transactions
contemplated hereby and no such fees are or will be chargeable to or for the
account of Buyer.
SECTION. 4.11. Financial Statements. Parent has previously delivered to
--------------------
Seller copies of (a) the consolidated balance sheet of the Parent and the
Company Subsidiaries as of December 31 for the fiscal years 1995 and 1994, and
the related consolidated statements of operations, statements of stockholders'
equity and cash flows for the fiscal years 1993 through 1995 (subject to
auditor's adjustment), accompanied for the 1994 fiscal year by the audit report
of Deloitte & Touche, independent public accountants and, for the 1993 fiscal
year by the audit reports of Arthur Anderson and Welsh Simko, independent public
accountants and (b) the unaudited consolidated balance sheet of the Parent and
the Company Subsidiaries as of January 31, 1996 and the related unaudited
consolidated statement of operations, statements of stockholders' equity and
cash flows for the one month period then ended. All of such financial
statements fairly present the consolidated financial position of the Parent and
the Company Subsidiaries as of the dates shown and the results of the
consolidated operations, statements of stockholders' equity and cash flows of
the Parent and the Company Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth, in each case subject, as to interim
statements, to changes resulting from year-end adjustments (none of which will
be material in amount and effect). All of such financial statements have been
prepared in accordance with GAAP consistently applied during the periods
involved, except as otherwise set forth in the notes thereto, and Parent and
the Company Subsidiaries have no liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise) which are fully reflected or
reserved against in the balance sheet as of December 31, 1994 included in such
financial statements, except for liabilities that may have arisen in the
ordinary and usual course of business and consistent with past practice and
that, individually or in aggregate, do not have and could not reasonably be
expected to have a material adverse effect on the financial condition of the
Parent and Company Subsidiaries taken as a whole.
SECTION 4.12. Inspections; Limitation of Seller's Warranties. Each Buyer
----------------------------------------------
is an informed and sophisticated participant in the transactions contemplated by
this Agreement and has undertaken such investigation, and has been provided with
and has evaluated such documents and information, as it has deemed necessary in
29
<PAGE>
connection with the execution, delivery and performance of this Agreement.
Each Buyer acknowledges that, except for the representations and warranties
expressly set forth herein, neither Seller nor any Affiliate of Seller makes
any, and does hereby disclaim all, representations or warranties, express or
implied, including, without limitation, any warranty of merchantability or
fitness for a particular purpose. In furtherance of the foregoing, and not in
limitation thereof, each Buyer acknowledges that no representation or warranty,
express or implied, has been made by the Seller or any of its Affiliates, with
respect to: (i) any information provided to the Buyer pursuant to the
Confidentiality Agreement or (ii) any financial projection or forecast delivered
to a Buyer with respect to the revenues or profitability which may arise from
the operation of the RPD Business after the Closing Time. With respect to any
projection or forecast delivered by or on behalf of the Seller to a Buyer, each
Buyer acknowledges that (i) there are uncertainties inherent in attempting to
make such projections and forecasts and (ii) it is familiar with such
uncertainties.
ARTICLE V
COVENANTS OF THE SELLER
-----------------------
The Seller agrees that:
SECTION 5.01. Further Conveyances. After the Closing, Seller will execute
-------------------
and deliver to Cambridge (or cause to be executed and delivered to Cambridge),
such additional instruments of conveyance, and Seller shall take such other and
further actions as Cambridge may reasonably request and which are ordinarily
provided by a seller, more completely to sell, transfer, and assign to
Cambridge and vest in Cambridge such title to the Purchased Assets as is
provided for in this Agreement.
SECTION 5.02. Non-Compete. For a period of three (3) years after the
-----------
Closing Time neither Seller nor any Affiliate of Seller will own, manage,
operate or control, anywhere within the United States any business engaged in
compression molding of sheet mold compound for automotive, truck and industrial
applications provided, however, nothing in this Section 5.02 shall preclude
Seller or any Affiliate of Seller from; acquiring any entity or business which
includes operations which engage in such business so long as Seller divests such
business within one year after
30
<PAGE>
the date of such acquisition. Prior to divesting any such business, Seller
shall notify Cambridge of its intent to so divest and Cambridge shall have a
period of thirty (30) days to make an offer to purchase such business from
Seller.
SECTION 5.03. Non-Solicitation of Employees. Seller shall not, for a
-----------------------------
period of one (1) year from and after the Closing Time, directly or indirectly
or through any Affiliate, employ or attempt to induce any person who is during
such period in the employ of Cambridge to leave the employ of Cambridge or any
subsidiary of Cambridge.
SECTION 5.04. Taxes. Seller will be responsible for the preparation and
-----
filing of all Tax returns for Seller for all periods as to which Tax returns are
due after the Closing Time (including the consolidated, unitary, and combined
Tax returns for Seller which include the operations of the RPD Business for any
period ending on or before the Closing Time). Seller will make all payments
required with respect to any such Tax returns.
ARTICLE VI
COVENANTS OF THE BUYER
----------------------
The Buyer agrees that:
SECTION 6.01. GenCorp Name.
------------
(a) Except as otherwise permitted by Sections 6.01(b) and (c), Buyer will
discontinue the use of, and delete, paint over or otherwise strike or remove
from any Purchased Assets any names, logos and designs which identify GenCorp as
promptly as reasonably practical after the Closing.
(b) Buyer shall have the right to continue to use the trademark "GenCorp"
(i) on inventory existing on the Closing Date until the depletion of such
inventory, (ii) on packaging materials existing on the Closing Date for a period
of six (6) months after the Closing Date, (iii) on patterns, molds and tools
existing on the Closing Date for a period of twelve (12) months after the
Closing Date, and (iv) on
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inventory manufactured by Buyer within a period of twelve (12) months after the
Closing Date from patterns, molds and tools existing on the Closing Date which
contain such trademark.
(c) Buyer shall delete the trademark "GenCorp" from all sales aids and
sales literature sold hereunder within a reasonable period after the Closing
Date, but in no event later than six (6) months after the Closing Date. Such
sales aids and sales literature which bear the trademarks of "GenCorp" which are
used by Buyer must state on the face thereof that the RPD business is now owned
by Buyer.
SECTION 6.02. Vacation of Shared Facility. Buyer will, within thirty (30)
---------------------------
days after the Closing, vacate the Farmington Hills Facility and the "A"
building to be razed at Seller's Ionia Facility and remove all Purchased Assets.
Buyer will promptly restore and repair, at its sole expense, any damage done by
the Buyer in vacating the Farmington Hills Facility and removing such Purchased
Assets.
SECTION 6.03. Vacation of Marion Facility. Buyer will in accordance with
---------------------------
this Section 6.03, within one year after the Closing and at its sole cost, risk
and expense, remove all RPD Marion Equipment and any other property of Buyer
from the Marion Facility.
(a) Any RPD Marion Equipment property which is affixed to the Marion
Facility or any Marion Facility building system is collectively referred to
herein as the "Equipment". The removal of the Equipment from the Marion Facility
is hereinafter referred to as the "Equipment Removal". Buyer shall not, in
connection with the Equipment Removal, engage in any other activities at the
Marion Facility including, without limitation, any cleaning or rebuilding of any
Equipment except for normal shut-down procedures necessary to move the Equipment
as reasonably agreed upon by Buyer and Seller.
(b) Prior to commencing the Equipment Removal Buyer shall submit to
Seller and obtain Seller's approval (which approval shall not be unreasonably
withheld) of a reasonably detailed written plan for the Equipment Removal. Such
plan shall provide: (1) a schedule for the Equipment Removal; (2) a general
description of the manner in which the Equipment will be removed from the Marion
Facility; (3) a list of the contractors and other third parties to be used by
Buyer in performing the Equipment Removal; (4) a description of all licenses,
permits and
32
<PAGE>
other governmental approvals required by Applicable Law to be obtained in
connection with the Equipment Removal; (5) such other information pertaining to
the Equipment Removal as Seller may reasonably request (such plan, the "Approved
Plan"). The Equipment Removal shall be undertaken in a manner which will not
effect the structural integrity of the Marion Facility, If Seller reasonably
determines that any of the Equipment Removal may affect the structural integrity
of the Marion Facility, then Buyer shall obtain if requested by Seller,
appropriate architectural and/or engineering certificates that the affected
building remains in compliance with Applicable Law and applicable safety
standards. Buyer shall be solely responsible for planning and implementing the
Equipment Removal and Seller's review and approval of the Approved Plan shall
not in any manner relieve Buyer of or transfer to Seller any risk, liability or
obligation in respect of the Equipment Removal, which risks, liabilities and
obligations shall at all times remain solely with Buyer.
(c) Buyer shall give Seller ten days advance written notice of its
intention to commence the removal of any items of Equipment. Such notice shall
specify the Equipment to be removed, the dates and times at which such removal
will commence and the dates and times at which such removal is estimated to be
completed.
(d) Buyer shall at its sole risk, cost and expense: (1) conduct the
Equipment Removal in a manner which: will not unreasonably interfere with the
Seller's activities at the Marion Facility and, will minimize any damage to the
Marion Facility; (2) conduct the Equipment Removal in a safe and workmanlike
manner using due care and in accordance with all Applicable Laws and the
Approved Plan; (3) obtain all licenses, permits and other governmental approvals
required by Applicable Law in connection with the Equipment Removal prior to
undertaking the Equipment Removal and maintain in force and comply with such
licenses, permits and approvals to the extent required by Applicable Law
including, without limitation, any license, permit or approval which may be
required to perform any "demolition" or its functional equivalent under
Applicable Law; (4) maintain any Equipment Removal work site in a safe
condition; and (5) engage contractors that have the equipment, skill and
experience necessary to perform the Equipment Removal in accordance with
accepted standards of industrial practice and who possess all licenses, permits
and approvals required by Applicable Law.
(e) Buyer shall promptly (and in any event within 20 business days) after
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each Equipment Removal, and at its sole cost and expense, remove from the Marion
Facility any debris resulting from the Equipment Removal and commence and
diligently prosecute the repair or replacement in a good and workmanlike manner
using first quality materials any loss or damage to the Marion Facility
resulting from the Equipment Removal, including, without limitation, by: filling
in and leveling all holes in floors; patching all roofs, ceilings and walls;
repairing, replacing, rewiring, replumbing or rerouting all building system
wires, pipes, ducts and other items so that all building systems perform in
substantially the same manner as prior to any such damage or loss. Without
limiting the foregoing sentence, such repairs and replacements will, at a
minimum, include such repairs and replacements as are necessary: (1) to prevent
any additional damage or loss to the Marion Facility, (2) to eliminate a risk to
health or safety, and (3) to correct any violations Applicable Law resulting
from the Equipment Removal.
SECTION 6.04. Non-Solicitation of Employees. Buyer shall not for a period
-----------------------------
of one year from and after the Closing, directly or indirectly or through any
Affiliate, employ or attempt to induce any person who is during such period in
the employ of the Seller to leave the employ of Seller; provided that the
foregoing restriction shall not apply to any RPD Business employee at the Marion
Facility.
SECTION 6.05. Title Insurance. At the Closing Buyer shall obtain, at its
---------------
expense, an ALTA Extended Coverage Owner's Policy of Title Insurance in an
amount not less than the fair market value of the Shelbyville Facility, naming
Buyer as an insured and covering the Shelbyville Facility (the "Title Policy")
from Lawyers Title Company (the "Title Company"). Buyer covenants and agrees
that prior to making an Indemnification Claim against Seller in respect of any
Title Matter it will exhaust its remedies against the Title Company under the
Title Policy is respect of such Title Matters. Seller shall not be liable to or
through Buyer and Buyer shall not assert against Seller and hereby waives any
and all claims against Seller in respect of any Title Matter to the extent
covered by the Title Policy.
SECTION 6.06. Environmental Reports. Buyer will file in respect of the
---------------------
Shadeland, Rushville, Shelbyville and Ionia Facilities with respect to the 1995
calendar year the following: SARA 312 (Tier 2), SARA 313 (Form R), Biennial
Waste Report, and State Air Emissions Summary, in each case as required by
Applicable Law.
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SECTION 6.07. Investigation Limitation. Buyer will not do any
------------------------
investigation or testing of soil or groundwater at the Shadeland Facility or
Rushville Facility or take any other action to solicit, promote, or encourage
the making of any Environmental Claim or which is otherwise reasonably likely to
result in an Environmental Claim being made.
SECTION 6.08. Rushville Lease Termination. Within ninety (90) days after
---------------------------
the Closing, Cambridge shall, at its sole cost and expense, permanently cease
all operations at the Rushville Facility, vacate the Rushville Facility, remove
all of its assets and property from the Rushville Facility and terminate the
Rushville Lease.
ARTICLE VII
COVENANTS OF BOTH PARTIES
-------------------------
The parties agree that:
SECTION 7.01. Administration of Accounts.
--------------------------
(a) All payments and reimbursements made in the ordinary course by any
third party in the name of or to the Seller in connection with or arising out of
the Purchased Assets or the Assumed Liabilities, received after the Closing Time
shall be held by the Seller in trust for the benefit of the Buyer and,
immediately upon receipt by the Seller of any such payment or reimbursement, the
Seller shall pay over to the Buyer the amount of such payment or reimbursement
without right of set-off.
(b) All payments and reimbursements made in the ordinary course by any
third party in the name of or to the Buyer in connection with or arising out of
Excluded Assets or the Excluded Liabilities, received after the Closing Time
shall be held by the Buyer in trust for the benefit of the Seller and,
immediately upon receipt by the Buyer of any such payment or reimbursement, the
Buyer shall pay over to the Seller the amount of such payment or reimbursement
without right of set-off.
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SECTION 7.02. Transfer Taxes. All transfer, documentary, sales, and other
--------------
similar Taxes ("Transfer Taxes") incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the Seller. The Seller
and the Buyer shall cooperate in timely making all filings, returns, reports and
forms as may be required to comply with the provisions of such Transfer Tax
laws.
SECTION 7.03. Access to Former Business Records. For a period of seven (7)
---------------------------------
years after the Closing Time, or until any audits of Seller's tax returns
relating to periods prior to or including the Closing Time are completed,
whichever occurs later, Buyer will retain all business records constituting part
of the Purchased Assets. During such period, Buyer will afford duly authorized
representatives of Seller free and full access to all of such records and will
permit such representatives, at Seller's expense, to make abstracts from, or to
take copies of any of such records, or to obtain temporary possession of any
thereof as may be reasonably required by Seller. For a like period, Seller will
retain all business records related to the RPD Business which constitutes part
of the Excluded Assets. During such period, Seller will afford duly authorized
representatives of Buyer free and full access to all of such records and will
permit such representatives, at Buyer's expense, to make abstracts from, or to
take copies of any of such records, or to obtain temporary possession of any
thereof as may be reasonably required by Buyer.
SECTION 7.04. Access to Former Employees. After the Closing, each of Buyer
--------------------------
and Seller will cooperate with the other, and cause its employees to cooperate
with the other, in furnishing information, evidence, testimony, and other
assistance as may be reasonably requested by the other party in connection with
any action, proceeding, or investigation by a third party relating to the RPD
Business. The party requesting such assistance will pay or reimburse the other
party for all reasonable out-of-pocket expenses incurred by the party providing
such assistance in connection therewith, including, without limitation, all
travel, lodging, and meal expenses.
SECTION 7.05. Inventory. Buyer shall, after the Closing Time, use efforts
---------
consistent with the efforts used by Buyer in the use and sale of its own
inventory, to use or sell the inventory of the RPD Business being sold by Seller
to Buyer hereunder. For purposes of this Section 7.05 all such inventory shall
be deemed to be used or sold to the extent that Buyer uses or sells any
inventory not sold to Buyer hereunder which is substitutable for the inventory
sold to Buyer hereunder except to the extent such substitution is required
because such inventory was at the Closing
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Time damaged, deteriorated or obsolete. To the extent that all such inventory is
not used or sold or deemed used or sold by Buyer within twelve (12) months after
the Closing Time (such inventory, the "Unsold Inventory"), it shall be
repurchased by Seller as provided in this Section 7.05. Buyer shall furnish
Seller with a schedule of the unsold inventory and such other documents
pertaining thereto as Seller may reasonably request. The repurchase price of the
unsold inventory shall be the amount paid therefore by Buyer at Closing. For
purposes of this Section 7.05 "inventory of the RPD Business" shall mean raw
materials, finished goods and work in process but shall exclude and Seller shall
have no obligation to repurchase supplies, service parts, spare parts, and
recycled materials (including recycled materials purchased pursuant to the
Phoenix contract).
SECTION 7.06. Reimbursement of Certain Costs. If Cambridge reasonably
------------------------------
incurs out-of-pocket expenses in excess of $50,000 as a result of a contractual
obligation to a customer which was assumed by Cambridge under this Agreement to
accept return of, provide refunds for, or to repair, replace, recall or service
any RPD Business product produced by Seller prior to the Closing Time, then
Cambridge shall be entitled to be reimbursed by Seller as follows: 50% of the
next $200,000 of such out-of-pocket expenses and 75% of such out-of-pocket
expenses in excess of $250,000; provided that (a) Cambridge gives Seller prompt
notification at the time it becomes aware that it may have a claim for such
reimbursement, (b) Cambridge provides Seller with such information regarding
such customer claim as Seller may reasonably request, (c) Cambridge permits
Seller to participate in, but not control, the resolution of any such customer
claim, and (d) the out-of-pocket costs incurred by Cambridge as a result of such
customer claim are commercially reasonable in the context of the particular
customer claim and not in respect of any other consideration of Cambridge.
ARTICLE VIII
EMPLOYEE MATTERS
----------------
SECTION 8.01. Salaried Employees. The following shall apply with respect
------------------
to all Employees who are not covered by a Union Contract (the "Salaried
Employees"):
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(a) Offers of Employment. At or prior to the Closing Time, Buyer will
--------------------
make offers of employment to all Salaried Employees including, without
limitation, any Salaried Employee who is not at work but is on salary
continuation (but not Salaried Employees who are not on salary continuation and
are on education, military, personal, family or short or long term disability
leave at the Closing Time) providing for wages and other terms and conditions
of employment, which are substantially comparable to the terms and conditions on
which such Salaried Employees were employed by Seller immediately prior to the
Closing except that the benefits to be provided to such Salaried Employees shall
be as described in Exhibit C hereto (the "Cambridge Benefits"). In addition,
Buyer shall make such an offer of employment to any Salaried Employee who, at
the Closing Time, is on leave without salary continuation to the extent required
by law and to any such Salaried Employee who, within two years after the Closing
Time gives written notice to Buyer of his or her desire to return to work;
provided that Buyer has a position available for which such Salaried Employee is
qualified and, if such Salaried Employee was on long or short term disability,
such Salaried Employee is fit for work.
(b) Employment.
----------
(i) All Salaried Employees who have accepted at the Closing Time,
or who subsequently accept Buyer's offer of employment with Buyer made pursuant
to Section 8.01(a) (the "Transferred Salaried Employees") will be employed by
Buyer at the time of such acceptance on the terms and conditions of such offers
(with the effect that no period of unemployment shall have occurred with
respect to any such Transferred Salaried Employees) and the employment by
Seller of such Salaried Employees will terminate for all purposes effective as
of the time of such acceptance; provided, however, that any such Salaried
Employee who is not at work but on salary continuation or short or long term
disability at the Closing Time may only accept such offer at such time as he or
she is fit for work and presents himself or herself to Buyer for work. The
Applicable Employment Date (the "Applicable Employment Date") in respect of any
Transferred Salaried Employee is the date such Transferred Salaried Employee
reports to work for Buyer.
(ii) After Buyer has complied with its obligations under this
Section 8.01, nothing in this Section 8.01 shall create any obligation on the
part of Buyer to thereafter continue the employment of any such Employee for any
definite period
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following the Closing or shall prevent Buyer from changing the terms or
conditions of employment, including employee benefit plans, at any time
following the Closing.
(c) Salaried Pension Plan. Seller currently maintains the "Pension Plan
---------------------
for Salaried Employees of GenCorp Inc. and Certain Subsidiary Companies" (the
"Salaried Pension Plan") which provides certain retirement benefits to eligible
salaried employees of GenCorp, including eligible Transferred Salaried
Employees. With respect to the Salaried Pension Plan the following shall apply:
(i) Buyer will not assume the Salaried Pension Plan or any trust
pertaining thereto or become a sponsor of the Salaried Pension Plan and no
assets of the Salaried Pension Plan will be transferred to Buyer or any plan or
trust maintained by Buyer.
(ii) Seller shall retain all liability to fully perform, pay and
discharge all liabilities under its Salaried Pension Plan.
(iii) Effective as of the Closing, all Salaried Employees will cease
to accrue service credit, any benefits or any other right or entitlement under
the Salaried Pension Plan.
(d) Savings Plan. Seller currently maintains the "GenCorp Retirement
------------
Savings Plan" (the "Savings Plan") which provides certain tax-advantaged savings
opportunities for eligible employees, including eligible Transferred Salaried
Employees. With respect to the Savings Plan, the following will apply:
(i) Buyer will not assume the Seller's Savings Plan or any trust
related thereto nor become a sponsor of the Savings Plan and no assets of the
Savings Plan will be transferred to Buyer or any plan or trust maintained by
Buyer.
(ii) Seller shall retain all liability to fully perform, pay and
discharge all liabilities under its Savings Plan.
(iii) Effective as of the Closing, Buyer will establish or otherwise
make available to Transferred Salaried Employees who are participants in the
Savings Plan as of the Closing a savings plan qualified under Section 401(k) of
the Internal Revenue Code of 1986.
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(e) Medical Plans. Seller currently maintains the "GenCorp Medical Plan"
-------------
and the "GenCorp Dental Plan" (collectively, the "Medical Plans") providing
medical and dental benefits for eligible active employees of GenCorp and their
respective eligible dependents, including eligible Transferred Salaried
Employees. With respect to the medical and dental benefits for Transferred
Salaried Employees, the following will apply:
(i) Effective as of the Applicable Employment Date, the Transferred
Salaried Employees and eligible dependents will cease to be covered by the
Medical Plans and neither GenCorp nor any of the Medical Plans will be
responsible for medical or dental charges or expenses incurred by or in respect
of such Buyer Salaried Employees or eligible dependents after the Closing.
(ii) Seller will be responsible for medical and dental charges or
expenses incurred by or in respect of such Transferred Employees or Eligible
Dependents for services rendered prior to the Applicable Employment Date.
(iii) Effective as of the Applicable Employment Date, Transferred
Salaried Employees and their eligible dependents will be eligible to participate
in the employee medical and dental plans established and maintained by Buyer as
described in Exhibit C and Buyer or such plans will be responsible for medical
and dental charges or expenses incurred by or in respect of such Transferred
Salaried Employees and eligible dependents after the Applicable Employment Date.
(iv) Effective as of the Applicable Employment Date, Buyer will
waive or cause the medical and dental plans described in Section 8.01(e)(iii) to
waive any pre-existing condition exclusions applicable to the Transferred
Salaried Employees and their eligible dependents that may exist under the
employee medical and dental plans established and maintained by Buyer if such
Transferred Salaried Employee was eligible to participate in Seller's medical
and dental plans at the time employment with Seller terminated.
(v) Effective as of the Applicable Employment Date, Buyer will
provide the Transferred Salaried Employees with equitable credit under the
medical plans described in Section 8.1(e)(iii) for any amounts previously paid
by such Transferred Salaried Employees under the Medical Plans as deductibles or
co-payments during the plan year in which the Closing occurs buy only to the
extent that
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Seller provides Buyer with information in a form reasonably satisfactory to
Buyer showing amounts credited in respect of Buyer's medical and dental plans as
deductible or co-pays.
(f) Life Insurance Plans. Seller currently maintains employee life
--------------------
insurance benefit plans for eligible active employees of GenCorp, including
eligible Transferred Salaried Employees (the "Active Employee Life Insurance
Plans"). With respect to the Active Employee Life Insurance Plans, the following
will apply:
(i) Effective as of the Closing, the Salaried Employees will
cease to be covered by the Active Employee Life Insurance Plans.
(ii) Effective as of the Closing the Transferred Salaried
Employees will become covered under employee life insurance plans established
and maintained by Buyer as described in Exhibit C.
(iii) Buyer will waive or cause such Buyer life insurance
plans to waive any pre-existing condition exclusions applicable to such
Transferred Salaried Employees that may exist under the employee life insurance
plans established and maintained by Buyer.
(g) Long Term and Short Term Disability Plans. Seller currently
-----------------------------------------
maintains employee long term disability and short term disability plans for
eligible employees of GenCorp, including eligible Transferred Salaried
Employees. With respect to such plans:
(i) Effective as of the Applicable Employment Date, the
Transferred Salaried Employees will cease to be covered by such long term
disability and short term disability plans and will become covered under
employee long term disability and short term disability plans established and
maintained by Buyer as described in Exhibit C.
(ii) Buyer will waive or cause such Buyer disability plans to
waive any pre-existing condition exclusions applicable to such Transferred
Salaried Employees that may exist under the employee long term disability and
short term disability plans established and maintained by Buyer if such employee
was eligible to participate in Seller's long term and short term disability
plans at the time
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employment with Seller terminated.
(h) Vacation Benefits. Seller currently maintains a vacation plan for
-----------------
eligible employees of GenCorp including eligible Transferred Salaried Employees.
With respect to such vacation plan after the Closing, Buyer shall make available
to each Transferred Salaried Employee accrued but unused vacation time under
Buyer's vacation plan and shall pay each Transferred Salaried Employee for any
vacation accrued but unused under Seller's vacation plan prior to the Closing
when such vacation is taken. In determining the amount of vacation for which a
Transferred Salaried Employee is eligible under Buyer's vacation plant, Buyer
shall give each such Transferred Salaried Employee credit for service with
Seller.
(i) Separation Pay. If Buyer terminates the employment of any Transferred
--------------
Salaried Employee for any reason other than "for cause", within twelve (12)
months after the Closing, then Buyer will provide such terminated Transferred
Salaried Employee with separation pay in an amount equal to one week of pay for
each year of service up to a maximum for eight weeks of pay.
(j) Retiree Medical Plans. Seller shall retain all assets and liabilities
---------------------
relating to Seller's retiree medical plans for Salaried Employees. Seller shall
hold Buyer harmless from any and all claims and/or liabilities to any Salaried
Employee arising under or pursuant to the Seller's retiree medical plan for
Salaried Employees.
SECTION 8.02. Union Employees. At the Closing, Buyer, Seller and the
---------------
Union will execute and deliver the Union Novation Agreements pursuant to which
Buyer will become the employer under the Union Agreement and GenCorp will be
released from its obligations under each Union Agreement.
SECTION 8.03. No Third-Party Claims. No Transferred Salaried Employee nor
---------------------
any spouse, former spouse or beneficiary under any of the Plans, or under any
plan from time to time established by the Buyer for the benefit of the
Transferred Salaried Employees, shall be entitled to assert any claim based on
any of the provisions of this Agreement (including but not limited to this
Article VIII) against either party to this Agreement (or any of its Affiliates).
SECTION 8.04. Workers' Compensation. Notwithstanding Sections 2.03 and
---------------------
2.04, Seller shall be liable for any workers' compensation claim relating to an
42
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occurrence prior to Closing Time and Buyer shall be liable for any workers'
compensation claim relating to an occurrence after the Closing Time. If a
workers' compensation claim arises in connection with a "continuing" occurrence
before and after the Closing, the liability of Buyer and Seller for such claim
shall be determined by Applicable Law or in the absence of such Applicable Law
on an equitable basis.
SECTION 8.05. Plan Payments. Seller will with respect to each Transferred
-------------
Salaried Employee pay all costs, expenses, benefits and claims incurred prior
to the Applicable Employment Date in respect of such Transferred Salaried
Employee under its benefit plans and will pay all accrued payroll up to the
Closing Time.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
-------------------------
SECTION 9.01. Survival of Representations and Warranties.
------------------------------------------
(a) The representations and warranties set forth in Article III shall
survive the Closing for a period of 540 days after the Closing Time, except that
the representations and warranties contained in Section 3.18 shall survive for a
period of three years after the Closing Time and the representations and
warranties contained in Sections 3.01, 3.02, 3.04(a) shall survive indefinitely.
(b) The representations and warranties set forth in Article IV shall
survive the Closing for the greater of (i) a period of 540 days after the
Closing Time or (ii) the period during which all or any portion of the
Subordinated Note remains outstanding, except that the representations and
warranties contained in Sections 4.01, 4.02, 4.03, 4.04, and 4.06(a) shall
survive indefinitely.
(c) Upon the expiration of the survival period of a representation and
warranty as described in Section 9.01(a) or (b) such representation and warranty
shall expire and terminate and there shall be no liability or obligation
whatsoever in respect thereof whether such liability has accrued prior to or
will accrue after the expiration of such representations and warranties unless
prior to the expiration
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thereof an Indemnification Claim is made with respect thereto. The
representations and warranties referred to in Sections 9.01(a) and (b) are, to
the extent and so long as they survive the Closing, referred to as the
"Surviving Representations".
SECTION 9.02. Seller's Agreement To Indemnify. Subject always to
-------------------------------
Sections 9.04, 9.05, 9.06 and 9.07 the Seller shall indemnify Cambridge in
respect of any and all Damages incurred by Buyer as a result of the following:
(a) any inaccuracy or misrepresentation in or breach of any
Surviving Representation made by the Seller in this Agreement;
(b) any breach or failure to perform by the Seller after the closing
Time of any of its covenants contained in this Agreement; or
(c) any Third Party Claim against Buyer resulting from the failure
of Seller to perform, pay or discharge any Excluding Liability.
SECTION 9.03. Buyer's Agreement To Indemnify. Subject always to Sections
------------------------------
9.04, 9.05, 9.06 and 9.07 each Buyer jointly and severally shall indemnify
Seller in respect of any and all Damages incurred by Seller as a result of the
following:
(a) any inaccuracy or misrepresentation in or breach of any
Surviving Representation made by a Buyer in this Agreement;
(b) any breach or failure to perform by a Buyer after the Closing
Time of any covenants contained in this Agreement; or
(c) a Third Party Claim against Seller resulting from the failure of
a Buyer to perform, pay or discharge any Assumed Liability.
SECTION 9.04. Indemnification Limits; Exclusive Remedy. Notwithstanding
----------------------------------------
any other provisions of this Agreement:
(a) No Buyer shall be entitled to indemnification pursuant to this
Article IX for any damages under Section 9.02(a) unless and to the extent (y)
Damages incurred with respect to a given instance exceed $10,000 and (z) the
amount by
44
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which Damages for all such instances in excess of such amount exceed $500,000.
(b) Neither party to this Agreement shall be entitled to indemnification
pursuant to this Article IX for any Damages under Sections 9.02(a) or 9.03(a),
unless the party seeking such indemnification shall make its claim therefor on
or prior to the date on which the relevant representation or warranty shall
expire pursuant to Section 9.01.
(c) In no event will Seller be liable under Section 9.02(a) for any
Damages or any portion of any Damages in excess of $10,000,000. So long as all
or any portion of the Subordinated Note is outstanding, the first remedy of
Buyer for any breach by Seller of any of its representation and warranties
contained herein shall be to, after complying with this Article IX, including
without limitation, Section 9.04(a), not pay amounts owing under the
Subordinated Note.
(d) In no event will any party be liable to any other party under this
Agreement for punitive, exemplary, special or consequential damages.
(e) Each party hereto acknowledges and agrees that, with respect to any
claim by a party hereto against the other party hereto which arises out of
breach of any of the representations, warranties, covenants or agreements of the
Seller or a Buyer herein, the indemnification remedy set forth in this Article
IX shall be the sole and exclusive remedy of the parties with respect thereto.
(f) In connection with any Direct Claim brought by one party against the
other party to enforce this Agreement, to the extent that a party prevails in
prosecuting or defending such Direct Claim such party shall be entitled to be
reimbursed by the other party for all reasonably and proximately incurred
out-of-pocket costs, expenses and attorneys' fees incurred by it in respect of
matters on which it prevailed and all costs and expenses incurred in connection
therewith by the non-prevailing party as to matters on which it did not prevail
shall not be included within and shall be excluded from any Damages incurred by
such non-prevailing party.
(g) Neither party shall have any obligation to indemnify the other party
in respect of any Third Party Claim asserted by any person who is not an
Independent Party.
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(h) If a party has knowledge of an Indemnification Claim at the Closing
Time, such party shall be deemed to have waived such Indemnification Claim and
the other party shall have no liability therefor.
(i) All Damages shall be computed net of (i) Tax benefits actually
realized therefrom to a party, and (ii) the amount of any insurance benefits
actually collected or collectible with respect thereto which reduces the Damages
that would otherwise be sustained, each party covenanting to pursue such tax
benefits and insurance coverage in good faith.
(j) An Indemnitor may not assert any offset or similar right in respect of
its obligations under this Agreement based upon any actual or alleged breach of
any representation, warranty or covenant contained in this Agreement or any
other actual or alleged liability or obligation of the Indemnitee to the
Indemnitor; provided, however, that the inability to assert any offset or
similar right pursuant to this sentence will not of itself result in a waiver
of any such actual or alleged breach of this Agreement, which may, subject to
this Article IX, be asserted pursuant to this Article IX.
(k) Except for any Environmental Claim, to the extent that the physical
condition of any Purchased Asset is not in compliance with Applicable Law at the
Closing Time such physical condition shall not be an Excluded Liability;
provided that nothing in Section 9.04(k) shall in any way limit Seller's right
to make an Indemnification Claim under Section 9.02(a) with respect to such
physical condition.
SECTION 9.05. Procedure for Third Party Claims. The rights and
--------------------------------
obligations of the Indemnitee and Indemnitor with respect to Indemnification
Claims arising out of a Third Party Claim shall be subject to the following
conditions:
(a) If a party receives notice of the assertion of any Third Party Claim
in respect of which it intends to make an Indemnification Claim, the Indemnitee
shall promptly provide written notice (an "Indemnification Notice") of such
assertion to the Indemnitor; provided that failure of the Indemnitee to give the
Indemnitor prompt notice as provided herein shall not relieve the Indemnitor of
any of its obligations hereunder except to the extent the Indemnitor is
prejudiced by such failure. The Indemnification Notice shall describe in
reasonable detail the nature of the Third Party Claim, the basis for an
Indemnification Claim and shall be
46
<PAGE>
accompanied by copies of papers and documents which have been served upon the
Indemnitee and such other documents and information as may be appropriate to an
understanding of such Third Party Claim and the liability of the Indemnitor to
indemnify the Indemnitee hereunder. Except as required by law, the Indemnitee
shall not answer or take any other action in respect of such Third Party Claim
which may prejudice the defense thereof unless and until Indemnitor has been
given the opportunity to assume the defense thereof under this Section 9.05 and
refused to do so. If Indemnitee takes any such action which does prejudice the
defense of any such Third Party Claim then Indemnitee shall be liable to
Indemnitor to the extent of such prejudice.
(b) Upon receipt of an Indemnification Notice, the Indemnitor shall have
the right but not the obligation to promptly assume and take exclusive control
of the defense, negotiation and/or settlement of such Third Party Claim. The
assumption of the defense by Indemnitor of a Third Party Claim shall not
prejudice the right of the Indemnitor to recover Damages from the Indemnitee
with respect thereto. If a party is defending, negotiating or settling a Third
Party Claim for which the other party may be liable, then such party shall at
all times do so in good faith as if it were ultimately liable for all Damages
resulting therefrom and shall not settle such Third Party Claim except on terms
which are commercially reasonable measured in the context of the matter settled
and not in respect of any other consideration of the settling party.
(c) If the Indemnitor does not, within twenty days after receipt of an
Indemnification Notice, take over the defense of such Third Party Claim then the
parties agree that the Indemnitee may join the Indemnitor in any action, claim
or proceeding brought by the third party asserting such Third Party Claim as to
which any right of indemnity created by this Agreement would or might apply, for
the purpose of enforcing any right of indemnity granted to such Indemnified
Party pursuant to this Agreement.
(d) If the Indemnitor has assumed the defense of a Third Party Claim then
the Indemnitee shall not compromise or settle such Third Party Claim; provided,
however, that the Indemnitee shall have the right to settle at its sole cost and
expense any Third Party Claim at any time if the Indemnitee waives its right to
recover any Damages therefor from the Indemnitor.
47
<PAGE>
(e) The party controlling the defense of a Third Party Claim shall keep
the Indemnitee or Indemnitor, as the case may be, reasonably informed at all
stages of the defense of such Third Party Claim. The party not controlling the
defense of any such Third Party Claim shall have the right, at its sole cost and
expense, to participate in, but not control, the defense of any such Third Party
Claim. Each party shall reasonably cooperate with the other in the defense,
negotiation and/or settlement of any such Third Party Claim. In connection with
any defense of a Third Party Claim undertaken by the Indemnitor, the Indemnitee
shall provide Indemnitor, its counsel, accountants and other representatives
with reasonable access to relevant properties, contracts, books and records and
make available such personnel of the Indemnitee as the Indemnitor may
reasonably request.
(f) If either party receives an offer to settle such Third Party Claim,
it shall promptly present such offer to the other party. If the Indemnitor is
willing to accept and perform all of the terms of such settlement offer and the
Indemnitee refuses to accept such settlement offer; then (1) the Indemnitor's
----
liability to the Indemnitee hereunder with respect to such Third party Claim
shall not exceed the amount of money and the performance obligations proposed to
be paid pursuant to such settlement offer, and, (2) if the Indemnitor has
assumed the defense of such Third Party Claim, then the Indemnitor may, if it so
elects, tender the defense thereof to the Indemnitee by paying to Indemnitee the
amount of money proposed to be paid in such settlement offer and irrevocably
accepting any non-monetary performance obligations, in which case the Indemnitor
shall have no further liability to the Indemnitee hereunder with respect to such
Third Party Claim and the Indemnitee shall have sole responsibility for the
future defense of such Third Party Claim and for any and all liabilities,
damages, claims, costs, and expenses (including attorneys' fees) resulting
therefrom.
SECTION 9.06. Procedure for Direct Claims. The rights and obligations of
---------------------------
Indemnitee and Indemnitors with respect to Indemnification Claims resulting from
or arising out of Direct Claims shall be subject to the following conditions: A
party having an Indemnification Claim resulting from or arising out of a Direct
Claim shall give prompt written notice to Indemnitor (an "Indemnification
Notice") specifying in reasonable detail each provision of this Agreement under
which the Indemnification Claim is made and the nature and amount of the
Indemnification Claim asserted; provided that failure of the Indemnitee to give
the Indemnitor prompt notice as provided herein shall not relieve the Indemnitor
of any of its
48
<PAGE>
obligations hereunder except to the extent the Indemnitor is prejudiced by such
failure. If the Indemnitor, within 30 days after the receipt of notice by
Indemnitee, shall not give written notice to Indemnitee accepting in its
entirety such Indemnification Claim, such Indemnification Claim shall be deemed
rejected by the Indemnitor and the parties may pursue such remedies as are
provided for by this Agreement.
SECTION 9.07 Environmental Claims. All Environmental Claims shall be
--------------------
subject to the provisions of Section 9.05 and shall, in addition, also be
subject to the following:
(a) Seller shall have the right to control any negotiations with any
Independent Party or Governmental Authority regarding any investigation,
remediation or monitoring of any Environmental Condition (collectively, a
"Response") including, without limitation, the manner and extent to which any
Response is implemented, and any Response shall be conducted under its exclusive
direction and its sole cost and expense; provided that Cambridge shall have the
right, at its expense, to participate in any such negotiations and Landlord
shall keep Cambridge reasonably informed regarding any such negotiations.
(b) Cambridge shall use its reasonable good faith efforts to cooperate with
Seller in all matters relating to any Seller Response. Seller shall reimburse
Cambridge for its reasonable out-of-pocket expenses incurred in providing such
cooperation. During the course of any Seller Response, Cambridge shall and
hereby does, grant to Seller, its agents, employees, contractors and
consultants, all access to the Shelbyville, Shadeland and Rushville Facilities
as is reasonably necessary to perform any Seller Response. Such access shall
include use of utilities at Seller's expense and reasonable office, parking and
storage space.
(c) Cambridge shall allow Seller to conduct sampling and to install,
operate and maintain any remediation and monitoring devices at, on or under the
Shadeland, Shelbyville or Rushville Facility, including, but not limited to,
soil removal equipment, monitoring wells and groundwater recovery and treatment
systems, that are required by any Governmental Authority or that Seller
reasonably determines are necessary to perform Seller's Response; provided that
such actions shall not unreasonably disrupt Cambridge operations.
49
<PAGE>
(d) Seller shall implement any required Response in a manner which does
not unreasonably interfere with Cambridge's operations.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Expenses. Except as otherwise provided in this Agreement,
--------
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such cost
or expense.
SECTION 10.02. Bulk Transfer Laws. Notwithstanding any other provision of
------------------
this Agreement, the Buyer hereby waives compliance by the Seller with the
provisions of any so-called bulk transfer law of any jurisdiction in connection
with the transactions contemplated hereby. Seller hereby indemnifies and agrees
to hold Buyer harmless from and against any and all liabilities, losses,
damages, costs and expenses, including reasonable counsel fees, reasonably and
proximately incurred or sustained by Buyer due to such non-compliance.
SECTION 10.03. Assignment. No party hereto shall transfer or assign, or
----------
grant or permit to exist any lien on, this Agreement or any of its rights or
obligations hereunder (by operation of law or otherwise) without the prior
written consent of the other party hereto (which consent may be withheld in such
other party's sole discretion), and any such purported transfer or assignment
without such consent shall be void and of no force of effect.
SECTION 10.04. Severability. If any provision of this Agreement or the
------------
application of any such provision is invalid, illegal or unenforceable in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or invalidate or render unenforceable such
provision in any other jurisdiction. In the event that any provision of this
Agreement shall be finally determined by a court of competent jurisdiction to be
unenforceable such court shall have jurisdiction to reform this Agreement so
that it is enforceable to the maximum extent permitted by law and the parties
shall abide by such court's
50
<PAGE>
determination.
SECTION 10.05. Amendment and Waiver. No amendment to this Agreement shall
--------------------
be effective unless it shall be in writing and signed by each party thereto.
Any failure of a party to comply with any obligation, covenant, agreement or
condition contained in this Agreement may be waived by the party entitled to the
benefits thereof only by a written instrument duly executed and delivered by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure of compliance.
SECTION 10.06. Parties in Interest: Limitation on Rights of Others. This
---------------------------------------------------
Agreement shall be binding upon and inure to the benefit of the parties thereto
and their permitted assigns. Nothing in this Agreement, whether express or
implied, shall give or be construed to give any person (other than the parties
thereto and their permitted assigns) any legal or equitable right, remedy or
claim under or in respect of this Agreement, unless such person is expressly
stated in this Agreement to be entitled to any such right, remedy or claim.
SECTION 10.07. Counterparts; Effectiveness. This Agreement (a) may be
---------------------------
executed by the parties thereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same contract and (b) shall not become
effective until one or more counterparts have been executed by each party
thereto and delivered to the other parties thereto.
SECTION 10.08. Entire Agreement. This Agreement together with any exhibits,
----------------
schedules, appendices and attachments thereto, constitute the entire agreement
of the parties with respect to the subject matter thereof and supersede all
prior written and oral agreements and understandings with respect to such
subject matter including, without limitation, the Letter of Intent between
Seller and Buyer dated February 9, 1996 and the Confidentiality Agreement
between Seller and Buyer dated November 9, 1995.
SECTION 10.09. Governing Law. This Agreement shall in all respects be
-------------
governed by and construed in accordance with the internal laws of the State of
Ohio
51
<PAGE>
applicable to agreements made and to be performed entirely within such State,
without regard to the conflict of laws principles of such State.
SECTION 10.10 Notices. All notices and other communications to be given
-------
to any party under this Agreement shall be in writing and any notice shall be
deemed given when delivered by hand, courier or overnight delivery service or
three days after being mailed by certified or registered mail, return receipt
requested, with appropriate postage prepaid, or when received in the form of a
telegram or facsimile, and shall be directed to the address or facsimile number
of such party specified below (or at such other address or facsimile number as
such party shall designate by like notice):
(a) If to a Buyer: Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Attn: Chairman of the Board
With a copy to: Jaffe, Raitt, Heuer & Weiss
One Woodward, Suite 2400
Detroit, MI 48226
Attn: Robin Krueger
(b) If to the Seller: GenCorp Inc.
175 Ghent Road
Fairlawn, Ohio 44333
Attn: Chief Financial Officer
SECTION 10.11 Interpretation. It is acknowledged by the parties that
--------------
this Agreement has undergone several drafts with the negotiated suggestions of
52
<PAGE>
each and, therefore, no presumptions shall arise favoring either party by virtue
of the authorship of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CAMBRIDGE INDUSTRIES, INC. GENCORP INC.
By: /s/ R. P. Mika By: /s/ D. M. Steuert
-------------------------- ---------------------------
Name: R. P. Mika Name: D. M. Steuert
------------------------ -------------------------
Title: Vice President Title: Senior Vice President
----------------------- ------------------------
and Chief Financial Officer
------------------------------
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ R. P. Mika
--------------------------
Name: R. P. Mika
------------------------
Title: Vice President
-----------------------
53
<PAGE>
EXHIBIT 10.25
MANAGEMENT AGREEMENT
--------------------
MANAGEMENT AGREEMENT dated as of October 15, 1996 among Cambridge
Industries Holdings, Inc., a Delaware corporation (the "Company"), Cambridge
-------
Industries, Inc., a Delaware corporation ("Cambridge"), and Donald Holton
("Executive"). ---------
---------
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase and the Company will sell 757.58 shares of the
Company's Class L Common Stock, par value $.01 per share (the "Class L Common"),
--------------
and 3,030.30 shares of the Company's Class A Common Stock, par value $.01 per
share (the "Class A Common"; the Class L Common and the Class A Common are
--------------
hereinafter sometimes referred to collectively as the "Common Stock"). All of
------------
such shares of Common Stock acquired by Executive are referred to herein as the
"Executive Stock". In addition, the Company desires to grant to Executive
---------------
options to acquire 8,750 shares of Class A Common, which options shall be
divided into three grants, one grant for 2,500 shares of Class A Common (the
"Tranche I Option"), one grant for 1,250 shares of Class A Common (the "Tranche
---------------- -------
II Option") and one grant for 5,000 shares of Class A Common (the "Tranche III
- - --------- -----------
Option"). The Tranche I Option, the Tranche II Option and the Tranche III Option
- - ------
are hereinafter referred to individually as an "Option" and collectively as the
------
"Options".
-------
The parties hereto agree as follows:
STOCK AND OPTION PROVISIONS
1. Purchase and Sale of Stock.
--------------------------
(a) Closing. As of the date hereof, Executive will purchase, and the
-------
Company will sell, 757.58 shares of Class L Common at a price per share of
$1,306.80 and 3,030.30 shares of Class A Common at a price per share of $3.30,
for an aggregate purchase price of $1,000,000. The Company will deliver to
Executive a certificate or certificates representing such shares of Executive
Stock, and, upon the receipt of such certificate(s), Executive will deliver to
the Company a check or wire transfer of funds in the aggregate amount of
$500,000 and a promissory note in the form of Annex A attached hereto in an
aggregate principal amount of $500,000 (the "Executive Note"). Executive's
--------------
obligations under the Executive Note will be secured by a pledge of 50% of the
shares of Executive Stock to the Company, and in connection therewith, Executive
will enter into a pledge agreement in the form of Annex B attached hereto.
(b) Representations and Warranties. In connection with the purchase
------------------------------
and sale of the Executive Stock hereunder, Executive represents and warrants to
the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to
this Agreement will be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act of 1933, as amended (the "1933 Act"), or any applicable
--------
state securities laws, and the Executive Stock will not be disposed of in
contravention of the 1933 Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
<PAGE>
(iii) Executive is able to bear the economic risk of his investment
in the Executive Stock for an indefinite period of time because the
Executive Stock has not been registered under the 1933 Act and, therefore,
cannot be sold unless subsequently registered under the 1933 Act or an
exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive
Stock and has had full access to such other information concerning the
Company as he has requested. Executive has reviewed, or has had an
opportunity to review, a copy of that certain Amended and Restated
Refinancing Agreement, dated as of November 17, 1995, between the Company
and certain of its stockholders, and Executive is familiar with the
transactions contemplated thereby. Executive has also reviewed, or has had
an opportunity to review the Company's Certificate of Incorporation and
bylaws and the loan agreements, notes and related documents with the
Company's and its Subsidiaries' (as defined below) lenders.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Executive is a party or any judgment, order
or decree to which Executive is subject.
2. Stock Options.
-------------
(a) Tranche I Option.
----------------
(i) Tranche I Option Grant. The Company hereby grants to Executive the
----------------------
Tranche I Option to purchase up to 2,500 shares of Class A Common Stock
("Tranche I Option Shares"), at a price per share of $3.30 (the "Tranche I
----------------------- ---------
Price"). The Tranche I Price and the number of Tranche I Option Shares will be
- - -----
equitably adjusted for any stock split, stock dividend, reclassification or
recapitalization of the Company which occurs subsequent to the date of this
Agreement. The Tranche I Option will expire on the earlier of the tenth
anniversary of the date hereof or the date of termination of Executive's
employment with the Company or a Subsidiary for any reason (the earlier of such
dates, the "Expiration Date"), provided that Executive will have 30 days after
---------------
the Expiration Date to exercise the Tranche I Option Shares which are then
exercisable pursuant to paragraph 1(a)(ii) below. The Tranche I Option is not
intended to be an "incentive stock option" within the meaning of Section 422A of
the Internal Revenue Code.
(ii) Exercisability. On each date set forth below, the Tranche I Option
--------------
will have vested and become exercisable with respect to the percentage of
Tranche I Option Shares set forth opposite such date if Executive is employed by
the Company or a Subsidiary on such date:
<TABLE>
<CAPTION>
Date Cumulative Percentage
---- of Tranche I Option Shares
--------------------------
Vested
------
<S> <C>
February 1, 1996 20%
August 1, 1996 60%
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
February 1, 1997 100%
</TABLE>
; provided that, upon the occurrence of (i) an Approved Sale (as defined below),
or (ii) (A) the Company (or its successor as a result of merger, consolidation,
reorganization or sale) becoming a reporting company under the Securities
Exchange Act of 1934 as a result of the registration of its common equity
securities thereunder (the "IPO") and (B) the persons listed on Schedule A
---
attached hereto (the "Investors") and their affiliates collectively ceasing to
---------
own at least 50% of the aggregate number of shares of Common Stock that they own
on the date hereof (as adjusted for stock splits, stock dividends and
recapitalization and for exchanges in connection with a merger, consolidation,
reorganization or sale) (the earlier of the events described in clauses (i) and
(ii), an "Acceleration Event"), the Tranche I Option will become fully vested
------------------
and exercisable with respect to all of the Tranche I Option Shares.
(iii) Procedure for Exercise. At any time after the Tranche I Option has
----------------------
become exercisable with respect to any Tranche I Option Shares and on or prior
to 30 days after the Expiration Date, Executive may exercise the Tranche I
Option with respect to the Tranche I Option Shares above by delivering written
notice of exercise to the Company, together with (a) written acknowledgment that
Executive has read and has been afforded an opportunity to ask questions of
management of the Company regarding all financial and other information provided
to Executive regarding the Company and (b) payment in full by delivery of a
cashier's or certified check in the amount of the Tranche I Price with respect
to such Tranche I Option Shares plus the amount, if any, of any additional
federal and state income taxes required to be withheld by reason of the exercise
of the Tranche I Option. As a condition to any exercise of the Tranche I Option,
Executive will permit the Company to deliver to him all financial and other
information regarding the Company and its subsidiaries which it believes
necessary to enable Executive to make an informed investment decision.
(b) Tranche II Option and Tranche III Option.
----------------------------------------
(i) Tranche II Option and Tranche III Option Grants. The Company hereby
-----------------------------------------------
grants to Executive (A) the Tranche II Option to purchase up to 1,250 shares of
Class A Common (the "Tranche II Option Shares"), with an exercise price per
------------------------
share (the "Tranche II Price") of $447.13, and (B) the Tranche III Option to
----------------
purchase up to 5,000 shares of Class A Common (the "Tranche III Option Shares"),
-------------------------
with an exercise price per share (the "Tranche III Price") of $807.13. The
-----------------
number of Tranche II Option Shares, the Tranche III Option Shares, the Tranche
II Price, and the Tranche III Price will be equitably adjusted for any stock
split, stock dividend, reclassification or recapitalization of the Company which
occurs subsequent to the date of this Agreement. The Tranche II Option and the
Tranche III Option will expire on the Expiration Date, provided Executive will
have 30 days after the Expiration Date to exercise the Tranche II Option and the
Tranche III Option. Neither the Tranche II Option nor the Tranche III Option is
intended to be an "incentive stock option" within the meaning of Section 422A of
the Internal Revenue code.
(ii) Exercisability. On each of February 1, 1997 and February 1, 1998,
--------------
50% of the Tranche II Option and 50% of the Tranche III Option will have vested
and become exercisable if Executive is employed by the Company or a Subsidiary
on such date; provided that, upon the occurrence of an Acceleration Event, the
Tranche II Option and the Tranche III Option will become fully vested and
exercisable with respect to all of the Tranche II Option Shares and Tranche III
Option Shares.
-3-
<PAGE>
(iii) Procedure for Exercise. At any time after the Tranche II Option
----------------------
and Tranche III Option have become exercisable with respect to any Tranche II
Option Shares or Tranche III Option Shares, respectively, and on or prior to 30
days after the Expiration Date, Executive may exercise all or a portion of the
Tranche II Option and the Tranche III Option by delivering written notice of
exercise to the Company together with (A) a written acknowledgment that
Executive has read, and has been afforded an opportunity to ask questions of
management of the Company regarding all financial and other information provided
to Executive regarding the Company, and (B) payment in full by delivery of a
cashier's or certified check in the amount of the Tranche II Price with respect
to the Tranche II Option and the Tranche III Price with respect to the Tranche
III Option plus the amount, if any, of any additional federal and state income
taxes required to be withheld by reason of the exercise of such Options. As a
condition to any exercise of the Tranche II Option and the Tranche III Option,
Executive will permit the Company to deliver to him all financial and other
information regarding the Company and its Subsidiaries which it believes
necessary to enable Executive to make an informed investment decision.
c. Securities Laws Restrictions. Executive represents that when
----------------------------
Executive exercises the Options he will be purchasing Option Shares for
Executive's own account and not on behalf of others. Executive understands and
acknowledges that federal and state securities laws govern and restrict
Executive's right to offer, sell or otherwise dispose of any Option Shares
unless Executive's offer, sale or other disposition thereof is registered under
the 1933 Act and state securities laws or, in the opinion of the Company's
counsel, such offer, sale or other disposition is exempt from registration
thereunder. Executive agrees that he will not offer, sell or otherwise dispose
of any Option Shares in any manner which would: (i) require the Company to file
any registration statement (or similar filing under state law) with the
Securities and Exchange Commission or to amend or supplement any such filing or
(ii) violate or cause the Company to violate the 1933 Act, the rules and
regulations promulgated thereunder or any other state or federal law. Executive
further understands that the certificates for any Option Shares Executive
purchases will bear the legend set forth in paragraph 6 hereof or such other
legends as the Company deems necessary or desirable in connection with the 1933
Act or other rules, regulations or laws.
d. Non-Transferability of Options. The Options are personal to
------------------------------
Executive and are not transferable by Executive except to Permitted Transferees
pursuant to paragraph 5 below. Only Executive or Permitted Transferees or
their respective estates or heirs are entitled to exercise the Options.
e. Effect of Transfers in Violation of Agreement. The Company will not
---------------------------------------------
be required (i) to transfer on its books any Option Shares which have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (ii) to treat as owner of such shares, to accord the right to vote
as such owner or to pay dividends to any transferee to whom such shares have
been transferred in violation of this Agreement.
f. Delivery of Shares. The date on which Executive has delivered to the
------------------
Company the items required under paragraph 2(a)(iii), as to the Tranche I
Option, and under paragraph 2(b)(iii), as to the Tranche II Option and the
Tranche III Option, is referred to herein as the "Exercise Date". Certificates
for Option Shares purchased upon exercise of the Options shall be delivered by
the Company to Executive within five business days after the Exercise Date.
-4-
<PAGE>
g. Date of Issuance. The Option Shares issuable upon the exercise of
----------------
the Options shall be deemed to have been issued to Executive at the Exercise
Date, and Executive shall be deemed for all purposes to have become the record
holder of such Option Shares at the Exercise Date.
h. Fully Paid. The issuance of certificates for Option Shares upon
----------
exercise of the Options shall be made without charge to Executive for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise. Each Option Share issuable upon exercise of the
Options shall, upon payment of the exercise price therefor, be fully paid and
nonassessable and free from all liens and charges with respect to the issuance
thereof.
i. Book Transfer. The Company shall not close its books against the
-------------
transfer of any Option Shares issued or issuable upon the exercise of the
Options in any manner which interferes with the timely exercise of the Options.
j. Filings. The Company shall assist and cooperate with Executive to
-------
make any required governmental filings or obtain any governmental approvals
prior to or in connection with any exercise of the Options (including, without
limitation, making any filings required to be made by the Company).
k. Conditional Exercise. Any exercise by Executive of all or any portion
--------------------
of the Options in connection with an Acceleration Event may, at the election of
Executive, be conditioned upon the consummation of the Acceleration Event in
which case such exercise shall not be deemed to be effective until the
consummation of such Acceleration Event.
l. Reservation. The Company shall at all times reserve and keep
-----------
available out of its authorized but unissued shares of Class A Common solely for
the purpose of issuance upon the exercise of the Options, such number of shares
of Class A Common as are issuable upon the exercise of all outstanding Options.
All Option Shares which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such Option Shares may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon each such
issuance).
3. Repurchase Option.
-----------------
(a) Definitions. The following terms are defined as follows:
-----------
"Cause" means (i) the willful failure (other than by reason of Disability)
-----
by Executive to substantially perform the duties reasonably requested or
reasonably prescribed by the Board of Directors of the Company (the "Board")
which are not inconsistent with Executive's position as President and Chief
Executive Officer of the Company and Cambridge and the continuation of such
conduct for five (5) business days after receipt by Executive of written notice
from the Board stating the nature of such conduct; (ii) the engaging by
Executive in conduct which is materially injurious to the Company, Cambridge or
any of their Subsidiaries and the continuation of such conduct for five (5)
business days after the receipt by Executive of written notice from the Board
stating the nature of the injurious conduct; or (iii) Executive's conviction of
a felony involving moral turpitude. For purposes of this definition of "Cause",
-----
no act or failure to act shall be deemed "willful" unless knowingly done, or
omitted to be done, not in good faith and without reasonable belief that the
action or omission was in
-5-
<PAGE>
the best interests of the Company, Cambridge or their Subsidiaries.
"Disability" means Executive's inability, whether mental or physical,
----------
to perform the normal duties of Executive's position for six (6) consecutive
months. If Cambridge and Executive are unable to agree as to whether Executive
is Disabled, the question will be decided by a physician selected jointly by
Cambridge and Executive, at the expense of Cambridge, whose decision will be
conclusive and binding.
"Fair Market Value" of each share of Executive Stock means the market
-----------------
value agreed upon by Executive and the Board; provided that the Fair Market
Value of Option Shares which have not been exercised will be reduced by the
exercise price of such Options (but in any event not below zero). If Executive
and the Board are unable to agree upon the market value within ten days after a
Termination Date (as defined below), then the Executive and the Company will
jointly select a mutually acceptable business appraiser whose determination will
be binding. If Executive and the Board are unable to agree upon an appraiser
within five (5) days after the expiration of the ten-day period for their
jointly determining the market value, then within such five-day period Executive
and the Board each shall appoint an appraiser and the two appraisers so
appointed shall within ten (10) days thereafter select a third appraiser who
shall serve as the sole appraiser. The appraiser shall determine the market
value of a share of Executive Stock without any discount for transfer
restrictions, lack of liquidity, the fact that a minority interest is being
evaluated, or the fact that Executive will no longer be employed by Cambridge;
provided, however, the appraiser shall not include in his determination any
premium attributable to publicly traded companies because their stock is
publicly traded unless the Common Stock is then publicly traded. Any appraiser
appointed or selected hereunder shall not (and the directors, officers,
employees and affiliates of the appraiser shall not) have a direct or a material
indirect financial interest in the Company or its Subsidiaries. All fees of any
appraiser(s) retained pursuant to this provision shall be borne by the Company.
The Company promptly shall make available to the appraiser all financial and
other information reasonably requested by the appraiser and shall otherwise
cooperate with the appraiser. The appraiser shall render his written report of
the Fair Market Value to the Company and Executive within thirty (30) days after
his appointment. Pursuant to MCLA '600.5001, the parties agree that a judgment
of any Michigan circuit court may be rendered upon any such determination of the
appraiser. Except as otherwise provided herein, the Fair Market Value shall be
determined as of the Termination Date.
"Good Reason" means the occurrence, without Executive's express written
-----------
consent, of any of the following circumstances:
(i) the assignment to Executive of any duties inconsistent with
Executive's status as President and Chief Executive Officer of the Company
and Cambridge, a substantial adverse alteration in the nature or status of
Executive's responsibilities from those in effect immediately prior to such
assignment of duties, Executive's removal from any office specified in
paragraph 14 hereof or the transfer of any of Executive's responsibilities
to one or more other persons;
(ii) any reduction by Cambridge in the Base Salary as in effect
from time to time;
(iii) the failure by Cambridge to pay or provide to Executive
within seven (7) days of a written demand any amount of Base Salary, bonus
or any benefit which is due, owing and payable pursuant to the terms of any
applicable arrangement or policy or pursuant to the terms hereof, or to pay
any portion of an installment of deferred compensation due under any
-6-
<PAGE>
deferred compensation program of Cambridge; or
(iv) the failure by Cambridge to continue to provide Executive
with benefits substantially similar, in the aggregate, to Cambridge's life,
medical, dental, health, accident or disability insurance plans in which
Executive is participating as of the date hereof.
"LIBO Rate" means the rate per annum (rounded upwards, if necessary, to
---------
the nearest 1/16 of 1%) quoted by NBD Bank, N.A. at approximately 10:00 a.m.
London time (or as soon thereafter as practicable) for the offering by Bankers
Trust Company to leading banks in London interbank market of United States
Dollar deposits having a term of three months, as quoted on February 1, 1996 for
the period from the date hereof until January 31, 1997, and as quoted on each
February 1st (or as soon thereafter as practicable) hereafter for each year
thereafter from February 1, 1997, and each successive February 1st,
respectively, to the next January 31st.
"Option Shares" means collectively the Tranche I Option Shares, the
-------------
Tranche II Option Shares and the Tranche III Option Shares which have been
issued or which are issuable. For purposes of this paragraph 3 and paragraph 4
below, issued Options Shares will be deemed to be Executive Stock.
"Original Value" of each share of Executive Stock will be equal to
--------------
$1,306.80 for each share of Class L Common, and the original purchase price paid
by Executive (which shall include the exercise price paid for Option Shares) for
shares of Class A Common (as proportionally adjusted for all stock splits, stock
dividends and other recapitalizations affecting the Class L Common or the Class
A Common, as the case may be, subsequent to the date hereof); provided that the
Original Value of Option Shares which have not been exercised will be equal to
zero.
"Subsidiary" means any corporation of which shares of stock having a
----------
majority of the general voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by the Company
either directly or through its Subsidiaries.
"Without Cause" means the termination of Executive's employment by
-------------
Cambridge for any reason other than for Cause (as defined herein), Disability
(as defined herein) or death.
(b) Repurchase Option. In the event that Executive is no longer employed
-----------------
by the Company, any of its Subsidiaries or any joint venture in which the
Company or any of its Subsidiaries have an equity interest (a "Joint Venture")
-------------
for any reason (the date of such termination being referred to herein as the
"Termination Date"), all (but no less than all) of the Executive Stock, whether
----------------
held on the Termination Date or obtained by exercise of the Options after the
Termination Date and whether held by Executive or one or more Permitted
Transferees (as defined in paragraph 4 below), will be subject to repurchase by
the Company and the Investors pursuant to the terms and conditions set forth in
this paragraph 3 (the "Repurchase Option").
-----------------
(c) Termination for Cause. If Executive is no longer employed by the
---------------------
Company or any of its Subsidiaries as a result of Executive's termination for
Cause, then on or after the Termination Date, the Company may elect to purchase
all (but not less than all) of the Executive Stock at a price per share equal to
the lower of its Original Value or the Fair Market Value thereof.
(d) Voluntary Termination Prior to February 1, 1998. If Executive is no
-----------------------------------------------
longer employed by the Company or any of its Subsidiaries as a result of
Executive's voluntary termination (other than
-7-
<PAGE>
for Good Reason or due to Disability) prior to February 1, 1998, then on or
after the Termination Date, the Company may elect to purchase all (but not less
than all) of (1) the Unvested Executive Stock (as defined below) of Executive at
a price per share equal to the lower of its Original Value or the Fair Market
Value thereof and (2) the Vested Executive Stock (as determined below) of
Executive at a price per share equal to the Fair Market Value thereof. For the
purpose of determining the purchase price of Executive Stock upon such voluntary
termination, on each date set forth below (each a "Vesting Date" and,
------------
collectively, the "Vesting Dates"), the percentage set forth opposite such date
-------------
of each class of Executive Stock owned by Executive will vest and become "Vested
------
Executive Stock" if, as of each such date, Executive is still employed by the
- - ---------------
Company, any of its Subsidiaries or any Joint Venture:
<TABLE>
<CAPTION>
Date Cumulative Percentage
---- of Tranche I Option Shares
--------------------------
Vested
------
<S> <C>
February 1, 1997 50%
February 1, 1998 100%
</TABLE>
Executive Stock which is not Vested Executive Stock will be treated as "Unvested
--------
Executive Stock" hereunder.
- - ---------------
(e) Termination Other than for Cause. If Executive is no longer employed
--------------------------------
by the Company or any of its Subsidiaries due to (i) Executive's death, (ii)
Disability of Executive, (iii) termination of Executive by the Company Without
Cause, (iv) termination of Executive's employment by Executive for Good Reason,
or (v) voluntary termination of Executive's employment by Executive on or after
February 1, 1998, the Company may elect to purchase all (but not less than all)
of the Executive Stock at a price per share equal to the Fair Market Value
thereof.
(f) Repurchase Procedures. The Company may elect to exercise the right to
---------------------
purchase all (but not less than all) of the shares of Executive Stock pursuant
to the Repurchase Option only by delivering written notice (the "Repurchase
----------
Notice") to the holder or holders of the Executive Stock within 30 days after
- - ------
the Termination Date giving rise to the Repurchase Option (the "Repurchase
----------
Option"). The Repurchase Notice will set forth the number of shares of Executive
- - ------
Stock to be acquired from such holder(s), the aggregate consideration to be paid
for such shares and the time and place for the closing of the transaction.
(g) Investor Rights.
---------------
(i) If for any reason the Company does not elect to purchase all
of the Executive Stock pursuant to the Repurchase Option, the Investors
will be entitled to exercise the Repurchase Option, only in the manner set
forth in this paragraph 3, for the Executive Stock the Company has not
elected to purchase (the "Available Shares"). As soon as practicable, but
----------------
in any event within ten (10) days after the Termination Date, the Company
will deliver written notice (the "Option Notice") to the Investors setting
-------------
forth the number of Available Shares and the price for each Available
Share.
(ii) Each of the Investors will initially be permitted to purchase
its pro rata share
-8-
<PAGE>
(based upon the number of shares of Common Stock then held by such
Investors) of the Available Shares. Each Investor may elect to purchase any
number of the Available Shares (subject to the preceding sentences) by
delivering written notice to the Company within 10 days after receipt of
the Option Notice from the Company (such 10-day period being referred to
herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5) days
after the expiration of the Investor Election Period, the Company will, if
necessary, notify the Investors electing to purchase Available Shares of
any Available Shares which Investors have elected not to purchase and each
of the electing Investors will be entitled to purchase the remaining
Available Shares on the same terms as described above (the "Second Option
-------------
Notice"); provided that if in the aggregate such Investors elect to
------
purchase more than the remaining Available Shares, such remaining Available
Shares purchased by each such Investor will be reduced on a pro rata basis
based upon the number of shares of Common Stock then held by such
Investors. Each Investor may elect to purchase any of the remaining
Available Shares available to such Investor by delivering written notice to
the Company within 5 days after the delivery of the Second Option Notice
(with such 5-day period referred to herein as the "Second Investor Election
------------------------
Period").
------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Investor Election Period (if any) the Company will, if necessary,
notify the holder(s) of Executive Stock as to the number of shares of
Executive Stock being purchased from the holder(s) by the Investors (the
"Supplemental Repurchase Notice"). At the time the Company delivers a
------------------------------
Supplemental Repurchase Notice to the holder(s) of Executive Stock, the
Company will also deliver to each electing Investor written notice setting
forth the number of shares of Executive Stock the Company and each Investor
will acquire, the aggregate purchase price to be paid and the time and
place of the closing of the transaction.
(h) Closing. The closing of the transactions contemplated by this
-------
paragraph 3 will take place on the date designated by the Company in the
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than 60 days after the delivery of such notice. The
Company and/or the Investors, as the case may be, will pay for the Executive
Stock to be purchased pursuant to the Repurchase Option by cash or certified or
cashier's check made payable to the holders of such Executive Stock. The
aggregate purchase price of the Executive Stock shall be reduced by (i) the
amount of outstanding principal and interest accrued, if any, on the Executive
Note (which Executive Note then shall be deemed paid in full), and (ii) the
aggregate exercise price of any Option Shares then vested and exercisable
pursuant to paragraph 2 of this Agreement which are included in the Executive
Stock. The Company and/or the Investors, as the case may be, will receive
customary representations and warranties from each seller regarding the sale of
the Executive Stock, including but not limited to the representation that such
seller has good and marketable title to the Executive Stock to be transferred
free and clear of all liens, claims and other encumbrances other than as may
arise under this Agreement and the other agreements referenced herein.
4. Sale of Executive Stock to the Company.
--------------------------------------
(a) Termination of Employment. In the event that (i) Executive is no
-------------------------
longer employed by
-9-
<PAGE>
the Company, any of its Subsidiaries or any Joint Venture due to (A) Executive's
death, (B) Disability of Executive, (C) termination of Executive's employment by
the Company Without Cause, (D) termination of Executive's employment by
Executive for Good Reason, or (E) voluntary termination of Executive's
employment by Executive on or after February 1, 1998, and (ii) neither the
Company nor the Investors has delivered timely a Repurchase Notice or
Supplemental Repurchase Notice for all such shares of Executive Stock held by
Executive and any Permitted Transferees(s) of Executive Stock ("Qualified
---------
Holder(s)"), then Executive and each Qualified Holder shall have the right to
- - ---------
sell to the Company (the "Sell Option") and the Company shall have the
-----------
obligation to purchase all (but not less than all) of the shares of Executive
Stock at a price per share equal to the Fair Market Value thereof.
(b) Exercise of Rights. Executive (or his heirs or estate) and each
------------------
Qualified Holder may only exercise the rights described above by delivering
written notice (the "Sell Notice") to the Company within 30 days after the
-----------
expiration of the later of the Investor Election Period or the Second Investor
Election Period. The Company shall give the Executive written notice of the
expiration of the Investor Election Period and the Second Investor Election
Period, if any. The Sell Notice will set forth the number of shares of the
Executive Stock to be sold to the Company and the basis for the computation
thereof, the number of shares to be purchased at Fair Market Value and/or
Original Value, and the time and place for closing of the transaction which
shall be at the Company's principal place of business within ten (10) days after
the receipt by the Company of the Sell Notice from Executive (and/or the
Qualified Holder) or, if later, within ten (10) days after the receipt by
Executive and/or the Qualified Holder) and the Company of the appraiser's
written report of the Fair Market Value. The aggregate purchase price of the
Executive Stock subject to the Sell Notice will be reduced by the amount of
outstanding principal and interest accrued, if any, on the Executive Note (which
Executive Note then shall be deemed paid in full) and the aggregate exercise
price of any Options which are included in the Executive Stock. The Company will
purchase all but not less than all of the shares of Executive Stock subject to
the Sell Notice by delivery to the holder(s) of the Executive Stock being
repurchased of cash or a certified or cashier's check in an amount equal to the
amount of cash paid by Executive in connection with the initial purchase of
Executive Stock plus any cash payments made by Executive on the Executive Note
or in connection with the exercise of any Option. The balance of the purchase
price will be paid by the Company by the issuance of its subordinated promissory
note (the "Subordinated Note") which will (i) be payable over three years in
-----------------
quarterly installments, (ii) bear interest at the LIBO Rate plus 3% per annum,
and (iii) be paid on a current basis so long as the Senior Obligations are not
in default. The obligations of the Company under the Subordinated Note will be
subordinate to the payment by the Company of all indebtedness of the Company to
(i) Bankers Trust Company, as Bank Agent, under the Credit Agreement dated as of
November 17, 1995 amended and restated as of March 1, 1996 among the Company,
Cambridge, Bankers Trust Company and the other Banks signatory thereto, (ii)
Bain Capital V Mezzaine Fund, L.P. and BCIP Trust Associates, L.P.
(collectively, the "Bain Funds") under the Senior Subordinated Credit Agreement
----------
dated as of December 14, 1995, as amended, by and among Cambridge and the Bain
Funds, (iii) the Bain Funds under the Junior Subordinated Credit Agreement dated
as of March 1, 1996 by and among the Company and the Bain Funds, (iv) Gencorp,
Inc. under the Senior Subordinated Credit Agreement dated as of March 1, 1996 by
and among the Company and Gencorp, Inc, and (v) any and all renewals or
refinancing thereof made by the Company with unaffiliated institutional lenders
(collectively, the "Senior Obligations"). Notwithstanding anything to the
------------------
contrary in the Subordinated Note, or in the related subordination agreement,
the principal of and all interest accrued on the Subordinated Note will be due
and payable in full on the earlier of (i) February 1, 2003, (ii) upon the
occurrence of an Acceleration Event or (iii) upon the occurrence of a redemption
of, or dividend on, the Company's equity securities (other than a repurchase of
equity securities of a manager (other than
-10-
<PAGE>
Richard Crawford) in connection with the termination of such person's employment
with the Company or its Subsidiaries).
(c) Limitation on Sell Option. The Company will be required to purchase
-------------------------
shares of the Executive Stock under the Sell Option only to the extent of its
funds legally available for the purchase of shares of its capital stock and only
to the extent that such purchase would not violate the provisions of any loan
agreement relating to the Senior Obligations which is binding upon the Company
as of the date hereof; provided, however, in the event that Company is unable to
complete its purchase of all of the Executive Stock due to the restrictions of
any such loan agreement or indenture, the Company at a minimum shall purchase
that amount of Executive Stock having a purchase price equal to the amount then
outstanding under the Executive Note and, as to the balance of the Executive
Stock, the Company agrees to undertake in good faith all reasonable efforts to
obtain the consent of its lender(s) to permit the purchase of the Executive
Stock and agrees to complete its purchase of the balance of the Executive Stock
as soon as it is permitted to do so. The purchase price for the balance of the
Executive Stock not purchased because the Company did not have sufficient funds
legally available for the purchase of shares of its capital stock or because of
restrictions contained in any loan agreement or indenture of the Company shall
be the higher of (i) the amount that would have been due had the Company been
able to complete the purchase upon the initial exercise of the Sell Option, and
(ii) the price that would be due assuming the Termination Date is the date the
Company gives written notice to Executive that it is now permitted to complete
the purchase of the balance of the Executive Stock.
-11-
<PAGE>
5. Restrictions on Transfer.
------------------------
(a) Transfer of Executive Stock and Option Shares. Executive will not
---------------------------------------------
sell, pledge or otherwise transfer any interest in any shares of Executive Stock
or Option Shares, except pursuant to (i) the provisions of paragraphs 1, 2, 3,
4, 8 and 10 hereof, (ii) the provisions of paragraph 5(b) below, or (iii)
pursuant to the Registration Agreement, dated as of November 17, 1995, as
amended, among the Company and its stockholders.
(b) Certain Permitted Transfers. The restrictions contained in this
---------------------------
paragraph 5 will not apply with respect to transfers of Executive Stock or
Option Shares (i) pursuant to applicable laws of descent and distribution, (ii)
among Executive's Family Group (as defined below) or (iii) any charitable
remainder trust (as such term is defined under Section 664 of the Internal
Revenue Code of 1986, as amended), provided that the restrictions contained in
this paragraph 5 will continue to be applicable to the Executive Stock or Option
Shares after any such transfer and the transferees of such Executive Stock shall
agree in writing to be bound by the provisions of this Agreement. "Family Group"
------------
means Executive's spouse and descendants (whether natural or adopted), and any
trust solely for the benefit of, or any corporation, limited liability company
or partnership (foreign or domestic) solely owned by, Executive and/or
Executive's spouse and/or descendants. Any transferee of Executive Stock
pursuant to a transfer in accordance with the provisions of this subparagraph
5(b) is herein referred to as a "Permitted Transferee". Upon the transfer of
--------------------
Executive Stock or Option Shares pursuant to this paragraph 5(b), the Permitted
Transferee(s) will deliver a written notice (the "Transfer Notice") to the
---------------
Company. The Transfer Notice will disclose in reasonable detail the identity of
the Permitted Transferee(s).
6. Additional Restrictions on Transfer.
-----------------------------------
(a) The certificates representing the Executive Stock and Option Shares
will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
---
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS
SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE ISSUER (THE
"COMPANY") AND A CERTAIN EMPLOYEE OF THE COMPANY DATED AS OF
-------
OCTOBER __, 1996, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.
(b) No holder of Executive Stock or Options Shares may sell, transfer
or dispose of any Executive Stock or Option Shares (except pursuant to an
effective registration statement under the
-12-
<PAGE>
1933 Act) without first delivering to the Company an opinion of counsel
reasonably acceptable in form and substance to the Company (which counsel shall
be reasonably acceptable to the Company) that registration under the 1933 Act is
not required in connection with such transfer.
7. Definition of Executive Stock and Option Shares. For purposes of
-----------------------------------------------
the Repurchase Option and the Sell Option under this Agreement, Executive Stock
will include shares of Common Stock issuable upon exercise of any vested Options
held by Executive or his Permitted Transferee, whether or not such vested
Options have been exercised. For all purposes of this Agreement, Executive Stock
and Option Shares will continue to be Executive Stock and Option Shares in the
hands of any holder other than Executive (except for the Company, the Investors
and purchasers pursuant to an offering registered under the 1933 Act or
purchasers pursuant to a Rule 144 transaction), and each such other holder of
Executive Stock and Option Shares will succeed to all rights and obligations
attributable to Executive as a holder of Executive Stock and Option Shares
hereunder. Executive Stock and Option Shares will also include shares of the
Company's capital stock issued with respect to shares of Executive Stock and
Option Shares by way of a stock split, stock dividend or other recapitalization.
8. Sale of the Company.
-------------------
(a) If the Board and the holders of a majority of the shares of Common
Stock then outstanding approve a sale of all or substantially all of the
Company's assets determined on a consolidated basis or a sale of all or
substantially all of the Company's outstanding capital stock (whether by merger,
recapitalization, consolidation, reorganization, combination or otherwise) to an
Independent Third Party (as defined below) or group of Independent Third Parties
(collectively an "Approved Sale"), each holder of Executive Stock or Option
-------------
Shares will vote for, consent to and raise no objections against such Approved
Sale. If the Approved Sale is structured as (i) a merger or consolidation, each
holder of Executive Stock or Options Shares will waive any dissenters rights,
appraisal rights or similar rights in connection with such merger or
consolidation or (ii) sale of stock, each holder of Executive Stock or Option
Shares will agree to sell all of his shares of Executive Stock or Options Shares
and rights to acquire shares of Executive Stock or Option Shares on the terms
and conditions approved by the Board and the holders of a majority of the
Executive Stock or Option Shares then outstanding. Each holder of Executive
Stock or Option Shares will take all necessary or desirable actions in
connection with the consummation of the Approved Sale as requested by the
Company. "Independent Third Party" means any person or entity who, immediately
-----------------------
prior to the contemplated transaction, does not own in excess of 10% of the
Company's Common Shares on a fully-diluted basis (a "10% Owner"), who is not
---------
controlling, controlled by or under common control with any such 10% Owner and
who is not the spouse or descendent (by birth or adoption) of any such 10% Owner
or a trust for the benefit of such 10% Owner and/or such other persons or
entities.
(b) The obligations of the holders of Common Stock with respect to the
Approved Sale of the Company are subject to the satisfaction of the following
conditions: (i) upon the consummation of the Approved Sale, each holder of
Common Stock will receive the same form of consideration and the same portion of
the aggregate consideration that such holders of Common Stock would have
received if such aggregate consideration had been distributed by the Company in
complete liquidation pursuant to the rights and preferences set forth in the
Company's Certificate of Incorporation as in effect immediately prior to such
Approved Sale; (ii) if any holders of a class of Common Stock are given an
option as to the form and amount of consideration to be received, each holder of
such class of Common Stock will be given the same option; and (iii) each holder
of then currently exercisable rights
-13-
<PAGE>
to acquire shares of a class of Common Stock (including Options which become
vested and exercisable upon an Approved Sale) will be given an opportunity to
exercise such rights prior to the consummation of the Approved Sale and
participate in such sale as holders of such class of Common Stock.
(c) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated by the Securities Exchange Commission may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Executive Stock and
Option Shares will, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501) reasonably acceptable to
the Company. If any holder of Executive Stock or Option Shares appoints a
purchaser representative designated by the Company, the Company will pay the
fees of such purchaser representative, but if any holder of Executive Stock or
Option Shares declines to appoint the purchaser representative designated by the
Company such holder will appoint another purchaser representative, and such
holder will be responsible for the fees of the purchaser representative so
appointed.
(d) Executive and the other holders of Executive Stock and Option
Shares (if any) will bear their pro-rata share (based upon the number of shares
sold) of the costs of any sale of Executive Stock and Option Shares pursuant to
an Approved Sale to the extent such costs are incurred for the benefit of all
holders of Common Stock and are not otherwise paid by the Company or the
acquiring party. Costs incurred by Executive and the other holders of Executive
Stock and Option Shares on their own behalf will not be considered costs of the
transaction hereunder.
9. Public Offering. In the event that the Board and the holders of a
---------------
majority of the shares of Common Stock then outstanding approve an initial
public offering and sale of Common Stock (a "Public Offering") pursuant to an
---------------
effective registration statement under the 1933 Act, as amended, the holders of
Executive Stock and Option Shares will take all necessary or desirable actions
in connection with the consummation of the Public Offering. In the event that
such Public Offering is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the Common Stock structure
will adversely affect the marketability of the offering, each holder of
Executive Stock and Option Shares will consent to and vote for a
recapitalization, reorganization and/or exchange of the Common Stock into
securities that the managing underwriters, the Board and holders of a majority
of the shares of Common Stock then outstanding find acceptable and will take all
necessary or desirable actions in connection with the consummation of the
recapitalization, reorganization and/or exchange; provided that the resulting
securities reflect and are consistent with the rights and preferences set forth
in the Company's Certificate of Incorporation as in effect immediately prior to
such Public Offering and this Agreement.
10. Participation Rights.
--------------------
(a) At least 30 days prior to any sale or exchange (a "Transfer") of
--------
any class of Common Stock by an Investor (other than a Transfer among the
Investors or their affiliates or to an employee of the Company or its
Subsidiaries), such Investor (the "Transferring Stockholder") will deliver a
------------------------
written notice (the "Sale Notice") to the Company and the holders of such class
-----------
of Executive Stock and Option Shares (the "Other Stockholders"), specifying in
------------------
reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the Transfer. The Other Stockholders may elect to participate
in the contemplated Transfer by delivering written notice to the Transferring
Stockholder within 30 days after delivery of the Sale Notice. If any Other
Stockholders have elected to participate in such Transfer, the Transferring
Stockholder and such Other Stockholders will be entitled to sell in
-14-
<PAGE>
the contemplated Transfer, at the same price and on the same terms, a number of
shares of such class of Common Stock equal to the product of (i) the quotient
determined by dividing the number of shares of such class of Common Stock
(including vested Option Shares but not including any other unexercised stock
options) owned by such person by the aggregate number of shares of such class of
Common Stock (including vested Option Shares but not including any other
unexercised stock options and treating the Class A Common, the Class L Common
and the Company's Class P Common Stock, par value $.01 per share, as a single
class) owned by the Transferring Stockholder, the Other Stockholders and other
stockholders participating in such sale and (ii) the number of shares of such
class of Common Stock to be sold in the contemplated Transfer.
(b) The Transferring Stockholder will use reasonable efforts to obtain
the agreement of the prospective transferee(s) to the participation of the Other
Stockholders in any contemplated Transfer, and the Transferring Stockholder will
not Transfer any of its securities to the prospective transferee(s) unless (i)
the prospective transferee(s) agrees to allow the participation of the Other
Stockholders or (ii) the Transferring Stockholder agrees to purchase the number
of such class of securities from the Other Stockholders which the Other
Stockholders would have been entitled to sell pursuant to the last sentence of
paragraph (a) above at the same price and terms as the Transferring Stockholder
sold its shares.
11. Preemptive Rights.
-----------------
(i) If the Company authorizes the issuance or sale of any of its
securities (other than as a dividend on the outstanding Common Stock) to any of
the Investors, the Company shall first offer to sell to Executive a portion of
such stock or securities equal to the quotient determined by dividing (A) the
number of shares of Common Stock and vested Options held by Executive by (B) the
total number of shares of Common Stock outstanding and issuable upon exercise of
all vested and exercisable Options. Executive shall be entitled to purchase such
stock or securities at the most favorable price and on the most favorable terms
as such stock or securities are to be offered to such other Persons (including
the Investors). The purchase price for all stock and securities offered to
Executive shall be payable in cash by delivery of a cashier's, personal or
certified check or by wire transfer of immediately available funds.
(ii) In order to exercise its purchase rights hereunder, Executive must
within 30 days after receipt of written notice from the Company describing in
reasonable detail the stock or securities being offered, the purchase price
thereof, the payment terms and such holder's percentage allotment deliver a
written notice to the Company describing its election hereunder.
(iii) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such stock or securities which the Executive
has not elected to purchase during the 90 days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to Executive. Any stock or securities offered or sold by the Company to
any of the Investors after such 90-day period must be reoffered to Executive
pursuant to the terms of this paragraph.
(iv) The rights under this paragraph shall terminate upon the
effectiveness of a registration statement filed by the Company with the
Securities and Exchange Commission under the 1933 Act with respect to an
offering of Common Stock; provided that if the registration statement is
withdrawn or abandoned before any shares of Common Stock are sold thereunder,
the provisions of this
-15-
<PAGE>
paragraph shall remain in effect.
12. Termination of Provisions Relating to Executive Stock and Option
----------------------------------------------------------------
Shares. The provisions of paragraphs 3, 4, 5 and 8 will terminate upon the first
- - ------
to occur of (i) an Approved Sale, or (ii) (A) the Company (or its successor as a
result of merger, consolidation, reorganization or sale) becoming a reporting
company under the Securities Exchange Act of 1934 as a result of the
registration of its common equity securities thereunder and (B) the Investors
and their affiliates collectively ceasing to own at least 50% of the aggregate
number of shares of Common Stock that they own on the date hereof (as adjusted
for stock splits, stock dividends and recapitalization and for exchanges in
connection with a merger, consolidation, reorganization or sale).
EMPLOYMENT PROVISIONS
13. Employment. Cambridge shall employ Executive, and Executive hereby
----------
accepts employment with Cambridge, upon the terms and conditions set forth in
this Agreement. The term of employment shall commence as of February 1, 1996 and
shall continue in effect until February 1, 1998 (the "Employment Period");
-----------------
provided however, on February 1, 1998 and on the first (1st) day of each
successive six-month anniversary thereof, the Employment Period shall
automatically be extended for an additional period of six (6) months unless
Cambridge or Executive shall have notified the other party in writing not less
than sixty (60) days prior to the commencement date of any such extension of
Cambridge's or Executive's intention not to so extend the Employment Period.
14. Position and Duties.
-------------------
(a) During the Employment Period, Executive shall serve as the
President and Chief Executive Officer of the Company and Cambridge and shall
have the normal duties, responsibilities and authority of the President and
Chief Executive Officer, subject to the power of the Board to expand or limit
such duties, responsibilities and authority (not inconsistent with Executive's
position as President and Chief Executive Officer) and to override actions of
the President and Chief Executive Officer.
(b) Executive shall report to the Board, and Executive shall devote his
best efforts and substantially all of his business time and attention (except
for permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company and its Subsidiaries.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner. Nothing
herein shall prohibit Executive from devoting his time to civic and community
activities or managing personal investments, as long as the foregoing do not
interfere with the performance of his duties hereunder or detract from his
devoting substantially all of his working time to the business and affairs of
the Company.
15. Base Salary and Benefits.
------------------------
(a) During the Employment Period, Executive's base salary shall be
$50,000 per month during February and March 1996 and thereafter shall be
$475,000 per annum or such higher rate as the Board may designate from time to
time (the "Base Salary"), which salary shall be payable in regular installments
-----------
in accordance with Cambridge's general payroll practices and shall be subject to
customary withholding. In addition, during the Employment Period, Executive and
his spouse shall be entitled to participate in all of the Company's and its
Subsidiaries' employee benefit programs for which senior
-16-
<PAGE>
executive employees of the Company and its Subsidiaries and their spouses are
generally eligible, and the Company shall make premium payments in an amount not
in excess of $21,000 per year with respect to a whole life insurance policy in
the amount of $700,000 to be obtained by Executive subsequent to the date
hereof.
(b) Cambridge shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Cambridge's policies in effect from time to time
with respect to travel, entertainment and other business expenses (including
commuting expenses to and from Rhode Island and/or Florida and lodging in
Michigan), subject to Cambridge's requirements with respect to reporting and
documentation of such expenses. Cambridge shall provide Executive with an
automobile and pay or reimburse Executive for all maintenance and operating
expenses incurred.
(c) In addition to the Base Salary, the Board will award a bonus (the
"Bonus") to Executive of between 30% (if 85% of Base Case Earnings (as defined
-----
below) target is achieved) and 60% (if Base Case Earnings target is achieved)
and 110% (if Stretch Case Earnings (as defined below) target is achieved) of the
Base Salary following the end of each fiscal year during the Employment Period
based upon the Company and its Subsidiaries on a combined basis achieving
mutually agreed upon earnings target's during such year. The Bonus will be paid
within 30 days following receipt by the Company of its audited financial
statements for such fiscal year. The Bonus for fiscal year 1996 and for the last
fiscal year of the Employment Period will be pro rated for the time during which
Executive is employed during such fiscal year and will be a minimum of $150,000
for fiscal year 1996. The Bonus will be calculated for each fiscal year of the
Company as follows:
(A) If the Company's and its Subsidiaries' Earnings are below
85% of the Company's target Base Case Earnings for the applicable
fiscal year, no Bonus shall be paid to Executive for that fiscal year.
(B) If the Company's and its Subsidiaries' Earnings are between 85%
and 100% of the Company's target Base Case Earnings for the applicable
fiscal year, Executive's Bonus will vary proportionately between 30% of
his annual Base Salary, in the event 85% of such target Base Case
Earnings amount is achieved, and 60% of his annual Base Salary, in the
event 100% of such target Base Case Earnings amount is achieved.
(C) If the Company's and its Subsidiaries' Earnings are between
100% of the Company's target Base Case Earnings and 100% of the
Company's target Stretch Case Earnings (as defined below) for the
applicable fiscal year, Executive's Bonus will vary proportionately
between 60% of his annual Base Salary, in the event 100% of such target
Base Case Earnings amount is achieved, and 110% of his annual Base
Salary, in the event 100% of such target Stretch Case Earnings amount
is achieved.
For purposes of this Agreement, the term "Earnings" means, for the Company and
--------
its Subsidiaries on a combined basis, earnings before interest, taxes,
depreciation, amortization (including amortization of any acquisition or
financing related costs),1 management bonuses, non-cash OPEB charges and foreign
exchange gains or losses, but after cash OPEB charges and any one-time cash
charges in connection with an acquisition which were charged against purchase
accounting reserves and before the reversal of reserves set up in conjunction
with the Gencorp acquisition or gains or losses associated with the Gencorp
purchase price adjustment to the extent reflected in earnings, all as determined
in accordance
-17-
<PAGE>
with generally accepted accounting principles consistently applied. The terms
"Base Case Earnings" and "Stretch Case Earnings" shall mean the forecasted
------------------ ---------------------
Earnings of the Company and its Subsidiaries on a combined basis which, for
fiscal year 1996, are in the amounts set forth below:
<TABLE>
<CAPTION>
Base Case Earnings Stretch Case Earnings
<S> <C>
$52,200,0002 $54,800,000
</TABLE>
The Company and Executive agree to jointly establish the Base Case Earnings for
each fiscal year subsequent to the 1996 fiscal year no later than the
commencement of such fiscal year based upon the Company's budget for each fiscal
year. Stretch Case Earnings for future fiscal years shall be set at 110% of Base
Case Earnings for such fiscal year.
16. Termination of Employment. Executive's employment may be terminated
-------------------------
by either Cambridge or Executive by giving a Notice of Termination, as defined
in subsection (a) of this paragraph 16. If Executive's employment should
terminate prior to the expiration of the Employment Period (as it may be
extended) Executive's entitlement to benefits shall be determined in accordance
with paragraph 17 hereof.
(a) Notice of Termination. Any termination of Executive's employment by
---------------------
Cambridge or by Executive shall be communicated by written Notice of Termination
to the other party hereto in accordance with paragraph 22 hereof. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which shall
---------------------
indicate the specific termination provision in this Agreement relied upon, if
any, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
17. Compensation Upon Termination. Upon termination of Executive's
-----------------------------
employment with Cambridge prior to expiration of the Employment Period (as it
may be extended), Executive shall be entitled to the following benefits and the
payment of such benefits will constitute Executive's sole and exclusive remedy
with respect to the termination of Executive's employment:
(a) If Executive's employment is terminated for Disability, Executive
shall receive until the end of the Employment Period all compensation payable to
Executive under Cambridge's disability and medical plans and programs, as in
effect on the Termination Date. After the end of the Employment Period,
Executive's benefits shall be determined under Cambridge's retirement, insurance
and other compensation programs then in effect in accordance with the terms of
such programs, provided that such terms shall not be less advantageous to
Executive than the terms of such programs in effect as of the date hereof.
(b) If Executive's employment shall be terminated (i) by Cambridge for
Cause or (ii) by Executive other than for Good Reason, Cambridge shall pay
Executive his full Base Salary through the Termination Date, at the rate in
effect at the time Notice of Termination is given, plus all other amounts to
which Executive is entitled under any compensation or benefit plans of Cambridge
at the time such payments are due, and Cambridge and the Company shall have no
further obligations to Executive under this paragraph 17.
(c) If Executive's employment shall be terminated by reason of
Executive's death, Cambridge shall pay Executive's estate or designated
beneficiary (as designated by Executive by
-18-
<PAGE>
written notice to Cambridge, which designation shall remain in effect for the
remainder of the Employment Period and any extensions thereof until revoked or a
new beneficiary is designated, in either case by written notice to Cambridge)
the full Base Salary through the Termination Date plus any Bonus earned
(determined by prorating the Bonus that otherwise would have been due based upon
the actual results for the full fiscal year for the portion of the fiscal year
occurring prior to the date of Executive's death), plus all other amounts to
which Executive is entitled under any compensation or benefit plans of Cambridge
at the date of Executive's death, and Cambridge and the Company shall have no
further obligation to Executive, Executive's beneficiaries or Executive's estate
under this paragraph 17.
(d) If Executive's employment shall be terminated (I) by Cambridge
Without Cause or (II) by Executive for Good Reason, then Executive shall be
entitled to the benefits provided below:
(i) Cambridge shall pay Executive his full Base Salary through
the Termination Date at the rate in effect at the time Notice of
Termination is given (or, if greater, at the rate in effect 30 days
prior to the time Notice of Termination is given), plus all other
amounts to which Executive is entitled under any compensation or
benefit plans of Cambridge, including without limitation, any Bonus
earned (determined by prorating the Bonus that otherwise would have
been due based upon actual results for the full fiscal year for the
portion of the fiscal year occurring prior to the Termination Date), at
the time such payments are due;
(ii) in lieu of any further Base Salary and Bonus payments to
Executive for periods subsequent to the Termination Date, Cambridge
shall pay to Executive his full Base Salary at the rate in effect
immediately prior to the time Notice of Termination is given (or, if
greater, at the rate in effect 30 days prior to the time Notice of
Termination is given), at the time such payments otherwise would be
due, (1) if the Termination Date occurs prior to the expiation of the
initial Employment Period, for the balance of the initial Employment
Period plus six (6) months, or (2) if the Termination Date occurs after
the expiration of the initial Employment Period, for six (6) months;
Executive shall not be required to mitigate the amount of any payment
provided for in subsection (d) of this paragraph 17 by seeking other
comparable employment or otherwise;
(iii) until the end of the Employment Period, Executive will
continue to participate in all other compensation and benefit plans
(including perquisites) in which Executive was participating prior to
the time Notice of Termination is given, or comparable plans
substituted therefor; provided, however, that if Executive is
ineligible, (e.g., by operation of law or the terms of the applicable
plan to continue to participate in any such plan) Cambridge will
provide Executive with a comparable level of compensation or benefits;
and
(iv) Cambridge shall also pay to Executive all reasonable
legal fees and expenses incurred by Executive in contesting or
disputing any such termination or in seeking to obtain or enforce any
right or benefit provided by this paragraph 17 if such termination is
determined by the arbitrator to have been for Good Reason or Without
Cause.
(e) In addition to all other amounts payable to Executive under this
paragraph 17, Executive shall be entitled to receive all benefits payable to
Executive pursuant to the terms of any plan or agreement of Cambridge relating
to retirement benefits.
-19-
<PAGE>
MISCELLANEOUS PROVISIONS
18. Confidential Information. Executive acknowledges that the
------------------------
information, observations and data obtained by him during the course of his
employment with the Company or any of its Subsidiaries concerning the business
or affairs of the Company and its Subsidiaries are the property of the Company
and its Subsidiaries, including without limitation, information regarding
manufacturing, production, procurement, sales, marketing, promotions, bids,
financial matters, production costs, pricing, customers, customer lists,
customer requirements and contemplated transactions. Therefore, Executive agrees
that he will not disclose to any unauthorized person or use for his own account
any of such information, observations or data without the Board's written
consent, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
Executive's acts or omissions to act. Executive agrees to deliver to the Company
at the termination of his employment, or at any other time the Company may
request, all memoranda, notes, plans, records, reports and other documents (and
copies thereof) relating to the business of the Company and its Subsidiaries
which he may then possess or have under his control.
19. Inventions and Patents. Executive agrees that all inventions,
----------------------
innovations or improvements in the Company's or any of its Subsidiaries' or
joint venture partner's method of conducting its business (including new
contributions, improvements, ideas and discoveries, whether patentable or not)
conceived or made by him during his employment with the Company or any of its
Subsidiaries or joint venture partners belong to the Company, its Subsidiaries
or such joint venture partners, whether so made during working hours or
otherwise. Executive will promptly disclose such inventions, innovations or
improvements to the Board and perform all actions reasonably requested by the
Board to establish and confirm such ownership.
20. Other Businesses. As long as Executive is employed by the Company,
----------------
any of its Subsidiaries or any Joint Venture, Executive agrees that he will not,
except with the express written consent of the Board and except with respect to
Butler Metal Group, Inc., St. Jude Capital Corp., Community Bank of Naples and
Flexmedics Corporation, become engaged in, or render services for, any business
other than the business of the Company, any of its Subsidiaries or any joint
venture in which the Company or any of its Subsidiaries have an equity interest.
21. Noncompete. If prior to the expiration of the Employment Period,
----------
Executive (a) voluntarily terminates his employment with the Company or any of
its Subsidiaries other than for Good Reason or is terminated by the Company or
any of its Subsidiaries for Cause or (b) is terminated by the Company or any of
its Subsidiaries Without Cause or Executive voluntarily terminates his
employment for Good Reason, then, for a period of 12 months after the
Termination Date, with respect to a termination pursuant to clause (a) and, for
a period equal to the lesser of 12 months or the length of time for which
Executive receives severance compensation at least equal to Executive's Base
Salary in connection with such termination, after the Termination Date, with
respect to a termination pursuant to clause (b), Executive will not (i) directly
or indirectly own, manage, control, participate in, consult with or render
services for any other person or entity engaged in any business similar to the
business conducted by the Company, any of its Subsidiaries or any Joint Venture
at the Termination Date (and as contemplated to be conducted by the Company
pursuant to any then binding agreement of the Company to acquire the business of
another entity), during the Employment Period in any geographic area in which
the Company, any of its Subsidiaries or any Joint Venture conducted such
business, and (ii) have any interest directly or indirectly in any such
business, provided that nothing
-20-
<PAGE>
herein will prevent Executive from owning in the aggregate not more than five
percent of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no participation in the management of such
corporation. If Executive's employment is terminated for any reason, whether by
the Company or by Executive, then for a period of 24 months after the
Termination Date, Executive will not (i) attempt to hire or procure or hire the
services of any person employed (at the Termination Date or at any date within
24 months thereof) by the Company, any of its Subsidiaries or any Joint Venture,
or (ii) induce or attempt to induce any customer or other business relation of
the Company into any business relationship which might harm the Company, any of
its Subsidiaries or any Joint Venture without the prior written consent of the
Board.
22. Notices. Any notice provided for in this Agreement must be in
-------
writing and must be personally delivered, received by certified mail, return
receipt requested, or sent by guaranteed overnight delivery service, to the
Investors at the addresses indicated in the Company's records and to the other
recipients at the address indicated below:
To the Company and Cambridge:
Cambridge Industries Holdings, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Attention: Board of Directors
with a copy to:
Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attn: Robert C. Gay
Edward Conard
Ronald P. Mika
To Executive:
Donald Holton
319 Neopolitan Way
Naples, FL 33940
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
23. Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement (including without limitation any of
the provisions of paragraph 21 hereof) is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
-21-
<PAGE>
24. Complete Agreement. This Agreement embodies the complete
------------------
agreement and understanding among the parties and supersedes and preempts
any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
25. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which will be deemed to be an original and all of which
taken together will constitute one and the same agreement.
26. Successors and Assigns. This Agreement is intended to bind and
----------------------
inure to the benefit of and be enforceable by Executive, the Company, the
Investors and their respective successors and assigns, provided that Executive
may not assign any of his rights or obligations, except as expressly provided by
the terms of this Agreement.
27. Governing Law. All issues concerning the enforceability, validity
-------------
and binding effect of this Agreement will be governed by and construed in
accordance with the laws of the State of Michigan, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Michigan or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than the State of Michigan. Notwithstanding the
foregoing, the parties acknowledge that the Company is a Delaware corporation
and the corporate law of the State of Delaware will be applied to the Company
and its stockholders.
28. Remedies. The parties hereto agree and acknowledge that money
--------
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party hereto will have the right to injunctive relief, in
addition to all of its other rights and remedies at law or in equity, to enforce
the provisions of this Agreement.
29. Arbitration.
-----------
(a) Arbitration. In the event of disputes between the parties with
-----------
respect to the terms and conditions of this Agreement, such disputes shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) at Detroit, Michigan. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement of
the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such arbitration,
shall be final and binding on the parties to this Agreement and may be
specifically enforced by legal proceedings, and, pursuant to MCLA 600.5001, the
parties agree that a judgment of any Michigan circuit court may be rendered upon
any arbitration award rendered pursuant to this Section 29. The parties agree
and acknowledge that money damages may not be an adequate remedy for any breach
of the provisions of this Agreement and that any party may, in his or its sole
discretion, ask for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(b) Procedure. Such arbitration may be initiated by written notice from
---------
either party to the other which shall be a compulsory and binding proceeding on
each party. The arbitration shall be
-22-
<PAGE>
conducted before a panel of three arbitrators selected in accordance with the
rules of the American Arbitration Association. Except as provided in paragraph
17(d)(iv) hereof, the costs of said arbitrators and the arbitration shall be
borne equally by the parties hereto and each party shall bear separately the
cost of their respective attorneys, witnesses and experts in connection with
such arbitration. Time is of the essence of this arbitration procedure, and the
arbitrators shall be instructed and required to render their decision within ten
(10) days following completion of the arbitration.
(c) Venue and Jurisdiction. Any and all legal proceedings to enforce
----------------------
this Agreement, (including any action to compel arbitration hereunder or to
enforce any award or judgment rendered thereby), shall be governed in accordance
with this paragraph 29.
30. Effect of Transfers in Violation of Agreement. The Company will not
---------------------------------------------
be required (a) to transfer on its books any shares of Executive Stock which
have been sold or transferred in violation of any of the provisions set forth in
this Agreement or (b) to treat as owner of such shares, to accord the right to
vote as such owner or to pay dividends to any transferee to whom such shares
have been transferred in violation of this Agreement.
31. Amendments and Waivers. Any provision of this Agreement may be
----------------------
amended or waived only with the prior written consent of the Company, the
Investors who hold 60% of the Common Stock held by the Investors and Executive;
provided, however, that in the event that such amendment or waiver would
adversely affect an Investor or group of Investors in a manner different than
any other Investors, then such amendment or waiver will require the consent of
such Investor or a majority of the Common Shares held by such group of Investors
adversely affected.
32. Third Party Beneficiaries. The parties hereto acknowledge and
-------------------------
agree that the Investors are third party beneficiaries of this Agreement. This
Agreement will inure to the benefit of and be enforceable by the Investors and
their respective successors and assigns.
33. Registration Agreement. Executive hereby agrees to become bound by,
----------------------
and subject to, the terms and conditions of that certain Registration Agreement
dated as of November 17, 1995, as amended, by and among the Company and it
stockholders (the "Registration Agreement"). The Company hereby acknowledges
----------------------
that the shares of Executive Stock are Management Registrable Securities (as
such term is defined in the Registration Agreement).
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /signature appears here/
--------------------------------
Title
------
CAMBRIDGE INDUSTRIES, INC.
-23-
<PAGE>
By: /signature appears here/
------------------------------------
Title:
---------------------------------
----------------------------------------
Donald Holton
-24-
<PAGE>
EXHIBIT 10.26
HOLDINGS SERVICES AGREEMENT
HOLDING SERVICES AGREEMENT dated as of July 1, 1997 between
Cambridge Industries Holdings, Inc., a Delaware corporation ("Holdings"), and
Cambridge Industries, Inc., a Delaware corporation and a wholly-owned subsidiary
of Holdings ("Cambridge")
Cambridge desires that Holdings perform certain management services
for Cambridge and Holdings desires to perform such management services, in each
case on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
SECTION 1. Term. Cambridge agrees to engage Holdings, and Holdings
----
agrees to provide management services to Cambridge, on the terms and conditions
set forth herein for a period commencing as of the date hereof and ending ten
(10) years from such date (or at such earlier time as is mutually agreed upon by
the parties). The period during which Holdings is engaged hereunder is
hereinafter referred to as the "Management Period."
-----------------
SECTION 2. Management Fee.
--------------
(a) During the Management Period, Holdings shall provide Cambridge
with such personnel as is necessary to provide the services set forth in Section
2(b).
(b) In connection with its engagement hereunder, Holdings' services
under this Agreement shall include:
(i) general executive services, including periodic advice and
consultation with respect to the affairs of Cambridge;
(ii) financial, accounting, legal, tax and cash management
services;
(iii) management information and other system services,
including technical support in connection therewith;
(iv) services related to tax, regulatory and other filings, as
well as periodic or other reports to governmental or other agencies having
jurisdiction over the respective businesses of Cambridge, including,
without limitation, the application on behalf of and for the account of
Cambridge, of all applicable licenses, permits, and consents;
<PAGE>
(v) services and costs related to the inclusion of employees
of Cambridge in benefit and compensation plans of Holdings, including group
life and health insurance plans, pension and salary continuation plans and
thrift plans; and
(vi) such other services as are customarily provided by
Holdings to Cambridge or as may otherwise be reasonably requested by
Cambridge.
SECTION 3. Management Fees.
---------------
(a) Cambridge shall provide direct payment or shall promptly
reimburse Holdings for such reasonable out-of-pocket expenses actually paid to
unaffiliated third parties as may be incurred by Holdings in connection with the
rendering of any services hereunder.
(b) In the event that Holdings incurs any other expenses in
connection with the rendering of any services hereunder, including, without
limitation, expenses for overhead, salaries, administration of benefit plans,
technical support and tax and accounting services, Holdings shall be entitled to
be paid or reimbursed for such amounts from Cambridge; provided, however, that
such payments or reimbursements to Holdings pursuant to this subsection (b)
shall not exceed $500,000 per year.
SECTION 4. Assignment. This Agreement or any rights hereunder may not
----------
be assigned or otherwise transferred by any party and shall not inure to the
benefit of any trustee in bankruptcy, receiver or other successor of any party,
whether by operation of law or otherwise, without the prior written consent of
the parties hereto.
SECTION 5. No Third-Party Beneficiaries. This Agreement is for the
----------------------------
sole benefit of the parties hereto and nothing herein expressed or implied shall
give or be construed to give to any person, other than the parties hereto, any
legal or equitable rights hereunder.
SECTION 6. Modification. This Agreement (a) sets forth the entire
------------
understanding and agreement of the parties with respect to the subject matter
hereof, and (b) supersedes all prior and contemporaneous understandings,
conditions and agreements, oral or written, expressed or implied, respecting the
engagement of Holdings in connection with the subject matter hereof. This
Agreement may not be modified or amended without the prior written consent of
the parties hereto.
SECTION 7. Notices. All notices or other communications required or
-------
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service), to Cambridge at the addresses
indicated in Cambridge's corporate records and to Holdings as follows:
2
<PAGE>
Cambridge Industries Holdings,
Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Attention: Chairman
President
with a copy to:
Jaffe, Raitt, Heuer & Weiss
One Woodward , Suite 2400
Detroit, MI 48226
Attention: Ira J. Jaffe
and a copy to:
Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Robert C. Gay
Ronald Mika
and a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: James L. Learner, Esq.
SECTION 8. Interpretation. The headings contained in this Agreement
--------------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9. Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to each of the other parties.
SECTION 10. Severability. In case any one or more of the provisions
------------
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, all other provisions of this Agreement
shall nevertheless remain in full force and effect, but if the economic or legal
substance of the transactions contemplated hereby is affected in a manner
material adverse to any party as a result of the determination that a provision
is invalid, illegal or unenforceable, the parties hereto agree to negotiate in
good faith to modify this Agreement so as
3
<PAGE>
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the closest extent possible.
SECTION 11. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the domestic laws of the State of Michigan, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Michigan or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Michigan.
SECTION 12. Waivers. Any waiver by any party of a breach of any
-------
provision of this Agreement, or the failure of a party to insist upon strict
adherence to that term or any other term of its Agreement, shall not operate as
or be construed to be a waiver of any other breach of such provision or of any
breach of any other provision of this Agreement. Any waiver must be in writing.
* * * * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
CAMBRIDGE INDUSTRIES, INC.
By: /s/ John M. Colaianne
--------------------------------
Its: CFO - Secretary
-------------------------------
CAMBRIDGE INDUSTRIES HOLDINGS, INC.
By: /s/ John M. Colaianne
--------------------------------
Its: CFO - Secretary
-------------------------------
4
<PAGE>
EXHIBIT 10.27
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
among
CAMBRIDGE INDUSTRIES HOLDINGS, INC.,
CAMBRIDGE INDUSTRIES, INC.,
VARIOUS LENDING INSTITUTIONS,
and
BANKERS TRUST COMPANY,
AS AGENT
--------------------------------
Dated as of July 10, 1997
--------------------------------
$280,000,000
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TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit...................................... 1
1.01 Commitments...................................................... 1
1.02 Minimum Borrowing Amounts, etc. ................................. 4
1.03 Notice of Borrowing.............................................. 4
1.04 Disbursement of Funds............................................ 5
1.05 Notes............................................................ 6
1.06 Conversions...................................................... 7
1.07 Pro Rata Borrowings.............................................. 8
1.08 Interest......................................................... 8
1.09 Interest Periods................................................. 9
1.10 Increased Costs, Illegality, etc. ............................... 10
1.11 Compensation..................................................... 12
1.12 Change of Lending Office......................................... 13
1.13 Replacement of Banks............................................. 13
SECTION 2. Letters of Credit............................................... 14
2.01 Letters of Credit................................................ 14
2.02 Letter of Credit Requests; Notices of Issuance................... 16
2.03 Agreement to Repay Letter of Credit Drawings..................... 16
2.04 Letter of Credit Participations.................................. 17
2.05 Increased Costs.................................................. 19
SECTION 3. Fees; Commitments............................................... 20
3.01 Fees............................................................. 20
3.02 Voluntary Termination or Reduction of Commitments................ 21
3.03 Mandatory Adjustments of Commitments, etc. ...................... 22
SECTION 4. Payments........................................................ 22
4.01 Voluntary Prepayments............................................ 22
4.02 Mandatory Prepayments............................................ 23
4.03 Method and Place of Payment...................................... 30
4.04 Net Payments..................................................... 30
SECTION 5. Conditions Precedent............................................ 32
5.01 Conditions Precedent to Loans on the Initial Borrowing Date...... 32
5.02 Conditions Precedent to all Credit Events........................ 41
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SECTION 6. Representations, Warranties and Agreements...................... 42
6.01 Corporate Status................................................. 42
6.02 Corporate Power and Authority.................................... 43
6.03 No Violation..................................................... 43
6.04 Litigation....................................................... 43
6.05 Use of Proceeds; Margin Regulations.............................. 44
6.06 Governmental Approvals........................................... 44
6.07 Investment Company Act........................................... 44
6.08 Public Utility Holding Company Act............................... 44
6.09 True and Complete Disclosure..................................... 44
6.10 Financial Condition; Financial Statements........................ 45
6.11 Security Interests............................................... 46
6.12 Representations and Warranties in Other Documents................ 46
6.13 Transaction...................................................... 47
6.14 Special Purpose Corporation...................................... 47
6.15 Compliance with ERISA............................................ 47
6.16 Capitalization................................................... 48
6.17 Subsidiaries..................................................... 49
6.18 Intellectual Property............................................ 49
6.19 Compliance with Statutes, etc. .................................. 50
6.20 Environmental Matters............................................ 50
6.21 Properties....................................................... 51
6.22 Labor Relations.................................................. 51
6.23 Tax Returns and Payments......................................... 51
6.24 Existing Indebtedness............................................ 52
6.25 Subordination.................................................... 52
SECTION 7. Affirmative Covenants........................................... 52
7.01 Information Covenants............................................ 52
7.02 Books, Records and Inspections................................... 55
7.03 Insurance........................................................ 56
7.04 Payment of Taxes................................................. 56
7.05 Corporate Franchises............................................. 56
7.06 Compliance with Statutes, etc. .................................. 56
7.07 Compliance with Environmental Laws............................... 57
7.08 ERISA............................................................ 58
7.09 Good Repair...................................................... 59
7.10 End of Fiscal Years; Fiscal Quarters............................. 59
7.11 Additional Security; Further Assurances.......................... 59
7.12 Register......................................................... 60
7.13 Contributions; Payments.......................................... 60
7.14 Foreign Subsidiaries Security.................................... 61
7.15 Interest Rate Protection......................................... 61
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7.16 Maintenance of Corporate Separateness............................ 62
7.17 Permitted Holdings PIK Securities................................ 62
SECTION 8. Negative Covenants.............................................. 62
8.01 Changes in Business.............................................. 62
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. ......... 63
8.03 Liens............................................................ 67
8.04 Indebtedness..................................................... 69
8.05 Advances, Investments and Loans.................................. 71
8.06 Dividends, etc. ................................................. 75
8.07 Transactions with Affiliates..................................... 77
8.08 Capital Expenditures............................................. 77
8.09 Minimum Consolidated EBITDA...................................... 78
8.10 Interest Coverage Ratio.......................................... 80
8.11 Leverage Ratio................................................... 81
8.12 Designated Senior Debt........................................... 82
8.13 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements; etc. .................... 83
8.14 Limitation on Certain Restrictions on Subsidiaries............... 84
8.15 Limitation on the Creation of Subsidiaries....................... 84
SECTION 9. Events of Default............................................... 85
9.01 Payments......................................................... 85
9.02 Representations, etc. ........................................... 85
9.03 Covenants........................................................ 85
9.04 Default Under Other Agreements................................... 85
9.05 Bankruptcy, etc. ................................................ 86
9.06 ERISA............................................................ 86
9.07 Security Documents............................................... 87
9.08 Guaranties....................................................... 87
9.09 Judgments........................................................ 87
9.10 Ownership........................................................ 87
SECTION 10. Definitions.................................................... 88
SECTION 11. The Agent...................................................... 118
11.01 Appointment..................................................... 118
11.02 Delegation of Duties............................................ 119
11.03 Exculpatory Provisions.......................................... 119
11.04 Reliance by Agent............................................... 119
11.05 Notice of Default............................................... 120
11.06 Non-Reliance on Agent, and Other Banks.......................... 120
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11.07 Indemnification................................................. 121
11.08 Agent in its Individual Capacity................................ 121
11.09 Holders......................................................... 121
11.10 Resignation of the Agent; Successor Agent....................... 122
SECTION 12. Miscellaneous.................................................. 122
12.01 Payment of Expenses, etc. ...................................... 122
12.02 Right of Setoff................................................. 123
12.03 Notices......................................................... 123
12.04 Benefit of Agreement............................................ 123
12.05 No Waiver; Remedies Cumulative.................................. 125
12.06 Payments Pro Rata............................................... 126
12.07 Calculations; Computations...................................... 126
12.08 Governing Law; Submission to Jurisdiction; Venue................ 127
12.09 Counterparts.................................................... 127
12.10 Effectiveness................................................... 127
12.11 Headings Descriptive............................................ 128
12.12 Amendment or Waiver; etc. ...................................... 128
12.13 Survival........................................................ 129
12.14 Domicile of Loans............................................... 129
12.15 Confidentiality................................................. 129
12.16 Waiver of Jury Trial............................................ 130
SECTION 13. Holdings Guaranty.............................................. 130
13.01 The Guaranty.................................................... 130
13.02 Bankruptcy...................................................... 131
13.03 Nature of Liability............................................. 131
13.04 Independent Obligation.......................................... 131
13.05 Authorization................................................... 132
13.06 Reliance........................................................ 133
13.07 Subordination................................................... 133
13.08 Waiver.......................................................... 133
13.09 Nature of Liability............................................. 134
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ANNEX I List of Banks
ANNEX II Bank Addresses
ANNEX III Real Properties
ANNEX IV Projections
ANNEX V Subsidiaries
ANNEX VI Insurance
ANNEX VII Existing Indebtedness
ANNEX VIII Existing Liens
(iv)
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ANNEX IX Existing Investments
ANNEX X Existing Letters of Credit
ANNEX XI ERISA Matters
EXHIBIT A-1 - Form of Notice of Borrowing
EXHIBIT A-2 - Form of Letter of Credit Request
EXHIBIT B-1 - Form of A Term Note
EXHIBIT B-2 - Form of B Term Note
EXHIBIT B-3 - Form of Revolving Note
EXHIBIT B-4 - Form of Swingline Note
EXHIBIT C - Form of Section 4.04(b)(ii) Certificate
EXHIBIT D-1 - Form of Opinion of Jaffe, Raitt, Heuer & Weiss
EXHIBIT D-2 - Form of Opinion of Kirkland & Ellis
EXHIBIT E - Form of Officers' Certificate
EXHIBIT F - Form of Pledge Agreement
EXHIBIT G - Form of Security Agreement
EXHIBIT H - Form of Subsidiary Guaranty
EXHIBIT I - Form of Subordination Provisions
EXHIBIT J - Form of Assignment and Assumption Agreement
EXHIBIT K - Form of Intercompany Note
EXHIBIT L - Form of Shareholder Subordinated Note
(v)
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CREDIT AGREEMENT, dated as of July 10, 1997, among CAMBRIDGE
INDUSTRIES HOLDINGS, INC., a Delaware corporation ("Holdings"), CAMBRIDGE
INDUSTRIES, INC., a Delaware corporation (the "Borrower"), the lenders from time
to time party hereto (each, a "Bank" and, collectively, the "Banks"), and
BANKERS TRUST COMPANY, as Agent (in such capacity, the "Agent"). Unless
otherwise defined herein, all capitalized terms used herein and defined in
Section 10 are used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the credit
facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitments. (A) Subject to and upon the terms and conditions
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herein set forth, each Bank severally agrees to make a loan or loans to the
Borrower, which loans shall be drawn, to the extent such Bank has a commitment
under such Facility, under the A Term Loan Facility, the B Term Loan Facility
and the Revolving Loan Facility, as set forth below:
(a) Loans under the A Term Loan Facility (each, an "A Term Loan" and,
collectively, the "A Term Loans"), (i) shall be incurred by the Borrower
pursuant to up to two drawings, during the period commencing on the Initial
Borrowing Date and ending on the A Term Loan Availability Termination Date,
(ii) shall be denominated in U.S. Dollars, (iii) shall be made as Base Rate
Loans and may, at the option of the Borrower, be maintained as and/or
converted into Base Rate Loans or Eurodollar Loans, provided, that (x) all
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A Term Loans made by all Banks pursuant to the same Borrowing shall, unless
otherwise specifically provided herein, consist entirely of A Term Loans of
the same Type and (y) no conversions into A Term Loans maintained as
Eurodollar Loans may be effected prior to the earlier of (1) the 90th day
after the Initial Borrowing Date and (2) that date (the "Syndication Date")
upon which the Agent determines in its sole discretion (and notifies the
Borrower) that the primary syndication (and resultant additions of
institutions as Banks pursuant to Section 12.04) has been completed, and
(iv) shall not exceed for any Bank at the time of incurrence thereof that
aggregate principal amount which
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equals the remaining A Term Loan Commitment, if any, of such Bank at such
time (before giving effect to any reductions on such date pursuant to
Section 3.03(b)(i)). Once repaid, A Term Loans may not be reborrowed.
(b) Each loan under the B Term Loan Facility (each, a "B Term Loan"
and, collectively, the "B Term Loans"), (i) shall be incurred by the
Borrower pursuant to a single drawing, which shall be on the Initial
Borrowing Date, (ii) shall be denominated in U.S. Dollars, (iii) shall be
made as Base Rate Loans and may, at the option of the Borrower, be
maintained as and/or converted into Base Rate Loans or Eurodollar Loans,
provided, that (x) all B Term Loans made by all Banks pursuant to the same
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Borrowing shall, unless otherwise specifically provided herein, consist
entirely of B Term Loans of the same Type and (y) no conversions into B
Term Loans maintained as Eurodollar Loans may be incurred prior to the
earlier of (1) the 90th day after the Initial Borrowing Date and (2) the
Syndication Date, and (iv) shall not exceed for any Bank at the time of
incurrence thereof on the Initial Borrowing Date that aggregate principal
amount which equals the B Term Loan Commitment, if any, of such Bank at
such time. Once repaid, B Term Loans may not be reborrowed.
(c) Loans under the Revolving Loan Facility (each, a "Revolving Loan"
and, collectively, the "Revolving Loans"), (i) may be incurred by the
Borrower at any time and from time to time after the Initial Borrowing Date
and prior to the Revolving Loan Maturity Date, (ii) shall be denominated in
U.S. Dollars, (iii) except as hereinafter provided may, at the option of
the Borrower, be incurred and maintained as and/or converted into Base Rate
Loans or Eurodollar Loans, provided, that (x) all Revolving Loans made as
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part of the same Borrowing shall, unless otherwise specifically provided
herein, consist of Revolving Loans of the same Type and (y) no incurrences
of, or conversions into, Revolving Loans maintained as Eurodollar Loans may
be effected prior to the earlier of (1) the 90th day after the Initial
Borrowing Date and (2) the Syndication Date, (iv) may be repaid and
reborrowed in accordance with the provisions hereof and (v) shall not
exceed for any Bank at any time outstanding that aggregate principal amount
which, when combined with (I) the aggregate principal amount of all other
then outstanding Revolving Loans made by such Bank and (II) such Bank's RL
Percentage, if any, of the Swingline Loans then outstanding and Letter of
Credit Outstandings (exclusive of Unpaid Drawings relating to Letters of
Credit which are repaid with the proceeds of, and simultaneously with the
incurrence of, Revolving Loans or Swingline Loans) at such time, equals the
Revolving Loan Commitment, if any, of such Bank at such time.
Notwithstanding anything to the contrary contained herein, the aggregate
amount of Revolving Loans incurred on the Initial Borrowing Date may not
exceed $2,500,000.
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(B) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity agrees to make at any time and from time to time
after the Initial Borrowing Date and prior to the Swingline Expiry Date, a loan
or loans to the Borrower (each, a "Swingline Loan" and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) shall be denominated in U.S. Dollars, (iii) may be repaid
and reborrowed in accordance with the provisions hereof, (iv) shall not exceed
in aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans then outstanding and the
Letter of Credit Outstandings (exclusive of Unpaid Drawings relating to Letters
of Credit which are repaid with the proceeds of, and simultaneously with the
incurrence of, Revolving Loans or Swingline Loans) at such time, an amount equal
to the Total Revolving Loan Commitment then in effect and (v) shall not exceed
in aggregate principal amount at any time outstanding the Maximum Swingline
Amount. BTCo shall not be obligated to make any Swingline Loans at a time when
a Bank Default exists unless BTCo has entered into arrangements satisfactory to
it and the Borrower to eliminate BTCo's risk with respect to the Defaulting
Bank's or Banks' participation in such Swingline Loans, including by cash
collateralizing such Defaulting Bank's or Banks' RL Percentage of the
outstanding Swingline Loans. BTCo will not make a Swingline Loan after it has
received written notice from the Borrower or the Required Banks stating that a
Default or an Event of Default exists until such time as BTCo shall have
received a written notice of (i) rescission of such notice from the party or
parties originally delivering the same or (ii) a waiver of such Default or Event
of Default from the Required Banks (or all the Banks to the extent required by
Section 12.12), and any loan made by BTCo to the Borrower in contravention of
this sentence shall not constitute a Swingline Loan (including for purposes of
Section 1.01(C)).
(C) On any Business Day, BTCo may, in its sole discretion, give
notice to the RL Banks that its outstanding Swingline Loans shall be funded with
a Borrowing of Revolving Loans (provided that each such notice shall be deemed
--------
to have been automatically given upon the occurrence of a Default or an Event of
Default under Section 9.05 or upon the exercise of any of the remedies provided
in the last paragraph of Section 9), in which case a Borrowing of Revolving
Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all RL
Banks pro rata based on each RL Bank's RL Percentage, and the proceeds thereof
--- ----
shall be applied directly to repay BTCo for such outstanding Swingline Loans.
Each RL Bank hereby irrevocably agrees to make Base Rate Loans upon one Business
Day's notice pursuant to each Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the date specified in writing
by BTCo notwithstanding (i) that the amount of the Mandatory Borrowing may not
comply with the Minimum Borrowing Amount otherwise required hereunder, (ii)
whether any conditions specified in Section 5 are then satisfied, (iii) whether
a Default or an Event of Default has occurred and is continuing, (iv) the date
of such Mandatory Borrowing and (v) any reduction in the Total Revolving Loan
Commitment after any such Swingline Loans were made.
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In the event that any Mandatory Borrowing cannot for any reason be made on the
date otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code in respect of the
Borrower), each RL Bank (other than BTCo) hereby agrees that it shall forthwith
purchase from BTCo (without recourse or warranty) such assignment of the
outstanding Swingline Loans as shall be necessary to cause the RL Banks to share
in such Swingline Loans ratably based upon their respective RL Percentages,
provided that all interest payable on the Swingline Loans shall be for the
- - --------
account of BTCo until the date the respective assignment is purchased and, to
the extent attributable to the purchased assignment, shall be payable to the RL
Bank purchasing same from and after such date of purchase.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
-------------------------------
of each Borrowing under a Facility shall not be less than the Minimum Borrowing
Amount for such Facility. More than one Borrowing may be incurred on any day;
provided, that at no time shall there be outstanding more than twelve Borrowings
- - --------
of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
-------------------
incur Loans under any Facility (excluding Borrowings of Swingline Loans and
Mandatory Borrowings), it shall give the Agent at its Notice Office, prior to
11:00 A.M. (New York time), at least three Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder. Each such notice (each, a "Notice of Borrowing")
shall, except as provided in Section 1.10, be irrevocable, and, in the case of
each written notice and each confirmation of telephonic notice, shall be in the
form of Exhibit A-1, appropriately completed to specify (i) the Facility
pursuant to which such Borrowing is to be made, (ii) the aggregate principal
amount of the Loans to be made pursuant to such Borrowing, (iii) the date of
such Borrowing (which shall be a Business Day) and (iv) whether the respective
Borrowing shall consist of Base Rate Loans or, to the extent permitted
hereunder, Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall promptly give each Bank written
notice (or telephonic notice promptly confirmed in writing) of each proposed
Borrowing, of such Bank's proportionate share thereof, if any, and of the other
matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo not later than 12:00 Noon (New
York time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
-4-
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(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(C), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent or BTCo (in the case of a Borrowing of Swingline Loans) or the respective
Letter of Credit Issuer (in the case of Letters of Credit), as the case may be,
may prior to receipt of written confirmation act without liability upon the
basis of such telephonic notice, believed by the Agent, BTCo or such Letter of
Credit Issuer, as the case may be, in good faith to be from an Authorized
Officer of the Borrower. In each such case, the Borrower hereby waives the
right to dispute the Agent's, BTCo's or such Letter of Credit Issuer's record of
the terms of such telephonic notice.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York
---------------------
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified
in Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later than
12:00 Noon (New York time) on the date specified in Section 1.01(C)), each Bank
with a Commitment under the respective Facility will make available its pro rata
share, if any, of each Borrowing requested to be made on such date (or in the
case of Swingline Loans, BTCo shall make available the full amount thereof) in
the manner provided below. All amounts shall be made available to the Agent in
U.S. Dollars and immediately available funds at the Payment Office and the Agent
promptly will make available to the Borrower by depositing to its account at the
Payment Office the aggregate of the amounts so made available in the type of
funds received. Unless the Agent shall have been notified by any Bank prior to
the date of Borrowing that such Bank does not intend to make available to the
Agent its portion of the Borrowing or Borrowings to be made on such date, the
Agent may assume that such Bank has made such amount available to the Agent on
such date of Borrowing, and the Agent, in reliance upon such assumption, may (in
its sole discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Bank and the Agent has made available same
to the Borrower, the Agent shall be entitled to recover such corresponding
amount from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding amount to
the Agent. The Agent shall also be entitled to recover from the Bank or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Agent to the Borrower to the date such corresponding amount is recovered by the
Agent, at a rate per annum equal to (x) if paid by such Bank, the overnight
Federal Funds rate or (y) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with Section 1.08, for the respective Loans.
-5-
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(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
-----
and interest on, all the Loans made to it by each Bank shall be evidenced (i) if
A Term Loans, by a promissory note substantially in the form of Exhibit B-1 with
blanks appropriately completed in conformity herewith (each, as amended from
time to time, an "A Term Note" and, collectively, the "A Term Notes"), (ii) if B
Term Loans, by a promissory note substantially in the form of Exhibit B-2 with
blanks appropriately completed in conformity herewith (each, as amended from
time to time, a "B Term Note" and, collectively, the "B Term Notes"), (iii) if
Revolving Loans, by a promissory note substantially in the form of Exhibit B-3
with blanks appropriately completed in conformity herewith (each, as amended
from time to time, a "Revolving Note" and, collectively, the "Revolving Notes")
and (iv) if Swingline Loans, by a promissory note substantially in the form of
Exhibit B-4 with blanks appropriately completed in conformity herewith (as
amended from time to time, the "Swingline Note").
(b) The A Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank or its registered assigns
and be dated the Initial Borrowing Date, (iii) be in a stated principal amount
equal to the A Term Loan Commitment of such Bank on the Initial Borrowing Date
and be payable in the principal amount of the A Term Loans evidenced thereby,
(iv) mature on the A Term Loan Maturity Date, (v) bear interest as provided in
the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01 and mandatory repayment as
provided in Section 4.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) The B Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank or its registered assigns
and be dated the Initial Borrowing Date, (iii) be in a stated principal amount
equal to the B Term Loans made by such Bank on the Initial Borrowing Date and be
payable in the principal amount of the B Term Loans evidenced thereby, (iv)
mature on the B Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01 and mandatory repayment as
provided in Section 4.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(d) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank or its registered
assigns and be dated the Initial Borrowing Date, (iii) be in a stated principal
amount equal to the Revolving Loan
-6-
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Commitment of such Bank on the Initial Borrowing Date and be payable in the
principal amount of the Revolving Loans evidenced thereby, (iv) mature on the
Revolving Loan Maturity Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans,
as the case may be, evidenced thereby, (vi) be subject to voluntary prepayment
as provided in Section 4.01 and mandatory repayment as provided in Section 4.02,
and (vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
(e) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo or its registered assigns and be
dated the Initial Borrowing Date, (iii) be in a stated principal amount equal to
the Maximum Swingline Amount and be payable in the principal amount of the
Swingline Loans evidenced thereby, (iv) mature on the Swingline Expiry Date, (v)
bear interest as provided in Section 1.08 in respect of the Base Rate Loans
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02, and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(f) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
shall not affect the Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert on
-----------
any Business Day occurring on or after the earlier of (x) the 90th day after the
Initial Borrowing Date and (y) the Syndication Date, all or a portion at least
equal to the applicable Minimum Borrowing Amount of the outstanding principal
amount of the Loans (other than Swingline Loans which at all times shall be
maintained as Base Rate Loans) owing by the Borrower pursuant to a single
Facility into a Borrowing or Borrowings of another Type of Loan under such
Facility; provided, that (i) except as otherwise provided in Section 1.10(b),
--------
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
an Interest Period applicable thereto and no partial conversion of a Borrowing
of Eurodollar Loans shall reduce the outstanding principal amount of the
Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default is in existence on the
date of the conversion and (iii) Borrowings of Eurodollar Loans resulting from
this Section 1.06 shall be limited in number as provided in Section 1.02. Each
such conversion shall be effected by the Borrower by giving the Agent at its
Notice Office, prior to 11:00 A.M. (New York time), at least three Business
Days' (or one Business Day's in the case of a conversion into Base Rate Loans)
prior written notice (or telephonic notice promptly confirmed in writing) (each
a "Notice of Conversion") specifying the Loans to be so converted, the Type of
Loans to be converted into and, if to be converted into a Borrowing of
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
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<PAGE>
Agent shall give each Bank prompt notice of any such proposed conversion
affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Loans (other than
-------------------
Swingline Loans) under this Agreement shall be made by the Banks pro rata on the
--- ----
basis of their A Term Loan Commitments, B Term Loan Commitments or Revolving
Loan Commitments, as the case may be. It is understood that no Bank shall be
responsible for any default by any other Bank of its obligation to make Loans
hereunder and that each Bank shall be obligated to make the Loans to be made by
it hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
--------
Loan shall bear interest from the date of the Borrowing thereof until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such Base
Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06, at a rate per annum which shall at all times be the
Applicable Base Rate Margin plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan and (ii)
the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section
1.06, 1.09 or 1.10(b), as applicable, at a rate per annum which shall at all
times be the Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan shall bear interest at a rate per annum equal
to the rate which is 2% in excess of the rate otherwise applicable to Base Rate
Loans of such Facility from time to time; provided that principal in respect of
--------
Eurodollar Loans shall bear interest after the same becomes due (whether by
acceleration or otherwise) until the end of the applicable Interest Period for
such Eurodollar Loan at a per annum rate equal to 2% in excess of the rate of
interest applicable on the due date therefor. Interest which accrues under this
Section 1.08(c) shall be payable on demand.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on each
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date
of any prepayment or repayment thereof (on the amount prepaid or repaid), (y)
the date of any conversion into a Base Rate Loan pursuant to Section 1.06, 1.09
or 1.10(b), as applicable (on the amount converted) and (z) the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day
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<PAGE>
of such Interest Period and (iii) in respect of each Loan, at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.09 Interest Periods. At the time the Borrower gives a Notice of
----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall have the same
Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period expires;
(iii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided, that if any Interest Period would
--------
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period for a Borrowing under a Facility may be
elected if it would extend beyond the respective Maturity Date for such
Facility;
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<PAGE>
(vi) no Interest Period may be elected at any time when a Default or
an Event of Default is then in existence; and
(vii) no Interest Period with respect to any Borrowing of Term Loans
shall extend beyond any date upon which a mandatory prepayment of such Term
Loans is required to be made under Section 4.02(A)(b)(i) or (ii), as the
case may be, if, after giving effect to the selection of such Interest
Period, the aggregate principal amount of such Term Loans maintained as
Eurodollar Loans with Interest Periods ending after such date of mandatory
repayment would exceed the aggregate principal amount of such Term Loans
permitted to be outstanding after such mandatory prepayment.
If upon the expiration of any Interest Period, the Borrower has failed to elect,
or is not permitted to elect by virtue of the application of clause (vi) above,
a new Interest Period to be applicable to the respective Borrowing of Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in
---------------------------------
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank, shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that, by reason of any changes arising after the date of
this Agreement affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of net income taxes or similar charges) because of (x) any
change since the date of this Agreement in any applicable law, governmental
rule, regulation, guideline, order or request (whether or not having the
force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not limited to a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
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<PAGE>
(iii) at any time since the date of this Agreement, that the
making or continuance of any Eurodollar Loan has become unlawful by
compliance by such Bank in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any such
governmental rule, regulation, guideline or order not having the force of
law but with which such Bank customarily complies even though the failure
to comply therewith would not be unlawful), or has become impracticable as
a result of a contingency occurring after the date of this Agreement which
materially and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within five Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and (except in the case of clause (i)) to the Agent of
such determination (which notice the Agent shall promptly transmit to each of
the other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar
Loans shall no longer be available until such time as the Agent notifies the
Borrower and the Banks that the circumstances giving rise to such notice by the
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given
by the Borrower with respect to Eurodollar Loans which have not yet been
incurred shall be deemed rescinded by the Borrower, (y) in the case of clause
(ii) above, the Borrower agrees to pay to such Bank, upon written demand
therefor (accompanied by the written notice referred to below), such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased costs
or reductions in amounts received or receivable hereunder (a written notice as
to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Borrower by such Bank shall, absent
manifest error, be final and conclusive and binding upon all parties hereto) and
(z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 1.10(b) as promptly as possible and, in any event,
within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and,
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii), the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii)), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan (which conversion, in the case of the
circumstances described in Section 1.10(a)(iii), shall occur no later than the
last day of the Interest Period then applicable to such Eurodollar Loan (or such
earlier date as shall be required by applicable law)); provided, that if more
--------
than one Bank is affected at any time, then all affected Banks must be treated
the same pursuant to this Section 1.10(b).
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<PAGE>
(c) If any Bank shall have determined that after the date hereof, the
adoption or effectiveness of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Bank with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Bank could have achieved
but for such adoption, effectiveness, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy), then from
time to time, upon written demand by such Bank (with a copy to the Agent),
accompanied by the notice referred to in the last sentence of this clause (c),
the Borrower agrees to pay to such Bank such additional amount or amounts as
will compensate such Bank for such reduction. Each Bank, upon determining in
good faith that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower, which notice
shall set forth the basis of the calculation of such additional amounts,
although the failure to give any such notice shall not release or diminish the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. The Borrower agrees to compensate each Bank, upon
------------
its written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding loss of anticipated profit with respect
to any Loans) which such Bank may sustain: (i) if for any reason (other than a
default by such Bank or the Agent) a Borrowing of Eurodollar Loans does not
occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment
made pursuant to Section 4.01 or 4.02 or as a result of an acceleration of the
Loans pursuant to Section 9) or conversion of any Eurodollar Loans occurs on a
date which is not the last day of an Interest Period applicable thereto; (iii)
if any prepayment of any Eurodollar Loans is not made on any date specified in a
notice of prepayment given by the Borrower; or (iv) as a consequence of (x) any
other default by the Borrower to repay its Eurodollar Loans when required by the
terms of this Agreement or (y) an election made pursuant to Section 1.10(b).
Calculation of all amounts payable to a Bank under this Section 1.11 shall be
made as though that Bank had actually funded its relevant Eurodollar Loan
through the purchase of a Eurodollar deposit bearing interest at the Eurodollar
Rate in an amount equal to the amount of that Loan, having a maturity comparable
to the relevant Interest Period and through the transfer of such Eurodollar
deposit from an offshore office of that Bank to a domestic office of that Bank
in the United States of America; provided, however, that each Bank may fund each
-------- -------
of its Eurodollar Loans in any manner it sees fit and the foregoing assumption
shall be util-
-12-
<PAGE>
ized only for the calculation of amounts payable under this Section 1.11. It is
further understood and agreed that if any repayment of Eurodollar Loans pursuant
to Section 4.01 or any conversion of Eurodollar Loans pursuant to Section 1.06
in either case occurs on a date which is not the last day of an Interest Period
applicable thereto, such repayment or conversion shall be accompanied by any
amounts owing to any Bank pursuant to this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans or Letters of
Credit affected by such event; provided, that such designation is made on such
--------
terms that, in the sole judgment of such Bank, such Bank and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequences of the event giving rise to the operation of any such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Bank provided in Section 1.10,
2.05 or 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
--------------------
Bank, (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with
respect to any Bank which results in such Bank charging to the Borrower
increased costs in excess of those being generally charged by the other Banks or
(z) in the case of a refusal by a Bank to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been approved
by the Required Banks as provided in Section 12.12(b), the Borrower shall have
the right, if no Default or Event of Default then exists or, in the case of
clause (z) above, would exist after giving effect to such replacement, to
replace such Bank (the "Replaced Bank") with one or more other Eligible
Transferee or Transferees, none of whom shall constitute a Defaulting Bank at
the time of such replacement (collectively, the "Replacement Bank") reasonably
acceptable to the Agent, provided that (i) at the time of any replacement
--------
pursuant to this Section 1.13, the Replacement Bank shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 12.04(b) (and with all
fees payable pursuant to said Section 12.04(b) to be paid by the Replacement
Bank) pursuant to which the Replacement Bank shall acquire all of the
Commitments and outstanding Loans of, and in each case participations in Letters
of Credit by, the Replaced Bank and, in connection therewith, shall pay to (x)
the Replaced Bank in respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Bank, (B) an amount equal to all Unpaid Drawings that have been
funded by (and not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time and (C) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant to
Section 3.01, (y) the respective Letter of Credit Issuer an amount equal to such
Replaced Bank's RL Percentage of any Unpaid Drawing (which at such time remains
an Unpaid Drawing)
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<PAGE>
with respect to a Letter of Credit issued by it to the extent such amount was
not theretofore funded by such Replaced Bank and (z) BTCo an amount equal to
such Replaced Bank's RL Percentage of any Mandatory Borrowing to the extent such
amount was not theretofore funded by such Replaced Bank, and (ii) all
obligations (including, without limitation, all such amounts, if any, owing
under Section 1.11) of the Borrower owing to the Replaced Bank (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment and Assumption Agreements, the payment of amounts
referred to in clauses (i) and (ii) above, recordation of the assignment on the
Register by the Agent pursuant to Section 7.12 and, if so requested by the
Replacement Bank, delivery to the Replacement Bank of the appropriate Note or
Notes executed by the Borrower, the Replacement Bank shall become a Bank
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions under this Agreement
(including, without limitation, Sections 1.10, 1.11, 2.05, 4.04, 12.01 and
12.06), which shall survive as to such Replaced Bank.
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time after the Initial Borrowing Date and prior to
the Business Day (or the 30th day in the case of trade Letters of Credit)
preceding the Revolving Loan Maturity Date to issue, for the account of the
Borrower and in support of, (A) trade obligations of the Borrower or any of its
Subsidiaries that arise in the ordinary course of business and are in respect of
general corporate purposes of the Borrower or its Subsidiaries, as the case may
be, and/or (B) on a standby basis, L/C Supportable Indebtedness, and subject to
and upon the terms and conditions herein set forth each Letter of Credit Issuer
agrees to issue from time to time, irrevocable letters of credit in such form as
may be approved by such Letter of Credit Issuer (each such letter of credit, a
"Letter of Credit" and, collectively, the "Letters of Credit"). Notwithstanding
the foregoing, no Letter of Credit Issuer shall be under any obligation to issue
any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer shall prohibit, or
request that such Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Letter of Credit Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Letter of Credit Issuer
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<PAGE>
is not otherwise compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in effect or
known to such Letter of Credit Issuer as of the date hereof and which such
Letter of Credit Issuer in good faith deems material to it; or
(ii) such Letter of Credit Issuer shall have received notice from
the Required Banks prior to the issuance of such Letter of Credit of the
type described in clause (vi) of Section 2.01(b).
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings relating to Letters of Credit which
are repaid on the date of, and prior to the issuance of, the respective Letter
of Credit) at such time, would exceed either (x) $10,000,000 or (y) when added
to the aggregate principal amount of all Revolving Loans and Swingline Loans
then outstanding, the Total Revolving Loan Commitment at such time; (ii) (x)
each standby Letter of Credit shall have an expiry date occurring not later than
one year after such standby Letter of Credit's date of issuance, provided, that
--------
any standby Letter of Credit may be automatically renewable for periods of up to
one year so long as such standby Letter of Credit provides that the respective
Letter of Credit Issuer retains an option, satisfactory to such Letter of Credit
Issuer, to terminate such standby Letter of Credit within a specified period of
time prior to each scheduled renewal date and (y) each trade Letter of Credit
shall have an expiry date occurring not later than 180 days after such trade
Letter of Credit's date of issuance; (iii) (x) no standby Letter of Credit shall
have an expiry date occurring later than the Business Day next preceding the
Revolving Loan Maturity Date and (y) no trade Letter of Credit shall have an
expiry date occurring later than 30 days prior to the Revolving Loan Maturity
Date; (iv) each Letter of Credit shall be denominated in U.S. Dollars and be
payable on a sight basis; (v) the Stated Amount of each Letter of Credit shall
not be less than $100,000 or such lesser amount as is acceptable to the Letter
of Credit Issuer; and (vi) no Letter of Credit Issuer will issue any Letter of
Credit after it has received written notice from the Borrower or the Required
Banks stating that a Default or an Event of Default exists until such time as
such Letter of Credit Issuer shall have received a written notice of (i)
rescission of such notice from the party or parties originally delivering the
same or (ii) a waiver of such Default or Event of Default by the Required Banks
(or all the Banks to the extent required by Section 12.12), and any letter of
credit issued by a Letter of Credit Issuer in contravention of this clause (vi)
shall not constitute a Letter of Credit (including for purposes of Section
2.04).
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless the respective Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Bank or Banks, including by cash collateralizing such Defaulting
Bank's or Banks' RL Percentage of the Letter of Credit Outstandings.
-15-
<PAGE>
(d) Annex X attached hereto contains a description of all letters of
credit issued or deemed issued and outstanding under the Existing Credit
Agreement on the Effective Date. Each such letter of credit, including any
extension thereof (each, an "Existing Letter of Credit") shall constitute a
"Letter of Credit" for all purposes of this Agreement, issued, for purposes of
Section 2.04(a), on the Effective Date.
2.02 Letter of Credit Requests; Notices of Issuance. (a) Whenever
----------------------------------------------
it desires that a Letter of Credit be issued, the Borrower shall give the Agent
and the respective Letter of Credit Issuer written notice thereof prior to 12:00
Noon (New York time) at least five Business Days (or such shorter period as may
be acceptable to such Letter of Credit Issuer) prior to the proposed date of
issuance (which shall be a Business Day) which written notice shall be in the
form of Exhibit A-2 (each, a "Letter of Credit Request"). Each Letter of Credit
Request shall include any other documents as the respective Letter of Credit
Issuer customarily requires in connection therewith.
(b) (i) In the case of standby Letters of Credit, each Letter of
Credit Issuer shall, on the date of each issuance of or amendment or
modification to a standby Letter of Credit by it, give the Agent and the
Borrower written notice of the issuance of or amendment or modification to such
Letter of Credit, accompanied by a copy to the Agent of the Letter of Credit or
Letters of Credit issued by it and each such amendment or modification thereto.
(ii) In the case of any trade Letters of Credit issued by a Letter
of Credit Issuer other than BTCo, the respective trade Letter of Credit Issuer
shall send to the Agent, on the first Business Day of each week, by telefax, its
outstanding trade Letter of Credit daily balances for the previous week. The
Agent shall deliver to each RL Bank by the end of each calendar month and upon
each Letter of Credit fee payment date a report setting forth for such period
the aggregate daily amount available to be drawn under trade Letters of Credit
issued by all Letter of Credit Issuers that were outstanding during such period.
2.03 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
--------------------------------------------
hereby agrees to reimburse each respective Letter of Credit Issuer, by making
payment to the Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit issued by it (each such amount so paid or disbursed until
reimbursed, an "Unpaid Drawing") no later than one Business Day following the
date of such payment or disbursement, with interest on the amount so paid or
disbursed by such Letter of Credit Issuer, to the extent not reimbursed prior to
1:00 P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but not including the date such Letter
of Credit Issuer is reimbursed therefor at a rate per annum which shall be the
Applicable Base Rate Margin plus the Base Rate as in effect from time to time
for Revolving Loans (plus an additional 2% per annum if not reimbursed by the
third Business
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<PAGE>
Day after the date of such payment or disbursement), such interest also to be
payable on demand. Each Letter of Credit Issuer shall provide the Borrower
prompt notice of any payment or disbursement made by it under any Letter of
Credit issued by it, although the failure of, or delay in, giving any such
notice shall not release or diminish the obligations of the Borrower under this
Section 2.03(a) or under any other Section of this Agreement.
(b) The Borrower's obligation under this Section 2.03 to reimburse
the respective Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against such Letter
of Credit Issuer, the Agent or any Bank, including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit issued by
it to conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing; provided,
--------
however, that the Borrower shall not be obligated to reimburse such Letter of
- - -------
Credit Issuer for any wrongful payment made by such Letter of Credit Issuer
under a Letter of Credit issued by it as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such Letter
of Credit Issuer.
2.04 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter of
Credit Issuer shall be deemed to have sold and transferred to each RL Bank, and
each such RL Bank (each, a "Participant") shall be deemed irrevocably and
unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such RL Bank's RL Percentage, in such Letter of Credit, each
substitute letter of credit, each drawing made thereunder and the obligations of
the Borrower under this Agreement with respect thereto (although Letter of
Credit Fees shall be payable directly to the Agent for the account of the RL
Banks as provided in Section 3.01(b) and the Participants shall have no right to
receive any portion of any Facing Fees) and any security therefor or guaranty
pertaining thereto. Upon any change in the Revolving Loan Commitments of the RL
Banks pursuant to Section 1.13 or 12.04(b), it is hereby agreed that, with
respect to all outstanding Letters of Credit and Unpaid Drawings relating to
Letters of Credit, there shall be an automatic adjustment to the participations
pursuant to this Section 2.04(a) to reflect the new RL Percentages of the
assigning and assignee Banks.
(b) In determining whether to pay under any Letter of Credit, the
respective Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they appear to comply
on their face with the requirements of such Letter of Credit. Any action taken
or omitted to be taken by any Letter of Credit Issuer under or in connection
with any Letter of Credit issued by it if taken or omitted in the
-17-
<PAGE>
absence of gross negligence or willful misconduct, shall not create for such
Letter of Credit Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to such Letter of Credit Issuer pursuant to
Section 2.03(a), such Letter of Credit Issuer shall promptly notify the Agent,
and the Agent shall promptly notify each Participant of such failure, and each
such Participant shall promptly and unconditionally pay to the Agent for the
account of such Letter of Credit Issuer, the amount of such Participant's RL
Percentage of such payment in U.S. Dollars and in same day funds; provided,
--------
however, that no Participant shall be obligated to pay to the Agent its RL
- - -------
Percentage of such unreimbursed amount for any wrongful payment made by such
Letter of Credit Issuer under a Letter of Credit issued by it as a result of
acts or omissions constituting willful misconduct or gross negligence on the
part of such Letter of Credit Issuer. If the Agent so notifies any Participant
required to fund a payment under a Letter of Credit prior to 11:00 A.M. (New
York time) on any Business Day, such Participant shall make available to the
Agent for the account of the respective Letter of Credit Issuer such
Participant's RL Percentage of the amount of such payment on such Business Day
in same day funds. If and to the extent such Participant shall not have so made
its RL Percentage of the amount of such payment available to the Agent for the
account of the respective Letter of Credit Issuer, such Participant agrees to
pay to the Agent for the account of such Letter of Credit Issuer, forthwith on
demand such amount, together with interest thereon, for each day from such date
until the date such amount is paid to the Agent for the account of such Letter
of Credit Issuer at the overnight Federal Funds rate. The failure of any
Participant to make available to the Agent for the account of the respective
Letter of Credit Issuer its RL Percentage of any payment under any Letter of
Credit issued by it shall not relieve any other Participant of its obligation
hereunder to make available to the Agent for the account of such Letter of
Credit Issuer its RL Percentage of any payment under any such Letter of Credit
on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Agent for the account of such Letter of Credit Issuer such other Participant's
RL Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
such Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, such Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its RL Percentage
thereof, in U.S. Dollars and in same day funds, an amount equal to such
Participant's RL Percentage of the principal amount thereof and interest thereon
accruing after the purchase of the respective participations.
(e) The obligations of each respective Participant to make payments
to the Agent for the account of each respective Letter of Credit Issuer with
respect to Letters of Credit issued by it which such Participant has a
participation in shall be irrevocable and not
-18-
<PAGE>
subject to counterclaim, set-off or other defense or any other qualification or
exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, any Letter of Credit
Issuer, any Bank, any Participant or other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions contemplated
herein (including the Transaction) or any unrelated transactions (including
any underlying transaction between the Borrower or any of its Subsidiaries
and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Increased Costs. If after the date hereof, the adoption or
---------------
effectiveness of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central bank or comparable agency shall
either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by such Letter
of Credit Issuer or such Participant's participation therein, or (ii) impose on
any Letter of Credit Issuer or any Participant any other conditions affecting
this Agreement, any Letter of Credit or such Participant's participation
therein; and the result of any of the foregoing is to increase the cost to such
Letter of Credit Issuer or such Participant of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Participant
hereunder, then, upon written demand to the Borrower by such Letter of Credit
Issuer or such Participant (a copy of which notice shall be sent by such Letter
of Credit Issuer or such Participant to the Agent), accompanied by the
certificate described in the last sentence of this Section 2.05, the Borrower
shall pay to
-19-
<PAGE>
such Letter of Credit Issuer or such Participant such additional amount or
amounts as will compensate such Letter of Credit Issuer or such Participant for
such increased cost or reduction. A certificate submitted to the Borrower by
such Letter of Credit Issuer or such Participant, as the case may be (a copy of
which certificate shall be sent by such Letter of Credit Issuer or such
Participant to the Agent), setting forth the basis for the determination of such
additional amount or amounts necessary to compensate such Letter of Credit
Issuer or such Participant as aforesaid shall be final and conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish the Borrower's obligations to
pay additional amounts pursuant to this Section 2.05 upon subsequent receipt of
such certificate.
SECTION 3. Fees; Commitments.
-----------------
3.01 Fees. (a) The Borrower shall pay to the Agent for distribution
----
to each Bank a commitment fee (the "Commitment Fee") for the period from the
Effective Date to and including the date the Total Commitment has been
terminated, computed at a rate equal to the Applicable Commitment Fee Percentage
on the daily Aggregate Unutilized Commitment of such Bank. Accrued Commitment
Fees shall be due and payable in arrears thereafter, in arrears on each
Quarterly Payment Date and the date upon which the Total Commitment is
terminated.
(b) The Borrower shall pay to the Agent for the account of the RL
Banks pro rata on the basis of their RL Percentages, a fee in respect of each
--- ----
Letter of Credit (the "Letter of Credit Fee") computed at a rate per annum equal
to the Applicable Eurodollar Margin then in effect with respect to Revolving
Loans on the daily Stated Amount of such Letter of Credit. Accrued Letter of
Credit Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and upon the first day after the termination of the Total Revolving
Loan Commitment upon which no Letters of Credit remain outstanding.
(c) The Borrower shall pay to the Agent for the account of the
respective Letter of Credit Issuer a fee in respect of each Letter of Credit
issued by such Letter of Credit Issuer (the "Facing Fee") computed at the rate
of 1/4 of 1% per annum on the daily Stated Amount of such Letter of Credit;
provided, that in no event shall the annual Facing Fee with respect to each
- - --------
Letter of Credit be less than $500; it being agreed that, on the date of
issuance of any Letter of Credit and on each anniversary thereof prior to the
termination of such Letter of Credit, if $500 will exceed the amount of Facing
Fees that will accrue with respect to such Letter of Credit for the immediately
succeeding 12-month period, the full $500 shall be payable on the date of
issuance of such Letter of Credit and on each such anniversary thereof prior to
the termination of such Letter of Credit. Except as provided in the immediately
preceding sentence, accrued Facing Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day after the
termination of the Total Commitment upon which no Letters of Credit remain
outstanding.
-20-
<PAGE>
(d) The Borrower hereby agrees to pay directly to the respective
Letter of Credit Issuer upon each issuance of, drawing under, and/or amendment
of, a Letter of Credit issued by it such amount as shall at the time of such
issuance, drawing or amendment be the administrative charge which such Letter of
Credit Issuer is customarily charging for issuances of, drawings under or
amendments of, letters of credit issued by it.
(e) The Borrower shall pay to the Agent, for its own account, such
fees as may be agreed to from time to time between the Borrower and the Agent,
when and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 Voluntary Termination or Reduction of Commitments. (a) Upon at
-------------------------------------------------
least two Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) to the Agent at its Notice Office (which notice the Agent
shall promptly transmit to each of the Banks), the Borrower shall have the
right, without premium or penalty, to terminate or partially reduce the
unutilized portion of the Total Unutilized Revolving Loan Commitment; provided
--------
that (x) any such termination or partial reduction shall apply to
proportionately and permanently reduce the Revolving Loan Commitment of each
Bank with a Revolving Loan Commitment and (y) any partial reduction pursuant to
this Section 3.02 shall be in the amount of at least $500,000.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
12.12(b), the Borrower shall have the right, upon five Business Days' prior
written notice to the Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks), to terminate the entire Revolving Loan
Commitment of such Bank, so long as all Loans, together with accrued and unpaid
interest, Fees and all other amounts, owing to such Bank are repaid concurrently
with the effectiveness of such termination pursuant to Section 4.01(b), and the
Borrower shall pay to the Agent at such time an amount in cash and/or Cash
Equivalents equal to such Bank's RL Percentage of the outstanding Letters of
Credit which it has a participation in (which cash and/or Cash Equivalents shall
be held by the Agent as security for the obligations of the Borrower hereunder
in respect of such outstanding Letters of Credit pursuant to a cash collateral
agreement to be entered into in form and substance reasonably satisfactory to
the Agent, which shall permit certain investments in Cash Equivalents reasonably
satisfactory to the Agent until the proceeds are applied to the secured
obligations) (at which time Annex I shall be deemed modified to reflect such
changed amounts), and at such time, such Bank shall no longer constitute a
"Bank" for purposes of this Agreement, except with respect to indemnifications
under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.05,
4.04, 12.01 and 12.06), which shall survive as to such repaid Bank.
-21-
<PAGE>
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
------------------------------------------
Commitment (and the A Term Loan Commitment, B Term Loan Commitment and Revolving
Loan Commitment of each Bank) shall terminate on July 31, 1997 unless the
Initial Borrowing Date has occurred on or before such date.
(b) (i) The Total A Term Loan Commitment shall (x) be reduced on
each date on which A Term Loans are incurred (after giving effect to the
incurrence of A Term Loans on such date), in an amount equal to the aggregate
principal amount of A Term Loans incurred on such date, and (y) terminate in its
entirety on the A Term Loan Availability Termination Date after giving effect to
any incurrence of A Term Loans on such date.
(ii) The Total B Term Loan Commitment shall terminate on the Initial
Borrowing Date, after giving effect to the making of the B Term Loans on such
date.
(c) The Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate on the earlier of (i) the date on which
a Change of Control Event occurs and (ii) the Revolving Loan Maturity Date.
(d) Each reduction or adjustment of the Total A Term Loan
Commitment, the Total B Term Loan Commitment or the Total Revolving Loan
Commitment pursuant to this Section 3.03 (or pursuant to Section 4.02) shall
apply proportionately to the A Term Loan Commitment, the B Term Loan Commitment,
or the Revolving Loan Commitment, as the case may be, of each Bank.
SECTION 4. Payments.
--------
4.01 Voluntary Prepayments. (a) The Borrower shall have the right
---------------------
to prepay the Loans made to it, in whole or in part, without premium or penalty
except as otherwise provided in this Agreement, from time to time on the
following terms and conditions: (i) the Borrower shall give the Agent at its
Notice Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay such Loans, whether such Loans are A Term
Loans, B Term Loans, Revolving Loans or Swingline Loans, the amount of such
prepayment and (in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be given by the Borrower prior to
11:00 A.M. (New York time) (x) at least one Business Day prior to the date of
such prepayment in the case of Term Loans or Revolving Loans maintained as Base
Rate Loans, (y) on the date of such prepayment in the case of Swingline Loans
and (z) at least three Business Days prior to the date of such prepayment in the
case of Eurodollar Loans, which notice shall, except in the case of Swingline
Loans, promptly be transmitted by the Agent to each of the Banks; (ii) each
prepayment shall be in an aggregate principal amount of at least $500,000 (or
$250,000 in the case of Swingline Loans); provided, that no partial prepayment
--------
of Euro-
-22-
<PAGE>
dollar Loans made pursuant to a Borrowing shall reduce the aggregate principal
amount of the Loans outstanding pursuant to such Borrowing to an amount less
than the Minimum Borrowing Amount applicable thereto; (iii) Eurodollar Loans may
only be prepaid pursuant to this Section 4.01(a) on the last day of an Interest
Period applicable thereto, unless the Borrower pays all amounts owing under
Section 1.11 as a result of repaying such Eurodollar Loans on a day other than
the last day of the Interest Period applicable thereto; (iv) each prepayment in
respect of any Loans made pursuant to a Borrowing shall be applied pro rata
--- ----
among such Loans; provided, that at the Borrower's election in connection with
--------
any prepayment of Revolving Loans pursuant to this Section 4.01(a), such
prepayment shall not be applied to any Revolving Loans of a Defaulting Bank at
any time when the aggregate amount of Revolving Loans of any Non-Defaulting Bank
exceeds such Non-Defaulting Bank's RL Percentage of all Revolving Loans then
outstanding; (v) each prepayment of Term Loans pursuant to this Section 4.01(a)
must consist of a prepayment of A Term Loans (in an amount equal to the A TL
Percentage of such prepayment) and B Term Loans (in an amount equal to the B TL
Percentage of such prepayment); (vi) each prepayment of A Term Loans pursuant to
this Section 4.01(a) shall reduce the then remaining Scheduled A Repayments on a
pro rata basis (based upon the then remaining principal amount of each such
- - --- ----
Scheduled A Repayment); and (vii) each prepayment of B Term Loans pursuant to
this Section 4.01(a) shall reduce the then remaining Scheduled B Repayments on a
pro rata basis (based upon the then remaining principal amount of each such
- - --- ----
Scheduled B Repayment).
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
12.12(b), the Borrower shall have the right, upon five Business Days' prior
written notice to the Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks) to repay all Loans, together with
accrued and unpaid interest, Fees and all other amounts owing to such Bank in
accordance with said Section 12.12(b) so long as (A) in the case of the
repayment of Revolving Loans of any RL Bank pursuant to this clause (b) the
Revolving Loan Commitment of such RL Bank is terminated concurrently with such
repayment pursuant to Section 3.02(b) (at which time Annex I shall be deemed
modified to reflect the changed Revolving Loan Commitments), and (B) in the case
of the repayment of Loans of any Bank the consents required by Section 12.12(b)
in connection with the repayment pursuant to this clause (b) shall have been
obtained.
4.02 Mandatory Prepayments.
---------------------
(A) Requirements:
------------
(a) If on any date the sum of (i) the aggregate outstanding
principal amount of Revolving Loans and Swingline Loans (after giving effect to
all other repayments thereof on such date) plus (ii) the Letter of Credit
Outstandings on such date exceeds the Total
-23-
<PAGE>
Revolving Loan Commitment as then in effect, the Borrower shall repay on such
date the principal of Swingline Loans, and if no Swingline Loans are or remain
outstanding, Revolving Loans, in an aggregate amount equal to such excess. If,
after giving effect to the prepayment of all outstanding Swingline Loans and
Revolving Loans, the aggregate amount of Letter of Credit Outstandings exceeds
the Total Revolving Loan Commitment as then in effect, the Borrower agrees to
pay to the Agent an amount in cash and/or Cash Equivalents equal to such excess
(up to the aggregate amount of Letter of Credit Outstandings at such time) and
the Agent shall hold such payment as security for the obligations of the
Borrower hereunder pursuant to a cash collateral agreement to be entered into in
form and substance satisfactory to the Agent (which shall permit certain
investments in Cash Equivalents satisfactory to the Agent until the proceeds are
applied to the secured obligations).
(b) (i) The Borrower shall be required to repay the principal amount
of A Term Loans on each date set forth below in the amount set forth opposite
such date below (each such repayment, as the same may be reduced as provided in
Sections 4.01 and 4.02(B), a "Scheduled A Repayment"):
<TABLE>
<CAPTION>
Scheduled A Repayment Date Amount
---------------------------------
<S> <C>
the last Business Day in March, 1998 $1,500,000
the last Business Day in June, 1998 $1,500,000
the last Business Day in September, 1998 $1,500,000
the last Business Day in December, 1998 $1,500,000
the last Business Day in March, 1999 $3,125,000
the last Business Day in June, 1999 $3,125,000
the last Business Day in September, 1999 $3,125,000
the last Business Day in December, 1999 $3,125,000
the last Business Day in March, 2000 $3,750,000
the last Business Day in June, 2000 $3,750,000
the last Business Day in September, 2000 $3,750,000
the last Business Day in December, 2000 $3,750,000
the last Business Day in March, 2001 $5,000,000
the last Business Day in June, 2001 $5,000,000
the last Business Day in September, 2001 $5,000,000
the last Business Day in December, 2001 $5,000,000
the last Business Day in March, 2002 $7,250,000
A Term Loan Maturity Date $9,250,000
</TABLE>
-24-
<PAGE>
; provided that in the event the aggregate principal amount of A Term Loans
--------
incurred at or prior to the time that the Total A Term Loan Commitment is
terminated in accordance with Section 3.03(b)(i)(y) is less than $70,000,000, an
amount equal to such deficiency shall be applied to reduce the Scheduled A
Repayments pro rata based on the then remaining Scheduled A Repayments.
--- ----
(ii) The Borrower shall be required to repay the principal amount of B
Term Loans on each date set forth below in the amount set forth opposite such
date below (each such repayment, as the same may be reduced as provided in
Sections 4.01 and 4.02(B), a "Scheduled B Repayment"):
<TABLE>
<CAPTION>
Scheduled B Repayment Date Amount
-------------------------- ------
<S> <C>
the last Business Day in March, 1998 $ 337,500
the last Business Day in June, 1998 $ 337,500
the last Business Day in September, 1998 $ 337,500
the last Business Day in December, 1998 $ 337,500
the last Business Day in March, 1999 $ 337,500
the last Business Day in June, 1999 $ 337,500
the last Business Day in September, 1999 $ 337,500
the last Business Day in December, 1999 $ 337,500
the last Business Day in March, 2000 $ 337,500
the last Business Day in June, 2000 $ 337,500
the last Business Day in September, 2000 $ 337,500
the last Business Day in December, 2000 $ 337,500
the last Business Day in March, 2001 $ 337,500
the last Business Day in June, 2001 $ 337,500
the last Business Day in September, 2001 $ 337,500
the last Business Day in December, 2001 $ 337,500
the last Business Day in March, 2002 $ 337,500
the last Business Day in June, 2002 $ 337,500
the last Business Day in September, 2002 $ 8,412,500
the last Business Day in December, 2002 $ 8,412,500
the last Business Day in March, 2003 $ 8,750,000
the last Business Day in June, 2003 $ 8,750,000
the last Business Day in September, 2003 $ 8,750,000
the last Business Day in December, 2003 $ 8,750,000
</TABLE>
-25-
<PAGE>
<TABLE>
<S> <C>
the last Business Day in March, 2004 $10,000,000
the last Business Day in June, 2004 $10,000,000
the last Business Day in September, 2004 $10,000,000
the last Business Day in December, 2004 $10,000,000
the last Business Day in March, 2005 $17,875,000
B Term Loan Maturity Date $19,225,000
</TABLE>
(c) On the Business Day after the date of receipt thereof by Holdings
and/or any of its Subsidiaries of Proceeds from any Asset Sale, an amount equal
to 100% of the Net Proceeds from such Asset Sale shall be applied as a mandatory
repayment of principal of the Term Loans (with the A TL Percentage of such
amount to be applied as a repayment of the A Term Loans and the B TL Percentage
of such amount to be applied as a repayment of the B Term Loans), in each case
subject to modification of such application as set forth in Section 4.02(C)),
provided that with respect to no more than $2,500,000 in the aggregate of such
- - --------
Proceeds in any fiscal year of the Borrower, the Net Proceeds therefrom shall
not be required to be so applied on such date to the extent that no Default or
Event of Default then exists and the Borrower delivers a certificate to the
Agent on or prior to such date stating that such Net Proceeds shall be used to
purchase assets used or to be used in the businesses referred to in Section
8.01(a) (including, without limitation (but only to the extent permitted by
Section 8.02), capital stock of a corporation engaged in any such business)
within 180 days following the date of such Asset Sale (which certificate shall
set forth the estimates of the proceeds to be so expended), provided, that (1)
--------
if all or any portion of such Net Proceeds not so applied to the repayment of
Term Loans are not so used (or contractually committed to be used) within such
180 day period, such remaining portion shall be applied on the last day of such
period as a mandatory repayment of principal of outstanding Term Loans as
provided above in this Section 4.02(A)(c) and (2) if all or any portion of such
Net Proceeds are not required to be applied on the 180th day referred to in
clause (1) above because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion being so used, then such remaining portion shall be applied on the date
of such termination or expiration as a mandatory repayment of principal of
outstanding Term Loans as provided in this Section 4.02(A)(c).
(d) On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries, an amount equal to 100% of the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
the sale or issuance of preferred or common equity of (or cash capital
contributions to) Holdings or any of its Subsidiaries (other than (x) issuances
of Holdings Common Stock (including as a result of the exercise of any options
with regard thereto) to management of Holdings and its Subsidiaries, and (y)
equity contributions to any Subsidiary of the Borrower made by the Borrower or
any other Subsidiary of the Borrower) shall be applied as a mandatory re-
-26-
<PAGE>
payment of principal of the Term Loans (with the A TL Percentage of such amount
to be applied as a repayment of the A Term Loans and the B TL Percentage of such
amount to be applied as a repayment of the B Term Loans, in each case subject to
modification of such application as set forth in Section 4.02(C)); provided that
--------
(i) $10,000,000 of cash equity contributions in the aggregate from Bain Capital,
senior management of the Borrower, and/or their respective Affiliates shall not
be required to be applied as provided above in this Section 4.02(A)(d) so long
as such equity contributions are substantially contemporaneously contributed to
the capital of the Borrower as an equity contribution (the cash contributions
made pursuant to this clause (i), the "Excess Equity Proceeds"), and (ii) only
75% of such proceeds resulting from the initial registered public offering of
Holdings Common Stock shall be applied as provided above in this Section
4.02(A)(d).
(e) On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries, an amount equal to 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
the incurrence of Indebtedness by Holdings and/or any of its Subsidiaries (other
than Indebtedness permitted to be incurred by Section 8.04 as in effect on the
Initial Borrowing Date) shall be applied as a mandatory repayment of principal
of the Term Loans (with the A TL Percentage of such amount to be applied as a
repayment of the A Term Loans and the B TL Percentage of such amount to be
applied as a repayment of the B Term Loans, in each case subject to modification
of such application as set forth in Section 4.02(C)).
(f) On each Excess Cash Payment Date, an amount equal to 75% of
Excess Cash Flow of the Borrower and its Subsidiaries for the most recent Excess
Cash Flow Period ending prior to such Excess Cash Payment Date (or 50% in the
case of the Excess Cash Flow Period ending on December 31, 1997) shall be
applied as a mandatory repayment of principal of the Term Loans (with the A TL
Percentage of such amount to be applied as a repayment of the A Term Loans and
the B TL Percentage of such amount to be applied as a repayment of the B Term
Loans, in each case subject to modification of such application as set forth in
Section 4.02(C)).
(g) Within 10 days following each date on which Holdings or any of
its Subsidiaries receives any proceeds from any Recovery Event, an amount equal
to 100% of the proceeds of such Recovery Event (net of reasonable costs and
taxes incurred in connection with such Recovery Event) shall be applied as a
mandatory repayment of principal of the Term Loans (with the A TL Percentage of
such amount to be applied as a repayment of the A Term Loans and the B TL
Percentage of such amount to be applied as a repayment of the B Term Loans, in
each case, subject to modification of such application as set forth in Section
4.02(C)), provided that so long as no Default or Event of Default then exists
--------
and such proceeds do not exceed $20,000,000, such proceeds shall not be required
to be so applied on such date to the extent that the Borrower has delivered a
certificate to the Agent on or prior to such date stating that such proceeds
shall be used to replace or restore any properties or assets in respect of which
such proceeds were paid within 360 days following
-27-
<PAGE>
the date of the receipt of such proceeds (which certificate shall set forth the
estimates of the proceeds to be so expended), and provided further, that (i) if
----------------
the amount of such proceeds exceeds $20,000,000, then the entire amount and not
just the portion in excess of $20,000,000 shall be applied as a mandatory
repayment of Term Loans as provided above in this Section 4.02(A)(g), (ii) if
all or any portion of such proceeds not required to be applied to the repayment
of Term Loans pursuant to the preceding proviso are not so used (or
contractually committed to be used) within 360 days after the date of the
receipt of such proceeds, such remaining portion shall be applied on the last
day of such period as a mandatory repayment of principal of the Term Loans as
provided in this Section 4.02(A)(g) and (iii) if all or any portion of such
proceeds are not required to be applied on the 360th day referred to in clause
(ii) above because such amount is contractually committed to be used and
subsequent to such date such contract is terminated or expires without such
portion being so used, then such remaining portion shall be applied on the date
of such termination or expiration as a mandatory repayment of principal of
outstanding Term Loans as provided in this Section 4.02(A)(g).
(h) On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries of a Pension Plan Refund, an amount equal to 100% of such Pension
Plan Refund shall be applied as a mandatory repayment of principal of Term Loans
(with the A TL Percentage of such amount to be applied as a repayment of the A
Term Loans and the B TL Percentage of such amount to be applied as a repayment
of the B Term Loans, in each case subject to modification of such application as
set forth in Section 4.02(C)).
(i) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all other then outstanding Loans of the
respective Facility shall be repaid in full on the earlier of (x) the date on
which a Change of Control Event occurs and (y) the Maturity Date for such
Facility.
(B) Application:
-----------
(a) Any amount required to be applied to A Term Loans and B Term
Loans, as the case may be, shall apply to the repayment of the outstanding
principal amount of A Term Loans and B Term Loans, respectively of the
respective Facility.
(b) All repayments of A Term Loans and B Term Loans shall be applied,
if required pursuant to Section 4.02(A)(c),(d),(e),(f),(g) or (h), to reduce the
then remaining Scheduled Repayments of the respective Facility pro rata based on
--- ----
the then remaining Scheduled Repayments of the respective Facility.
(c) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans which are to be repaid and
the specific Borrowing(s) under the affected Facility pursuant to which made;
provided, that (i) Eurodollar
- - --------
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<PAGE>
Loans made pursuant to a specific Facility may be designated for repayment
pursuant to this Section 4.02 only on the last day of an Interest Period
applicable thereto unless all Eurodollar Loans made pursuant to such Facility
with Interest Periods ending on such date of required prepayment and all Base
Rate Loans made pursuant to such Facility have been paid in full; (ii) if any
repayment of Eurodollar Loans made pursuant to a single Borrowing shall reduce
the outstanding Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount, such Borrowing shall be immediately converted into
Base Rate Loans; and (iii) each repayment of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans; provided, that no
--- ---- --------
repayment pursuant to Section 4.02(A) (a) shall be applied to any Revolving
Loans of a Defaulting Bank at any time when the aggregate amount of the
Revolving Loans of any Non-Defaulting Bank exceeds such Non-Defaulting Bank's RL
Percentage of Revolving Loans then outstanding. In the absence of a designation
by the Borrower as described in the preceding sentence, the Agent shall, subject
to the above, make such designation in its sole discretion with a view, but no
obligation, to minimize breakage costs owing under Section 1.11.
Notwithstanding the foregoing provisions of this Section 4.02(B)(c), if at any
time the mandatory prepayment of Loans pursuant to Section 4.02(A)(c), (d), (e),
(g) or (h) would result, after giving effect to the procedures set forth above
in this clause (c), in the Borrower incurring breakage costs under Section 1.11
as a result of Eurodollar Loans being repaid other than on the last day of an
Interest Period applicable thereto (the "Affected Eurodollar Loans"), then the
Borrower may in its sole discretion initially deposit a portion (up to 100%) of
the amounts that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Agent to be held as security for the obligations of
the Borrower hereunder pursuant to a cash collateral agreement to be entered
into in form and substance satisfactory to the Agent, with such cash collateral
to be released from such cash collateral account upon the first occurrence (or
occurrences) thereafter of the last day of an Interest Period applicable to the
relevant Loans that are Eurodollar Loans (or such earlier date or dates as shall
be requested by the Borrower), to repay an aggregate principal amount of such
Loans equal to the Affected Eurodollar Loans not initially repaid pursuant to
this sentence.
(C) Waiver of Certain Mandatory
Repayments by B Banks
----------------------------
Notwithstanding anything to the contrary contained in this Section
4.02 or elsewhere in this Agreement (including, without limitation, in Section
12.12), the Borrower shall have the option, in its sole discretion, to give the
Banks with outstanding B Terms Loans (the "B Banks") the option to waive a
mandatory repayment of such Loans pursuant to Section 4.02(A)(c), (d), (e), (f),
(g) and/or (h) (each such repayment, a "Waivable Mandatory Repayment") upon the
terms and provisions set forth in this Section 4.02(C). If the Borrower elects
to exercise the option referred to in the preceding sentence, the Borrower shall
give to the Agent written notice of its intention to give the B Banks the right
to waive a Waivable Mandatory Repayment at least five Business Days prior to
such repayment, which notice the Agent shall promptly forward to all B Banks
(indicating in
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<PAGE>
such notice the amount of such repayment to be applied to each such Bank's
outstanding Term Loans under such Facilities). The Borrower's offer to permit
such B Banks to waive any such Waivable Mandatory Repayment may apply to all or
part of such repayment, provided that any offer to waive part of such repayment
--------
must be made ratably to such B Banks on the basis of their outstanding B Term
Loans. In the event any such B Bank desires to waive such B Bank's right to
receive any such Waivable Mandatory Repayment in whole or in part, such B Bank
shall so advise the Agent no later than the close of business two Business Days
after the date of such notice from the Agent, which notice shall also include
the amount such B Bank desires to receive in respect of such repayment. If any
B Bank does not reply to the Agent within the two Business Days, it will be
deemed not to have waived any part of such repayment. If any B Bank does not
specify an amount it wishes to receive, it will be deemed to have accepted 100%
of the total payment. In the event that any such B Bank waives all or part of
such right to receive any such Waivable Mandatory Repayment, the Agent shall
apply 100% of the amount so waived by such B Bank to the A Term Loans in
accordance with Section 4.02(B).
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable account of the Banks entitled thereto, not later than 12:00 Noon
(New York time) on the date when due and shall be made in immediately available
funds and in U.S. Dollars at the Payment Office, it being understood that
written, telex or facsimile transmission notice by the Borrower to the Agent to
make a payment from the funds in the Borrower's account at the Payment Office
shall constitute the making of such payment to the extent of such funds held in
such account. Any payments under this Agreement which are made later than 12:00
Noon (New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder
------------
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Bank pursuant to the laws
of the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
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<PAGE>
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or net profits of such Bank pursuant to the laws
of the jurisdiction in which the principal office or applicable lending office
of such Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or applicable
lending office of such Bank is located and for any withholding of taxes as such
Bank shall determine are payable by, or withheld from, such Bank in respect of
such amounts so paid to or on behalf of such Bank pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Bank
pursuant to this sentence. The Borrower will furnish to the Agent within 45
days after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Bank, and reimburse such
Bank upon its written request, for the amount of any Taxes so levied or imposed
and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Agent on or prior to the Effective Date, or in the case of a Bank that
is an assignee or transferee of an interest under this Agreement pursuant to
Section 1.13 or 12.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit C (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower and the Agent two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a
Section 4.04(b)(ii) Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Agent of its inability to deliver any such Form or
Certificate, in which case such Bank shall not be
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<PAGE>
required to deliver any such Form or Certificate pursuant to this Section
4.04(b). Notwithstanding anything to the contrary contained in Section 4.04(a),
but subject to Section 12.04(b) and the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any Bank which is not
a United States person (as such term is defined in Section 7701(a)(30) of the
Code) for U.S. Federal income tax purposes to the extent that such Bank has not
provided to the Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) the Borrower shall
not be obligated pursuant to Section 4.04(a) hereof to gross-up payments to be
made to a Bank in respect of income or similar taxes imposed by the United
States if (I) such Bank has not provided to the Borrower the Internal Revenue
Service Forms required to be provided to the Borrower pursuant to this Section
4.04(b) or (II) in the case of a payment, other than interest, to a Bank
described in clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this Section
4.04 and except as set forth in Section 12.04(b), the Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set forth in Section
4.04(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of any changes
after the Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
SECTION 5. Conditions Precedent.
--------------------
5.01 Conditions Precedent to Loans on the Initial Borrowing Date.
-----------------------------------------------------------
The obligation of each Bank to make each Loan to the Borrower hereunder, and the
obligation of any Letter of Credit Issuer to issue each Letter of Credit
hereunder, on the Initial Borrowing Date is subject to the satisfaction of the
following conditions:
(a) Execution of Agreement; Notes. On or prior to the Initial
-----------------------------
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Agent for the account of each Bank the appropriate A
Term Note, B Term Note and Revolving Note, if any, and to BTCo the Swingline
Note, in each case executed by the Borrower and in the amount, maturity and as
otherwise provided herein.
(b) Officer's Certificate. On the Initial Borrowing Date, the Agent
---------------------
shall have received a certificate dated such date signed by an appropriate
officer of the Borrower stating that all of the applicable conditions set forth
in Sections 5.01(e), (f), (h) and (j) and 5.02(a) exist as of such date.
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<PAGE>
(c) Opinions of Counsel. On the Initial Borrowing Date, the Agent
-------------------
shall have received opinions, addressed to the Agent and each of the Banks and
dated the Initial Borrowing Date, from (i) Jaffe, Raitt, Heuer & Weiss, counsel
to the Credit Parties, which opinion shall cover the matters contained in
Exhibit D-1 and such other matters incident to the transactions contemplated
herein as the Agent may reasonably request, (ii) Kirkland & Ellis, counsel to
the Credit Parties, which opinion shall cover the matters contained in Exhibit
D-2 and such other matters incident to the transactions contemplated herein as
the Agent may reasonably request and (iii) local counsel to the Credit Parties
reasonably satisfactory to the Agent, which opinions shall cover such matters
incident to the transactions contemplated herein and in the other Credit
Documents as the Agent may reasonably request and shall be in form and substance
reasonably satisfactory to the Agent.
(d) Corporate Proceedings. (i) On the Initial Borrowing Date, the
---------------------
Agent shall have received from each Credit Party a certificate, dated the
Initial Borrowing Date, signed by the chairman, a vice chairman, the president,
chief financial officer or any vice-president of such Credit Party, and attested
to by the secretary or any assistant secretary of such Credit Party, in the form
of Exhibit E with appropriate insertions, together with copies of the
Certificate of Incorporation and By-Laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate and all of the
foregoing (including each such Certificate of Incorporation and By-Laws) shall
be satisfactory to the Agent.
(ii) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall
be reasonably satisfactory in form and substance to the Agent, and the
Agent shall have received all information and copies of all certificates,
documents and papers, including good standing certificates, bring-down
certificates and any other records of corporate proceedings and
governmental approvals, if any, which the Agent reasonably may have
requested in connection therewith, such documents and papers, where
appropriate, to be certified by proper corporate or governmental
authorities.
(iii) On the Initial Borrowing Date, the ownership and capital
structure (including, without limitation, the terms of any capital stock,
options, warrants or other securities issued by Holdings or any of its
Subsidiaries) and management of Holdings and its Subsidiaries shall be in
form and substance satisfactory to the Agent and the Required Banks.
(e) Adverse Change, etc. On or prior to the Initial Borrowing Date,
--------------------
nothing shall have occurred since December 31, 1996 (and neither the Banks nor
the Agent shall have become aware of any facts or conditions not previously
known) which the Required Banks or the Agent shall determine (a) has, or could
reasonably be expected to have, a material adverse effect on the rights or
remedies of the Banks or the Agent, or on
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<PAGE>
the ability of any Credit Party to perform its obligations to them hereunder or
under any other Credit Document or (b) has, or could reasonably be expected to
have, a Material Adverse Effect.
(f) Litigation. On the Initial Borrowing Date, there shall be no
----------
actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or (b) which the Agent or the Required Banks
shall determine could reasonably be expected to (i) have a Material Adverse
Effect or (ii) have a material adverse effect on the Transaction, the rights or
remedies of the Banks or the Agent hereunder or under any other Credit Document
or on the ability of any Credit Party to perform its respective obligations to
the Banks or the Agent hereunder or under any other Credit Document.
(g) Payment of Fees. On the Initial Borrowing Date, all costs, fees
---------------
and expenses, and all other compensation contemplated by this Agreement, due to
the Agent or the Banks (including, without limitation, legal fees and expenses)
shall have been paid to the extent due.
(h) Consummation of Certain Aspects of the Transaction. (i) On the
--------------------------------------------------
Initial Borrowing Date, (x) the Borrower shall have received gross cash proceeds
of at least $100,000,000 from the issuance of Senior Subordinated Notes (it
being understood that such cash proceeds shall include all amounts directly
applied to pay underwriting and placement commissions and discounts and related
fees) and (y) the Borrower shall have utilized the full amount of the net cash
proceeds from such issuance to make payments owing in connection with the
Transaction (including dividending to Holdings an amount equal to the
outstanding Holdings Senior Subordinated Debt and Holdings Junior Subordinated
Debt plus accrued interest thereon and prepayment penalties related thereto)
prior to utilizing any proceeds of the Term Loans for such purpose.
(ii) On the Initial Borrowing Date, Holdings and the Borrower shall
have repurchased, retired or redeemed all of the outstanding Existing
Subordinated Debt for cash, in accordance with its terms, or on such other
terms and conditions as may be satisfactory to the Agent and the Required
Banks, and all securities and note purchase agreements, purchase or sale
agreements or other agreements pursuant to which the Existing Subordinated
Debt was issued and all guaranties and security documents with respect
thereto shall have been terminated and be of no further force or effect.
(iii) On the Initial Borrowing Date, the total commitments in respect
of the Indebtedness to be Refinanced shall have been terminated, and all
loans and notes with respect thereto shall have been repaid in full,
together with interest thereon and fees payable in connection therewith,
all letters of credit issued thereunder shall have been terminated (or
incorporated hereunder as Existing Letters of Credit) and all other amounts
(including premiums) owing pursuant to the
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<PAGE>
Indebtedness to be Refinanced shall have been repaid in full and all
documents in respect of the Indebtedness to be Refinanced and all
guarantees with respect thereto shall have been terminated and be of no
further force and effect.
(iv) On the Initial Borrowing Date, the creditors in respect of the
Indebtedness to be Refinanced shall have terminated and released all
security interests and Liens on the assets owned by Holdings and its
Subsidiaries. The Agent shall have received such releases of security
interests in and Liens on the assets owned by Holdings and its Subsidiaries
as may have been requested by the Agent, which releases shall be in form
and substance reasonably satisfactory to the Agent. Without limiting the
foregoing, there shall have been delivered (i) proper termination
statements (Form UCC-3 or the appropriate equivalent) for filing under the
UCC of each jurisdiction where a financing statement (Form UCC-1 or the
appropriate equivalent) was filed with respect to Holdings or any of its
Subsidiaries in connection with the security interests created with respect
to the Indebtedness to be Refinanced and the documentation related thereto,
(ii) termination or reassignment of any security interest in, or Lien on,
any patents, trademarks, copyrights, or similar interests of Holdings or
any of its Subsidiaries on which filings have been made, (iii) terminations
of all mortgages, leasehold mortgages, deeds of trust and leasehold deeds
of trust created with respect to property of Holdings or any of its
Subsidiaries, in each case, to secure the obligations in respect of the
Indebtedness to be Refinanced, all of which shall be in form and substance
reasonably satisfactory to the Agent, and (iv) all collateral owned by
Holdings or any of its Subsidiaries in the possession of any of the
creditors in respect of the Indebtedness to be Refinanced or any collateral
agent or trustee under any related security document shall have been
returned to Holdings or such Subsidiary.
(v) On or prior to the Initial Borrowing Date, there shall have been
delivered to the Banks true and correct copies of all Documents entered
into in connection with the Transaction (including, without limitation, the
Refinancing Documents and the Senior Subordinated Notes Documents), and all
of the terms and conditions of such Documents (including, without
limitation, with respect to the Senior Subordinated Notes Documents,
amortization, maturities, interest rates, covenants, defaults, remedies,
sinking fund provisions, and subordination provisions), as well as the
structure of the Transaction, shall be in form and substance satisfactory
to the Agent and the Required Banks.
(vi) All conditions precedent to the consummation of the Transaction
as set forth in the documentation related thereto shall have been satisfied
(except as otherwise provided in this Section 5.01(h).
(i) Pro Forma Balance Sheets. On or prior to the Initial Borrowing
------------------------
Date, there shall have been delivered to the Agent, an unaudited pro forma
--- -----
consolidated
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<PAGE>
balance sheet of each of Holdings and its Subsidiaries and the Borrower and its
Subsidiaries after giving effect to the Transaction and prepared in accordance
with GAAP, together with a related funds flow statement, which pro forma balance
--- -----
sheets and funds flow statement shall be reasonably satisfactory in form and
substance to the Agent and the Required Banks.
(j) Approvals. On or prior to the Initial Borrowing Date, all
---------
necessary governmental (domestic and foreign) and third party approvals in
connection with the Transaction, the transactions contemplated by the Documents
and otherwise referred to herein or therein shall have been obtained and remain
in effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes materially adverse conditions upon the consummation of the Transaction,
the transactions contemplated by the Documents and otherwise referred to herein
or therein. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction or the making of Loans or
the issuance of Letters of Credit.
(k) Pledge Agreement. On the Initial Borrowing Date, each Credit
----------------
Party shall have duly authorized, executed and delivered a Pledge Agreement in
the form of Exhibit F, together with such changes (or with such other documents)
as may be requested by the Collateral Agent in connection with local law (as
modified, amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "Pledge Agreement") and shall have delivered to the
Collateral Agent, as pledgee thereunder, all of the Pledged Securities referred
to therein, endorsed in blank in the case of promissory notes or accompanied by
executed and undated stock powers in the case of capital stock, and the Pledge
Agreement and such other documents shall be in full force and effect.
(l) Security Agreement. On the Initial Borrowing Date, each Credit
------------------
Party shall have duly authorized, executed and delivered a Security Agreement in
the form of Exhibit G, together with such changes (or with such other documents)
as may be requested by the Collateral Agent in connection with local law (as
modified, amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "Security Agreement") covering all of the Security
Agreement Collateral, together with:
(A) executed copies of Financing Statements (Form UCC-1 and/or UCC-3)
or appropriate local equivalent in appropriate form for filing under the
UCC or appropriate local equivalent of each jurisdiction as may be
necessary to perfect the security interests purported to be created by the
Security Agreement;
(B) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, each of a recent date listing all effective
financing statements that name Holdings, the Borrower or any of their
respective Subsidiaries or a division or operating unit of any such Person,
as debtor, and that are filed in the
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<PAGE>
jurisdictions referred to in clause (A) above, together with copies of such
financing statements (none of which shall cover the Collateral except (x)
those with respect to which appropriate termination statements executed by
the secured lender thereunder have been delivered to the Agent and (y) to
the extent evidencing Permitted Liens);
(C) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by the Security Agreement (it being
understood and agreed that UCC financing statements and termination
statements and assignments of security interests in intellectual property
shall be filed in the appropriate governmental office within three Business
Days after the Initial Borrowing Date); and
(D) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect the security
interests purported to be created by the Security Agreement have been
taken;
and the Security Agreement and such other documents shall be in full force and
effect.
(m) Mortgages; Title Insurance; Surveys, etc. (i) On the Initial
-----------------------------------------
Borrowing Date, the Collateral Agent shall have received fully executed
counterparts of deeds of trust, mortgages and similar documents in each case in
form and substance satisfactory to the Collateral Agent (as amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof,
each a "Mortgage" and collectively, the "Mortgages") with respect to each of the
Mortgaged Properties located in the United States, and arrangements reasonably
satisfactory to the Collateral Agent shall be in place to provide that
counterparts of such Mortgages shall be recorded on the Initial Borrowing Date
in all places to the extent necessary or desirable, in the judgment of the
Collateral Agent, effectively to create a valid and enforceable first priority
Lien, subject only to Permitted Encumbrances, on each such Mortgaged Property in
favor of the Collateral Agent (or such other trustee as may be required or
desired under local law) for the benefit of the Secured Creditors.
(ii) On the Initial Borrowing Date, the Collateral Agent shall have
received mortgagee title insurance policies (or binding commitments to
issue such title insurance policies) issued by title insurers reasonably
satisfactory to the Collateral Agent (the "Mortgage Policies") in amounts
reasonably satisfactory to the Collateral Agent and assuring the Collateral
Agent that the Mortgages are valid and enforceable first priority mortgage
Liens on the respective Mortgaged Properties, free and clear of all defects
and encumbrances except Permitted Encumbrances. Such Mortgage Policies
shall be in form and substance reasonably satisfactory to the Collateral
Agent and (a) shall include an endorsement for future advances under this
Agreement, the Notes and the Mortgages and for any other matter that the
Col-
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<PAGE>
lateral Agent in its discretion may reasonably request (to the extent
available in the respective jurisdiction of each Mortgaged Property), (b)
shall not include an exception for mechanics' liens, (c) shall provide
extended coverage over general exceptions, and (d) shall provide for
affirmative insurance and such reinsurance (including direct access
agreements) as the Collateral Agent in its discretion may reasonably
request.
(iii) On the Initial Borrowing Date, the Collateral Agent shall have
also received (a) surveys in form and substance reasonably satisfactory to
the Collateral Agent of each Mortgaged Property designated as "owned" on
Annex III hereto, dated a recent date reasonably acceptable to the
Collateral Agent, certified in a manner reasonably satisfactory to the
Collateral Agent by a licensed professional surveyor reasonably
satisfactory to the Collateral Agent or in lieu of such surveys, an
affidavit from the Borrower to the effect that there have been no changes
in the Mortgaged Properties since the day of each survey previously
delivered to the Collateral Agent in 1995, such affidavit to be
satisfactory to the Collateral Agent and the title insurer providing the
Mortgage Policies, or (b) an affidavit of no change in survey for each
Mortgaged Property sufficient to issue a Mortgage Policy with respect to
such Mortgaged Property with full extended coverage endorsement over
matters that would be disclosed by a survey.
(n) Plans; Collective Bargaining Agreements; Existing Indebtedness
--------------------------------------------------------------
Agreements; Shareholders' Agreements; Management Agreements; Employment
- - -----------------------------------------------------------------------
Agreements; Non-Compete Agreements; Tax Allocation Agreements; Material
- - -----------------------------------------------------------------------
Contracts. On or prior to the Initial Borrowing Date, there shall have been
- - ---------
delivered to the Banks copies, certified as true and correct by an appropriate
officer of the Borrower, of:
(i) all "employee benefit plans" (as defined in Section 3(3) of
ERISA); all pension, profit-sharing, stock option, employee stock purchase
or any other plan or arrangement providing for deferred or other
compensation; any severance agreements, programs, policies or arrangements
maintained for the benefit of current or former employees of Holdings or
any of its Subsidiaries (collectively, the "Employee Benefit Plans") and
the most recent annual reports on Internal Revenue Service Form 5500 for
any Employee Benefit Plans required to file such reports, and all
attachments thereto, which shall include, without limitation, for each Plan
(i) that is a "single-employer plan" (as defined in Section 4001(a)(15) of
ERISA), the most recently completed actuarial valuation prepared therefor
by such Plan's regular enrolled actuary and the Schedule B, "Actuarial
Information," to Form 5500 most recently filed with the Internal Revenue
Service and (ii) for each Plan that is a "multiemployer plan" (as defined
in Section 4001(a)(3) of ERISA), each of the documents referred to in
clause (i) either in the possession of Holdings, any Subsidiary of Holdings
or any ERISA Affiliate or reasonably available thereto from the sponsor or
trustees of such Plan;
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(ii) any collective bargaining agreements or any other similar
agreement or arrangement covering the employees of Holdings or any of its
Subsidiaries (collectively, the "Collective Bargaining Agreements");
(iii) all agreements evidencing or relating to the Existing
Indebtedness that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Existing Indebtedness
Agreements");
(iv) (A) the Stockholders' Agreement, (B) the Registration
Rights Agreement and (C) all other agreements entered into by Holdings or
any of its Subsidiaries governing the terms and relative rights of its
capital stock, and any agreements entered into by shareholders relating to
any such entity with respect to their capital stock, in each case that are
to remain in effect after giving effect to the consummation of the
Transaction (collectively, the "Shareholders' Agreements");
(v) (A) the Consulting Agreement and (B) any other material
agreements (or the forms thereof) with members of, or with respect to, the
management of Holdings or any of its Subsidiaries that are to remain in
effect after giving effect to the consummation of the Transaction,
(collectively, the "Management Agreements");
(vi) any employment agreements entered into by Holdings or any
of its Subsidiaries (collectively, the "Employment Agreements");
(vii) any non-compete agreement entered into by Holdings or any
of its Subsidiaries (collectively, the "Non-Compete Agreements");
(viii) (A) the Holdings Tax Allocation Agreement and (B) any other
tax sharing or tax allocation agreements entered into by Holdings or any of
its Subsidiaries (collectively, the "Tax Allocation Agreements"); and
(ix) (A) the Holdings Services Agreement and (B) all other
material contracts and licenses of Holdings or any of its Subsidiaries
(including E.P. Plastics, Goodyear Composites and each of their
Subsidiaries) that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Material Contracts");
all of which Employee Benefit Plans, Collective Bargaining Agreements, Existing
Indebtedness Agreements, Shareholders' Agreements, Management Agreements,
Employment Agreements, Non-Compete Agreements, Tax Allocation Agreements and
Material Contracts shall be in form and substance reasonably satisfactory to the
Agent and shall be in full force and effect on the Initial Borrowing Date.
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<PAGE>
(o) Solvency Opinion; Environmental Analyses; Evidence of Insurance.
---------------------------------------------------------------
On the Initial Borrowing Date, the Agent shall have received:
(i) a solvency opinion from Valuation Research Corporation,
addressed to the Agent and each of the Banks and dated the Initial
Borrowing Date and supporting the conclusions, that, after giving effect to
the Transaction and the incurrence of all financings contemplated herein,
each of Holdings and the Borrower (each on a stand-alone basis) and each of
Holdings and its Subsidiaries and the Borrower and its Subsidiaries (each
on a consolidated basis) are not insolvent and will not be rendered
insolvent by the indebtedness incurred in connection herewith, will not be
left with unreasonably small capital with which to engage in their
respective businesses and will not have incurred debts beyond their ability
to pay such debts as they mature and become due;
(ii) Phase I and Phase II environmental assessments of the Real
Property of E.P. Plastics and Goodyear Composites acquired pursuant to the
Acquisitions, from Clayton Environmental Consultants, the results of which
shall be in form and substance satisfactory to the Agent and the Required
Banks; and
(iii) evidence of insurance complying with the requirements of
Section 7.03 for the business and properties of Holdings and its
Subsidiaries, in scope, form and substance reasonably satisfactory to the
Agent and the Required Banks and naming the Collateral Agent as an
additional insured, mortgagee and/or loss payee, and stating that such
insurance shall not be cancelled or revised without 30 days prior written
notice by the insurer to the Collateral Agent.
(p) Projections. On or prior to the Initial Borrowing Date, the Banks
-----------
shall have received the financial projections (the "Projections") set forth on
Annex IV hereto, for the ten fiscal years ended after the Initial Borrowing
Date.
(q) Existing Indebtedness. On the Initial Borrowing Date and after
---------------------
giving effect to the Transaction and the Loans incurred on the Initial Borrowing
Date, neither Holdings nor any of its Subsidiaries shall have any preferred
stock or Indebtedness outstanding except for the Loans, the Senior Subordinated
Notes, the Holdings Preferred Stock, the Voplex Canada Preferred Stock and the
Existing Indebtedness. On and as of the Initial Borrowing Date, all of the
Existing Indebtedness shall remain outstanding after giving effect to the
Transaction and the other transactions contemplated hereby without any default
or events of default existing thereunder or arising as a result of the
Transaction and the other transactions contemplated hereby (except to the extent
amended or waived by the parties thereto on terms and conditions satisfactory to
the Agent and the Required Banks), and there shall not be any amendments or
modifications to the Existing Indebtedness Agreements other than as requested or
approved by the Agent or the Required Banks (which approval may not be
unreasonably withheld). On and as of the Initial Borrowing Date, the
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Agent and the Required Banks shall be satisfied with the amount of and the terms
and conditions of all Existing Indebtedness.
(r) Financial Statements. On or prior to the Initial Borrowing
--------------------
Date, the Agents shall have received unaudited financial statements for E.P.
Plastics and Goodyear Composites for the fiscal year ending December 31, 1996,
which shall be in form and substance satisfactory to the Agents and the Banks.
(s) Subsidiary Guaranty. On the Initial Borrowing Date, each
-------------------
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Subsidiary Guaranty in the form of Exhibit H (as modified, amended or
supplemented from time to time in accordance with the terms hereof and thereof,
the "Subsidiary Guaranty"), and the Subsidiary Guaranty shall be in full force
and effect.
5.02 Conditions Precedent to all Credit Events. The obligation of
-----------------------------------------
each Bank to make each Loan to the Borrower hereunder (including, without
limitation, Loans to be made on the Initial Borrowing Date), and the obligation
of any Letter of Credit Issuer to issue each Letter of Credit hereunder
(including, without limitation, Letters of Credit to be issued on the Initial
Borrowing Date), is subject, at the time of each such Credit Event, to the
satisfaction of the following conditions:
(a) No Default; Representations and Warranties. At the time of each
------------------------------------------
Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
(b) Notice of Borrowing; Letter of Credit Request. The Agent shall
---------------------------------------------
have received a Notice of Borrowing satisfying the requirements of Section 1.03
with respect to each incurrence of Loans, and the Agent and the respective
Letter of Credit Issuer shall have received a Letter of Credit Request
satisfying the requirements of Section 2.02 with respect to each issuance of a
Letter of Credit.
5.03 Conditions Precedent to A Term Loans. The obligation of each
------------------------------------
Bank to make each A Term Loan to the Borrower hereunder (including, without
limitation, A Term Loans, if any, to be made on the Initial Borrowing Date) is
subject, at the time of the incurrence of each such A Term Loan, to the
satisfaction of the following conditions:
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<PAGE>
(a) Acquisitions. (i) The Acquisition to be financed with the
------------
proceeds of such A Term Loans shall have been consummated (assuming the
application of the A Term Loans) in accordance with the respective Acquisition
Documents and all applicable laws, and each of the conditions precedent to the
consummation of such Acquisition (including, without limitation, the accuracy in
all material respects of the representations and warranties contained in the
respective Acquisition Agreement) shall have been satisfied and not waived
except with the consent of the Agent and the Required Banks to the satisfaction
of the Agent and the Required Banks; provided that (x) the proceeds of A Term
--------
Loans may only be used to finance the Acquisitions and related fees and
expenses, (y) in no event shall the aggregate principal amount of the A Term
Loans used to finance the Goodyear Composites Acquisition exceed $40,000,000,
and (z) in no event shall the aggregate principal amount of the A Term Loans
used to finance the E.P. Plastics Acquisition exceed $30,000,000.
(ii) On or prior to the date of each incurrence of A Term Loans,
there shall have been delivered to the Banks true and correct copies of the
respective Acquisition Documents, and all of the terms and conditions of
such Acquisition Documents shall be in form and substance satisfactory to
the Agent and the Required Banks.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to each of the Banks that all
of the applicable conditions specified above in this Section 5 exist as of the
date of such Credit Event. All of the certificates, legal opinions and other
documents and papers referred to in this Section 5, unless otherwise specified,
shall be delivered to the Agent at its Notice Office for the account of each of
the Banks and, except for the Notes, in sufficient counterparts for each of the
Banks and shall be reasonably satisfactory in form and substance to the Agent
and the Required Banks.
SECTION 6. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Banks to enter into this Agreement and to make the Loans and issue
and/or participate in the Letters of Credit provided for herein, each of
Holdings and the Borrower makes the following representations, warranties and
agreements with the Banks in each case after giving effect to the Transaction,
all of which shall survive the execution and delivery of this Agreement, the
making of the Loans and the issuance of the Letters of Credit (with the
occurrence of each Credit Event being deemed to constitute a representation and
warranty that the matters specified in this Section 6 are true and correct in
all material respects on and as of the date of each such Credit Event, unless
stated to relate to a specific earlier date in which all representations and
warranties shall be true and correct in all material respects as of such earlier
date):
6.01 Corporate Status. Holdings and each of its Subsidiaries (i) is
----------------
a duly organized and validly existing corporation in good standing under the
laws of the jurisdic-
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<PAGE>
tion of its organization, (ii) has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized to do
business and is in good standing in all jurisdictions where it is required to be
so qualified and where the failure to be so qualified would have a Material
Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Documents to which it is a party. Each Credit Party has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Credit Party
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
6.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Documents to which it is a party nor compliance by them
with the terms and provisions thereof, nor the consummation of the transactions
contemplated herein or therein, (i) will contravene any applicable provision of
any law, statute, rule or regulation, or any order, writ, injunction or decree
of any court or governmental instrumentality, (ii) will conflict or be
inconsistent with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or (other than
pursuant to the Security Documents) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or assets
of Holdings or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, credit agreement or any other material
agreement or instrument to which Holdings or any of its Subsidiaries is a party
or by which it or any of its property or assets are bound or to which it may be
subject or (iii) will violate any provision of the Certificate of Incorporation
or By-Laws of Holdings or any of its Subsidiaries.
6.04 Litigation. There are no actions, suits or proceedings pending
----------
or, to the knowledge of Holdings or any of its Subsidiaries, threatened, with
respect to Holdings or any of its Subsidiaries (i) that are likely to have a
Material Adverse Effect or (ii) that could reasonably be expected to have a
material adverse effect on the rights or remedies of the Banks or on the ability
of any Credit Party to perform its respective obligations to the Banks hereunder
and under the other Credit Documents to which it is, or will be, a party.
Additionally, there does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon the occurrence of any Credit Event.
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<PAGE>
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Term Loans incurred on the Initial Borrowing Date shall be utilized to finance
the Transaction and to pay fees and expenses incurred in connection therewith.
(b) The proceeds of Revolving Loans and Swingline Loans incurred on
and after the Initial Borrowing Date shall be utilized for the general corporate
and working capital purposes of the Borrower and its Subsidiaries; provided that
--------
no more than $2,500,000 of the proceeds of Revolving Loans and Swingline Loans
may be incurred on the Initial Borrowing Date and used to finance the
Transaction.
(c) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System and no part of the proceeds of
any Loan will be used to purchase or carry any Margin Stock or to extend credit
for the purpose of purchasing or carrying any Margin Stock.
6.06 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Document or
(ii) the legality, validity, binding effect or enforceability of any Document,
other than post-acquisition filings with the government of Korea in connection
with the E.P. Plastics Acquisition.
6.07 Investment Company Act. Neither Holdings nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 Public Utility Holding Company Act. Neither Holdings nor any of
----------------------------------
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings
or any of its Subsidiaries in writing to the Agent or any Bank (including,
without limitation, all factual information contained in the Documents and the
Confidential Memorandum dated June 1997, distributed to the Banks in connection
with this Agreement, except for projected and pro forma financial information
--- -----
included therein as to which the Borrower makes certain representations and
warranties in Sections 6.10(b) and (e)) for purposes of or in connection with
this Agreement or any transaction contemplated herein is, and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
any such Per-
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<PAGE>
sons in writing to the Agent or any Bank will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided.
6.10 Financial Condition; Financial Statements. (a) On and as of
-----------------------------------------
the Initial Borrowing Date, on a pro forma basis after giving effect to the
--- -----
Transaction and to all Indebtedness incurred, and to be incurred (including,
without limitation, the Loans and the Senior Subordinated Notes), and Liens
created, and to be created, by each Credit Party in connection therewith, with
respect to each of Holdings and the Borrower (each on a stand-alone basis) and
each of Holdings and its Subsidiaries and of the Borrower and its Subsidiaries
(each on a consolidated basis), (x) the sum of the assets, at a fair valuation,
of each of Holdings and the Borrower (each on a stand-alone basis) and each of
Holdings and its Subsidiaries and of the Borrower and its Subsidiaries (each on
a consolidated basis), will exceed its debts, (y) it has not incurred nor
intended to, nor believes that it will, incur debts beyond its ability to pay
such debts as such debts mature and (z) it will have sufficient capital with
which to conduct its business. For purposes of this Section 6.10, "debt" means
any liability on a claim, and "claim" means (i) right to payment whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(b) (i) The pro forma (both immediately before and after giving
--- -----
effect to the Transaction, the related financing thereof (including the Loans,
the Senior Subordinated Notes) and the other transactions contemplated hereby
and thereby) consolidated balance sheets of each of Holdings and its
Subsidiaries and the Borrower and its Subsidiaries taken as a whole as at March
31, 1997 prepared on a basis consistent with the Projections and copies of which
have heretofore been delivered to each Bank, and (ii) the audited consolidated
balance sheet of the Borrower for the fiscal year ended in December, 1996, and
the unaudited consolidated balance sheet of the Borrower at March 31, 1997 and
the related combined statements of operations and cash flow of the Borrower for
the fiscal year or three-month period, as the case may be, ended as of said
dates, which annual financial statements have been examined by Deloitte & Touche
LLP, certified public accountants, who delivered an unqualified opinion with
respect thereto and copies of which have heretofore been delivered to each Bank,
present fairly in all material respects the financial position of the Borrower
and its Subsidiaries on a consolidated basis, at the dates of said statements
and the results of operations for the periods covered thereby (or, in the case
of the pro forma balance sheets, present a good faith estimate of the pro forma
--- ----- --- -----
financial condition of each of Holdings and its Subsidiaries and the Borrower
and its Subsidiaries on a consolidated basis (in each case both immediately
before and after giving effect to the
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<PAGE>
Transaction, and the related financing thereof (including the Loans and the
Senior Subordinated Notes), on a consolidated basis at the date thereof)). All
such financial statements have been prepared in accordance with GAAP
consistently applied except to the extent provided in the notes to said
financial statements and subject, in the case of the March 31, 1997 statements,
to normal year-end audit adjustments and the absence of footnotes.
(c) Since December 31, 1996, nothing has occurred that has had or
could reasonably be expected to have a Material Adverse Effect.
(d) Except as fully reflected in the financial statements described
in Section 6.10(b) and the Indebtedness incurred under this Agreement and the
Senior Subordinated Notes, there were as of the Initial Borrowing Date (and
after giving effect to any Loans made on such date), no liabilities or
obligations (excluding current obligations incurred in the ordinary course of
business) with respect to Holdings or any of its Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due), and neither Holdings nor the Borrower know of any basis for the
assertion against Holdings or any of its Subsidiaries of any such liability or
obligation which, either individually or in the aggregate, are or would be
reasonably likely to have, a Material Adverse Effect.
(e) The Projections are based on good faith estimates and assumptions
made by the management of the Borrower, and on the Initial Borrowing Date such
management believed that the Projections were reasonable and attainable, it
being recognized by the Banks, however, that projections as to future events are
not to be viewed as facts and that the actual results during the period or
periods covered by the Projections probably will differ from the projected
results and that the differences may be material. There is no fact known to
Holdings or any of its Subsidiaries which would have a Material Adverse Effect,
which has not been disclosed herein or in such other documents, certificates and
statements furnished to the Banks for use in connection with the transactions
contemplated hereby.
6.11 Security Interests. On and after the Initial Borrowing Date,
------------------
each of the Security Documents creates (or after the execution and delivery
thereof will create), as security for the Obligations, a valid and enforceable
perfected security interest in and Lien on all of the Collateral subject
thereto, superior to and prior to the rights of all third Persons and subject to
no other Liens (except that the Security Agreement Collateral, the Mortgaged
Properties and the collateral covered by the Additional Security Documents may
be subject to Permitted Liens relating thereto), in favor of the Collateral
Agent. No filings or recordings are required in order to perfect the security
interests created under any Security Document except for filings or recordings
required in connection with any such Security Document which shall have been
made as contemplated by Section 5.01(l) or (m) or on or prior to the execution
and delivery thereof as contemplated by Sections 7.11, 7.14 and 8.15.
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<PAGE>
6.12 Representations and Warranties in Other Documents. All
-------------------------------------------------
representations and warranties set forth in the other Documents were true and
correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Initial Borrowing Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
6.13 Transaction. At the time of consummation thereof, the
-----------
Transaction shall have been consummated in accordance with the terms of the
respective Documents and all applicable laws. At the time of consummation
thereof, all consents and approvals of, and filings and registrations with, and
all other actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Transaction have
been obtained, given, filed or taken or waived and are or will be in full force
and effect (or effective judicial relief with respect thereto has been obtained)
except (i) for post-acquisition filings with the government of Korea in
connection with the E.P. Plastics Acquisition and (ii) where the failure to
obtain, give, file, or take would not reasonably be expected to have a Material
Adverse Effect. All applicable waiting periods with respect thereto have or,
prior to the time when required, will have, expired without, in all such cases,
any action being taken by any competent authority which restrains, prevents, or
imposes material adverse conditions upon the Transaction. Additionally, there
does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the Transaction, or the performance by Holdings
and its Subsidiaries of their obligations under the Documents and all applicable
laws.
6.14 Special Purpose Corporation. Holdings has no significant assets
---------------------------
(other than the capital stock of the Borrower and immaterial assets used for the
performance of those activities permitted to be performed by Holdings pursuant
to Section 8.01(b)) or liabilities (other than under this Agreement and the
other Credit Documents and the other Documents to which it is a party, those
liabilities permitted to be incurred by Holdings pursuant to Section 8.01(b)
and, as and when issued from time to time in accordance with the terms of this
Agreement, Permitted Holdings PIK Securities and Shareholder Subordinated
Notes).
6.15 Compliance with ERISA. (a) Except as set forth on Annex XI,
---------------------
each Plan is in substantial compliance with ERISA and the Code; no Reportable
Event has occurred with respect to a Plan; no Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability; no Plan has an
accumulated or waived funding deficiency, has permitted decreases in its funding
standard account or has applied for a waiver of the minimum funding standard or
an extension of any amortization period within the meaning of Section 412 of the
Code; all contributions required to be made with respect to a Plan and a Foreign
Pension Plan have been timely made; neither Holdings nor any Subsidiary of
Holdings nor any ERISA Affiliate has incurred any material liability to or on
account of
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<PAGE>
a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the
Code or reasonably expects to incur any material liability (including any
indirect, contingent or secondary liability) under any of the foregoing Sections
with respect to any Plan (other than liabilities of any ERISA Affiliate which
could not, by operation of law or otherwise, become a liability of Holdings or
any of its Subsidiaries); no condition exists which presents a material risk to
Holdings or any Subsidiary of Holdings or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; no proceedings have been instituted to terminate, or to
appoint a trustee to administer, any Plan; using actuarial assumptions and
computation methods consistent with subpart 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of Holdings and its Subsidiaries and its ERISA
Affiliates to all Plans which are multiemployer plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan ended prior to the date
of the most recent Credit Event, would not result in a Material Adverse Effect;
no lien imposed under the Code or ERISA on the assets of Holdings or any
Subsidiary of Holdings or any ERISA Affiliate (other than Nortec Precision
Plastics, Inc.) exists or is likely to arise on account of any Plan; and
Holdings and its Subsidiaries do not maintain or contribute to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) which provides
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) or any employee pension benefit plan (as defined in
Section 3(2) of ERISA) the obligations with respect to which could reasonably be
expected to have a Material Adverse Effect.
(b) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. Neither
Holdings nor any of its Subsidiaries has incurred any material obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The present value of the accrued benefit liabilities (whether or not vested)
under each Foreign Pension Plan which is funded, determined as of the end of the
most recently ended fiscal year of the Borrower on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan, and for each Foreign Pension Plan which
is not funded, the obligations of such Foreign Pension Plan are properly
accrued.
6.16 Capitalization. (a) On the Initial Borrowing Date and after
--------------
giving effect to the Transaction and the other transactions contemplated hereby,
the authorized capital stock of Holdings shall consist of (i) 200,000 shares of
Class A common stock, $0.01 par value per share (such authorized shares of Class
A common stock, together with any subsequently authorized shares of Class A
common stock of Holdings, the "Holdings Class A Common Stock"), of which 55,000
shares shall be issued and outstanding, (ii) 29,000 shares of Class L common
stock, $0.01 par value per share (such authorized shares
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<PAGE>
of Class L common stock, together with any subsequently authorized shares of
Class L common stock of Holdings, the "Holdings Class L Common Stock"), of which
25,000 shares shall be issued and outstanding, (iii) 45,000 shares of Class P
common stock, $0.01 par value per share (such authorized shares of Class P
common stock, together with any subsequently authorized shares of Class P common
stock of Holdings, the "Holdings Class P Common Stock"), of which 45,000 shares
shall be issued and outstanding and (iv) 1,000 shares of Holdings Preferred
Stock, no par value, of which 1,000 shares shall be issued and outstanding and
all of which shall be owned by Crawford. All such outstanding shares have been
duly and validly issued, are fully paid and nonassessable. Holdings does not
have outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock, except for options to purchase Holdings Common Stock granted
to Richard S. Crawford pursuant to the Option Agreement, warrants to purchase
Holdings Common Stock referred to in the Existing Credit Agreement granted in
connection with the Transaction (as defined in the Original Credit Agreement)
and warrants to purchase Holdings Common Stock granted in connection with the
Borrower Subordinated Debt and the Holdings Junior Subordinated Debt. Holdings
has approved (i) the issuance of additional Holdings Class A common stock and
Holdings Class L common stock and (ii) the grant of options for shares of
Holdings Class A common stock to certain key employees of the Borrower, to
consist of 661.16 shares of Class L common stock and 70,654.55 shares of Class A
common stock in the aggregate. Holdings has also approved the issuance of shares
of Holdings Class A common stock and Holdings Class L common stock to a former
officer and director of the Borrower.
(b) On the Initial Borrowing Date and after giving effect to the
Transaction and the other transactions contemplated hereby, the authorized
capital stock of the Borrower shall consist of 3,000 shares of common stock,
$0.01 par value per share, and all of the issued and outstanding shares are
owned by Holdings. All such outstanding shares have been duly and validly
issued, are fully paid and nonassessable. The Borrower does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock.
6.17 Subsidiaries. On and as of the Initial Borrowing Date and after
------------
giving effect to the consummation of the Transaction, Holdings has no
Subsidiaries other than the Borrower and its Subsidiaries, and the Borrower has
no Subsidiaries other than those Subsidiaries listed on Annex V. Annex V
correctly sets forth, as of the Initial Borrowing Date and after giving effect
to the Transaction, the percentage ownership (direct and indirect) of Holdings
in each class of capital stock of each of its Subsidiaries and also identifies
the direct owner thereof.
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6.18 Intellectual Property. Holdings and each of its Subsidiaries
---------------------
owns or holds a valid license to use all the material patents, trademarks,
permits, service marks, trade names, technology, know-how and formulas or other
rights with respect to the foregoing, free from restrictions that are materially
adverse to the use thereof, that are used in the operation of the business of
Holdings and each of its Subsidiaries as presently conducted.
6.19 Compliance with Statutes, etc. Holdings and each of its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including compliance with all applicable Environmental Laws
with respect to any Real Property or governing its business and the requirements
of any permits issued under such Environmental Laws with respect to any such
Real Property or the operations of Holdings or any of its Subsidiaries), except
such non-compliance as is not likely to, individually or in the aggregate, have
a Material Adverse Effect.
6.20 Environmental Matters. (a) Each of Holdings and each of its
---------------------
Subsidiaries has complied with, and on the date of each Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no pending or, to the
best knowledge of Holdings and the Borrower, past or threatened Environmental
Claims against Holdings or any of its Subsidiaries or any Real Property owned or
operated by Holdings or any of its Subsidiaries. There are no facts,
circumstances, conditions or occurrences regarding the operations of Holdings or
any of its Subsidiaries or any Real Property owned or operated by Holdings or
any of its Subsidiaries or, to the best knowledge of Holdings and the Borrower,
on any property adjoining or in the vicinity of any such Real Property that
would reasonably be expected (i) to form the basis of an Environmental Claim
against Holdings or any of its Subsidiaries or any such Real Property or (ii) to
cause any such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such Real Property by Holdings or any of
its Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by Holdings or any of its Subsidiaries where such generation, use,
treatment or storage has violated or would reasonably be expected to violate any
Environmental Law or to result in an Environmental Claim against Holdings or any
of its Subsidiaries. Hazardous Materials have not at any time been Released on
or from any Real Property owned or operated by Holdings or any of its
Subsidiaries. There are not now any underground storage tanks located on any
Real Property owned or operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 6.20,
the representations made in this Section 6.20 shall only be untrue if the
aggregate effect of all conditions, failures, noncompliances, Environmental
Claims, Releases and presence of
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underground storage tanks, in each case of the types described above, would
reasonably be expected to have a Material Adverse Effect.
6.21 Properties. All Real Property owned by Holdings or any of its
----------
Subsidiaries and all material Leaseholds leased by Holdings or any of its
Subsidiaries, in each case as of the Initial Borrowing Date and after giving
effect to the Transaction, and the nature of the interest therein, is correctly
set forth in Annex III. Holdings and each of its Subsidiaries has good and
marketable title to, or a validly subsisting leasehold interest in, all material
properties owned or leased by it, including all Real Property reflected in Annex
III or in the financial statements referred to in Section 6.10(b), free and
clear of all Liens, other than Permitted Liens.
6.22 Labor Relations. Neither Holdings nor any of its Subsidiaries
---------------
is engaged in any unfair labor practice that could reasonably be expected to
have a Material Adverse Effect. There is (i) no unfair labor practice complaint
pending against Holdings or any of its Subsidiaries or, to the best knowledge of
Holdings and the Borrower, threatened against any of them, before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against Holdings or
any of its Subsidiaries or, to the best knowledge of Holdings and the Borrower,
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings or any of its Subsidiaries or, to the best
knowledge of Holdings and the Borrower, threatened against Holdings or any of
its Subsidiaries and (iii) to the best knowledge of Holdings and the Borrower,
no union representation question existing with respect to the employees of
Holdings or any of its Subsidiaries and, to the best knowledge of Holdings and
the Borrower, no union organizing activities are taking place, except (with
respect to any matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as is not reasonably likely to have a
Material Adverse Effect.
6.23 Tax Returns and Payments. All Federal, material state and other
------------------------
material returns, statements, forms and reports for taxes (the "Returns")
required to be filed by or with respect to the income, properties or operations
of Holdings and/or any of its Subsidiaries have been timely filed with the
appropriate taxing authority. The Returns accurately reflect all liability for
taxes of Holdings and its Subsidiaries for the periods covered thereby.
Holdings and each of its Subsidiaries have paid all taxes payable by them other
than immaterial taxes and other taxes which are not yet due and payable, and
other than those contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP. Except
as disclosed in the financial statements referred to in Section 6.10(b)
delivered to the Agent prior to the Initial Borrowing Date, there is no material
action, suit, proceeding, investigation, audit, or claim now pending or, to the
knowledge of Holdings and the Borrower, threatened by any authority regarding
any taxes relating to Holdings or any of its Subsidiaries. As of the Initial
Borrowing Date, neither Holdings nor any of its Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any
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<PAGE>
statute of limitations relating to the payment or collection of taxes of
Holdings or any of its Subsidiaries, or is aware of any circumstances that would
cause the taxable years or other taxable periods of Holdings or any of its
Subsidiaries not to be subject to the normally applicable statute of
limitations. Neither Holdings nor any of its Subsidiaries has provided, with
respect to themselves or property held by them, any consent under Section 341 of
the Code. Neither Holdings nor any of its Subsidiaries has incurred, or will
incur, any material tax liability in connection with the Transaction and the
other transactions contemplated hereby.
6.24 Existing Indebtedness. Annex VII sets forth a true and complete
---------------------
list of all Indebtedness of Holdings and its Subsidiaries (other than
Indebtedness which in the aggregate does not exceed $500,000) as of the Initial
Borrowing Date and which is to remain outstanding after giving effect to the
Transaction and the incurrence of Loans on such date (excluding the Loans, the
Letters of Credit and the Senior Subordinated Notes) (all such Indebtedness set
forth on Annex VII, the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower and
any other entity which directly or indirectly guaranteed such debt.
6.25 Subordination. The subordination provisions contained in the
-------------
Senior Subordinated Notes Documents are enforceable against Borrower and the
holders thereof, and all Obligations are within the definition of "Senior Debt"
included in such subordination provisions.
SECTION 7. Affirmative Covenants. Holdings and the Borrower hereby
---------------------
covenant and agree that on the Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Letters of
Credit or Notes are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations (other than any indemnities described
in Section 12.13 hereof which are not then due and payable) incurred hereunder,
are paid in full:
7.01 Information Covenants. Holdings will furnish to each Bank:
---------------------
(a) Monthly Reports. Within 30 days after the end of each fiscal
---------------
month of Holdings, the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such month and the related consolidated
statements of income and retained earnings and of cash flows for such month
and for the elapsed portion of the fiscal year ended with the last day of
such month, in each case setting forth comparative figures for the
corresponding month in the prior fiscal year, all of which shall be
certified by the chief financial officer or other Authorized Officer of
Holdings, subject to normal year-end audit adjustments and the absence of
footnotes.
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(b) Quarterly Financial Statements. Within 45 days after the close
------------------------------
of each quarterly accounting period in each fiscal year of Holdings, the
consolidated balance sheet of Holdings and its Subsidiaries as at the end
of such quarterly accounting period and the related consolidated statements
of income and retained earnings and of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly accounting period; all of which shall be in
reasonable detail and certified by the chief financial officer or other
Authorized Officer of Holdings that they fairly present the financial
condition of Holdings and its Subsidiaries as of the dates indicated and
the results of their operations and changes in their cash flows for the
periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of Holdings, the consolidated balance sheets of Holdings
and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows
for such fiscal year and setting forth comparative consolidated figures for
the preceding fiscal year and comparable budgeted figures for such fiscal
year and certified by Deloitte & Touche LLP or such other independent
certified public accountants of recognized national standing as shall be
reasonably acceptable to the Agent, in each case to the effect that such
statements fairly present in all material respects the financial condition
of Holdings and its Subsidiaries as of the dates indicated and the results
of their operations and changes, together with a certificate of such
accounting firm stating that in the course of its regular audit of the
business of Holdings and its Subsidiaries, which audit was conducted in
accordance with generally accepted auditing standards, no Default or Event
of Default which has occurred and is continuing has come to their attention
insofar as such Default or Event of Default relates to financial or
accounting matters or, if such a Default or Event of Default has come to
their attention a statement as to the nature thereof.
(d) Budgets, etc. Not more than 60 days after the commencement of
-------------
each fiscal year of Holdings, budgets of the Borrower and its Subsidiaries
in reasonable detail for each of the four fiscal quarters of such fiscal
year and for each of the four fiscal quarters of the immediately succeeding
fiscal year, in each case as customarily prepared by management for its
internal use setting forth, with appropriate discussion, the principal
assumptions upon which such budgets are based. Together with each delivery
of financial statements pursuant to Section 7.01(b) and (c), a comparison
of the current year to date financial results (other than in respect of the
balance sheets included therein) against the budgets required to be
submitted pursuant to this clause (d) shall be presented.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 7.01(b) and (c), a certificate
of the chief financial
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<PAGE>
officer or other Authorized Officer of Holdings to the effect that no
Default or Event of Default exists or, if any Default or Event of Default
does exist, specifying the nature and extent thereof, which certificate
shall set forth the calculations required to establish whether Holdings and
its Subsidiaries were in compliance with the provisions of Sections
8.02(r), 8.04, 8.06 and 8.08 through and including 8.12, as at the end of
such fiscal quarter or year, as the case may be. In addition, at the time
of the delivery of the financial statements provided for in Section
7.01(c), a certificate of the chief financial officer or other Authorized
Officer of Holdings setting forth (i) the amount of, and calculations
required to establish the amount of, Excess Cash Flow for the Excess Cash
Flow Period ending on the last day of the respective fiscal year and (ii)
the calculations required to establish whether Holdings and the Borrower
were in compliance with Section 4.02(A)(c) for the respective fiscal year.
(f) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days (or 10 Business Days in the case of clause (y)
below) after any officer of Holdings or any of its Subsidiaries obtains
knowledge thereof, notice of (x) the occurrence of any event which
constitutes a Default or an Event of Default, which notice shall specify
the nature thereof, the period of existence thereof and what action
Holdings or the Borrower proposes to take with respect thereto and (y) the
commencement of, or threat of, or any significant development in, any
litigation or governmental proceeding pending against Holdings or any of
its Subsidiaries which is likely to have a Material Adverse Effect, or a
material adverse effect on the ability of any Credit Party to perform its
respective obligations hereunder or under any other Credit Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of each
-----------------
report or "management letter" submitted to Holdings or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of Holdings or any of
its Subsidiaries.
(h) Environmental Matters. Promptly after obtaining knowledge of any
---------------------
of the following, written notice of any of the following environmental
matters which could reasonably be expected to result in a remedial cost to
Holdings or any of its Subsidiaries in excess of $500,000:
(i) any pending or threatened material Environmental Claim
against Holdings or any of its Subsidiaries or any Real Property owned
or operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property owned or
operated by Holdings or any of its Subsidiaries that (x) results in
material noncompliance by Holdings or any of its Subsidiaries with any
applicable
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<PAGE>
Environmental Law or (y) could reasonably be anticipated to form the
basis of a material Environmental Claim against Holdings or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by Holdings or any of its Subsidiaries that could
reasonably be anticipated to cause such Real Property to be subject to
any material restrictions on the ownership, occupancy, use or
transferability by Holdings or its Subsidiary, as the case may be, of
its interest in such Real Property under any Environmental Law; and
(iv) the taking of any material removal or remedial action in
response to the actual or alleged presence of any Hazardous Material
on any Real Property owned or operated by Holdings or any of its
Subsidiaries.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and Holdings' or the Borrower's response thereto. In addition, Holdings
agrees to provide the Banks with copies of all material written
communications by Holdings or any of its Subsidiaries with any Person,
government or governmental agency relating to any of the matters set forth
in clauses (i)-(iv) above, and such detailed reports relating to any of the
matters set forth in clauses (i)-(iv) above as may reasonably be requested
by the Agent or the Required Banks.
(i) Other Information. Promptly upon transmission thereof, copies of
-----------------
any filings and registrations with, and reports to, the SEC by Holdings or
any of its Subsidiaries and copies of all financial statements, proxy
statements, notices and reports as Holdings or any of its Subsidiaries
shall generally send to analysts or the holders of their capital stock or
of Permitted Holdings PIK Securities or Senior Subordinated Notes in their
capacity as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Agreement) and, with reasonable
promptness, such other information or documents (financial or otherwise) as
the Agent on its own behalf or on behalf of any Bank may reasonably request
from time to time.
7.02 Books, Records and Inspections. Holdings will, and will cause
------------------------------
each of its Subsidiaries to, permit, upon notice to the chief financial officer
or other Authorized Officer of Holdings or the Borrower, (x) officers and
designated representatives of the Agent or any Bank to visit and inspect any of
the properties or assets of Holdings and any of its Subsidiaries in whomsoever's
possession, and to examine the books of account of Holdings and any of its
Subsidiaries and discuss the affairs, finances and accounts of Holdings and of
any of its Subsidiaries with, and be advised as to the same by, their officers
and independent accountants, all at such reasonable times and intervals and to
such rea-
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<PAGE>
sonable extent as the Agent or any Bank may desire and (y) the Agent, at the
request of the Required Banks, to conduct, at Holdings' and the Borrower's
expense, an audit of the accounts receivable and/or inventories of the Borrower
and its Subsidiaries at such times (but no more frequently than once a year
unless an Event of Default has occurred and is continuing) as the Required Banks
shall reasonably require.
7.03 Insurance. Holdings will, and will cause each of its
---------
Subsidiaries to, at all times from and after the Effective Date maintain in full
force and effect insurance with reputable and solvent insurance carriers in such
amounts, covering such risks and liabilities and with such deductibles or self-
insured retentions as are in accordance with normal industry practice. At any
time that insurance at the levels described in Annex VI is not being maintained
by Holdings and its Subsidiaries, Holdings will notify the Banks in writing
thereof and, if thereafter notified by the Agent to do so, Holdings will obtain
insurance at such levels to the extent then generally available (but in any
event within the deductible or self-insured retention limitations set forth in
the preceding sentence) or otherwise as are reasonably acceptable to the Agent.
Holdings will furnish to the Agent on the Initial Borrowing Date and on each
date on which financial statements are delivered pursuant to Section 7.01(c) a
summary of the insurance carried in respect of Holdings and its Subsidiaries and
the assets of Holdings and its Subsidiaries together with certificates of
insurance and other evidence of such insurance, if any, naming the Collateral
Agent as mortgagee with respect to real property, lenders loss payee with
respect to personal property, additional insured with respect to general
liability and umbrella liability coverage and certificate holder with respect to
workers' compensation insurance.
7.04 Payment of Taxes. Holdings will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims for sums that have become due
and payable which, if unpaid, might become a Lien not otherwise permitted under
Section 8.03(a) or charge upon any properties of Holdings or any of its
Subsidiaries; provided, that neither Holdings nor any of its Subsidiaries shall
--------
be required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP.
7.05 Corporate Franchises. Holdings will do, and will cause each of
--------------------
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises and authority to do business; provided, however, that any transaction
-------- -------
permitted by Section 8.02 will not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. Holdings will, and will cause
------------------------------
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all
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applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls) except for such non-compliance
as would not have a Material Adverse Effect or a material adverse effect on the
ability of any Credit Party to perform its obligations under any Credit Document
to which it is a party.
7.07 Compliance with Environmental Laws. (a) (i) Holdings will pay,
----------------------------------
and will cause each of its Subsidiaries to pay, all costs and expenses incurred
by it in keeping in compliance with all Environmental Laws, and will keep or
cause to be kept all Real Properties owned or operated by Holdings or any of its
Subsidiaries free and clear of any Liens imposed pursuant to such Environmental
Laws; and (ii) neither Holdings nor any of its Subsidiaries will generate, use,
treat, store, release or dispose of, or permit the generation, use, treatment,
storage, release or disposal of, Hazardous Materials on any Real Property owned
or operated by Holdings or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property, unless
the failure to comply with the requirements specified in clause (i) or (ii)
above, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. If Holdings or any of its Subsidiaries, or
any tenant or occupant of any Real Property owned or operated by Holdings or any
of its Subsidiaries, cause or permit any intentional or unintentional act or
omission resulting in the presence or Release of any Hazardous Material (except
in compliance with applicable Environmental Laws and which does not give rise to
an Environmental Claim), each of Holdings and the Borrower agrees to undertake,
and/or to cause any of its Subsidiaries, tenants or occupants to undertake, at
their sole expense, any clean up, removal, remedial or other action required
pursuant to Environmental Laws to remove and clean up any Hazardous Materials
from any Real Property, except where the failure to do so would not reasonably
be expected to have a Material Adverse Effect; provided, that neither Holdings
--------
nor any of its Subsidiaries shall be required to comply with any such order or
directive which is being contested in good faith and by proper proceedings so
long as it has maintained adequate reserves with respect to such compliance to
the extent required in accordance with GAAP.
(b) At the written request of the Agent or the Required Banks,
Holdings or any of its Subsidiaries will provide, at their sole cost and
expense, an environmental site assessment report concerning any of their Real
Properties, prepared by an environmental consulting firm approved by the Agent,
which approval shall not be unreasonably withheld, indicating the presence or
absence of Hazardous Materials and the potential cost of any removal or remedial
action in connection with any Hazardous Materials on such Real Property,
provided that such request shall be made only if either (i) there exists an
Event of Default under Section 9, or (ii) the Banks receive notice under Section
7.01(h) for any event for which notice is required to be delivered for any such
Real Property; provided further, however, that in the case of clause (ii) above
the environmental assessment shall be required only with respect to the Real
Property that is the subject of such required
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<PAGE>
notice. If Holdings or its Subsidiaries fails to provide the same within 90
days after such request was made, the Agent may order the same, and Holdings and
its Subsidiaries shall grant and hereby grant to the Agent and the Banks and
their agents access to such Property and specifically grants the Agent and the
Banks an irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at the Borrower's expense.
7.08 ERISA. As soon as possible and, in any event, within 10 days
-----
after Holdings or any Subsidiary of Holdings or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following events to the extent
that one or more of such events is reasonably likely to result in a material
liability to Holdings or any Subsidiary of Holdings, Holdings will deliver to
each of the Banks a certificate of the chief financial officer or other
Authorized Officer of Holdings setting forth details as to such occurrence and
the action, if any, which Holdings, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by Holdings, such Subsidiary, such ERISA Affiliate,
the PBGC, a Plan participant or the Plan administrator with respect thereto:
that a Reportable Event has occurred, that an accumulated funding deficiency has
been incurred or an application may be or has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization period
under Section 412 of the Code with respect to a Plan; that a contribution
required to be made to a Plan or Foreign Pension Plan has not been timely made;
that a Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has an Unfunded Current Liability
giving rise to a lien under ERISA or the Code; that proceedings may be or have
been instituted to terminate or appoint a trustee to administer a Plan; that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that Holdings, any Subsidiary of Holdings or
any ERISA Affiliate will or may incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409, 502(i) or 502(l) of ERISA; or that Holdings or any Subsidiary of
Holdings has or may incur any liability under any employee welfare benefit plan
(within the meaning of Section 3(1) of ERISA) that provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any employee pension benefit plan (as defined in Section 3(2) of
ERISA) in addition to the liability pursuant to any such welfare or pension plan
or plans existing on the Effective Date. At the request of any Bank, Holdings
will deliver to such Bank a complete copy of the annual report (Form 5500) of
each Plan required to be filed with the Internal Revenue Service. In addition
to any certificates or notices delivered to the Banks pursuant to the first
sentence hereof, copies of annual reports and any notices received by Holdings
or any Subsidiary of Holdings or any ERISA Affiliate with respect to any Plan or
Foreign Pension Plan shall be delivered to the Banks no later than 10 days after
the date such report has been filed with the Internal
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Revenue Service or received by Holdings or the Subsidiary or the ERISA
Affiliate, as applicable.
7.09 Good Repair. Holdings will, and will cause each of its
-----------
Subsidiaries to, ensure that its material properties and equipment used in its
business are kept in good repair, working order and condition, normal wear and
tear excepted, and, subject to Section 8.08, that from time to time there are
made in such properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to
the extent and in the manner useful or customary for companies in similar
businesses.
7.10 End of Fiscal Years; Fiscal Quarters. Holdings will, for
------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year, and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.11 Additional Security; Further Assurances. (a) Holdings will,
---------------------------------------
and will cause each of its Domestic Subsidiaries (and subject to Section 7.14,
each of its Foreign Subsidiaries) to, grant to the Collateral Agent security
interests and mortgages in such assets and properties of Holdings and its
Subsidiaries as are not covered by the original Security Documents, and as may
be requested from time to time by the Agent or the Required Banks (collectively,
the "Additional Security Documents"). All such security interests and mortgages
shall be granted pursuant to documentation reasonably satisfactory in form and
substance to the Agent and shall constitute valid and enforceable perfected
security interests and mortgages superior to and prior to the rights of all
third Persons and subject to no other Liens except for Permitted Liens. The
Additional Security Documents or instruments related thereto shall have been
duly recorded or filed in such manner and in such places as are required by law
to establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Security Documents and
all taxes, fees and other charges payable in connection therewith shall have
been paid in full.
(b) Holdings will, and will cause each of its Subsidiaries to, at the
expense of Holdings and the Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, Holdings
shall cause to be delivered to the Collateral Agent such opinions of counsel,
title insurance and other related documents as may be reasonably requested by
the Agent to assure themselves that this Section 7.11 has been complied with.
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(c) If the Agent or the Required Banks determine that they are
required by law or regulation to have appraisals prepared in respect of the Real
Property of Holdings and its Subsidiaries constituting Collateral, the Borrower
shall provide to the Agent appraisals which satisfy the applicable requirements
of the Real Estate Appraisal Reform Amendments of the Financial Institution
Reform, Recovery and Enforcement Act of 1989, as amended, and which shall be in
form and substance reasonably satisfactory to the Agent.
(d) Holdings and the Borrower agree that each action required above
by this Section 7.11 shall be completed as soon as possible, but in no event
later than 90 days after such action is either requested to be taken by the
Agent or the Required Banks or required to be taken by Holdings and its
Subsidiaries pursuant to the terms of this Section 7.11; provided that in no
--------
event shall Holdings or the Borrower be required to take any action, other than
using its reasonable efforts, to obtain consents from third parties with respect
to its compliance with this Section 7.11.
7.12 Register. The Borrower hereby designates the Agent to serve as
--------
the Borrower's agent, solely for purposes of this Section 7.12, to maintain a
register (the "Register") on which it will record the Commitments from time to
time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such recordation shall not affect
the Borrower's obligations in respect of such Loans. With respect to any Bank,
the transfer of the Commitments of such Bank and the rights to the principal of,
and interest on, any Loan made pursuant to such Commitments shall not be
effective until such transfer is recorded on the Register maintained by the
Agent with respect to ownership of such Commitments and Loans and prior to such
recordation all amounts owing to the transferor with respect to such Commitments
and Loans shall remain owing to the transferor. The registration of assignment
or transfer of all or part of any Commitments and Loans shall be recorded by the
Agent on the Register only upon the acceptance by the Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
12.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Bank shall surrender the Note evidencing such Loan, and thereupon one
or more new Notes in the same aggregate principal amount shall be issued to the
assigning or transferor Bank and/or the new Bank. The Borrower agrees to
indemnify the Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Agent in performing its duties under this Section 7.12.
7.13 Contributions; Payments. (a) Holdings will contribute as an
-----------------------
equity contribution to the capital of the Borrower upon its receipt thereof, any
cash proceeds received by Holdings from any sale or issuance of its preferred or
common equity or any cash capital contributions received by Holdings, other than
the portion of the proceeds of
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an initial public offering of Holdings Common Stock to be used by Holdings for
the purposes set forth in Section 8.13(i)(y).
(b) The Borrower will use the proceeds of all equity contributions
received by it from Holdings as provided in clause (a) above toward the
repayment of Term Loans to the extent required by Section 4.02(d).
7.14 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower acceptable to the Agent and the Required Banks does not within 30 days
after a request from the Agent or the Required Banks deliver evidence, in form
and substance mutually satisfactory to the Agent and the Borrower, with respect
to any Foreign Subsidiary which has not already had all of its stock pledged
pursuant to the Pledge Agreement that (i) a pledge (x) of 66-2/3% or more of the
total combined voting power of all classes of capital stock of such Foreign
Subsidiary entitled to vote, and (y) of any promissory note issued by such
Foreign Subsidiary to Holdings or any of its Domestic Subsidiaries, (ii) the
entering into by such Foreign Subsidiary of a security agreement in
substantially the form of the Security Agreement and (iii) the entering into by
such Foreign Subsidiary of a guaranty in substantially the form of the
Subsidiary Guaranty, in any such case would cause the undistributed earnings of
such Foreign Subsidiary as determined for Federal income tax purposes to be
treated as a deemed dividend to such Foreign Subsidiary's United States parent
for Federal income tax purposes, then in the case of a failure to deliver the
evidence described in clause (i) above, that portion of such Foreign
Subsidiary's outstanding capital stock or any promissory notes so issued by such
Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge
Agreement shall be pledged to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement
in substantially similar form, if needed), and in the case of a failure to
deliver the evidence described in clause (ii) above, such Foreign Subsidiary
shall execute and deliver the Security Agreement (or another security agreement
in substantially similar form, if needed), granting the Secured Creditors a
security interest in all of such Foreign Subsidiary's assets and securing the
Obligations of the Borrower under the Credit Documents and under any Interest
Rate Protection Agreement or Other Hedging Agreement and, in the event the
Subsidiary Guaranty shall have been executed by such Foreign Subsidiary, the
obligations of such Foreign Subsidiary thereunder, and in the case of a failure
to deliver the evidence described in clause (iii) above, such Foreign Subsidiary
shall execute and deliver the Subsidiary Guaranty (or another guaranty in
substantially similar form, if needed), guaranteeing the Obligations of the
Borrower under the Credit Documents and under any Interest Rate Protection
Agreement or Other Hedging Agreement, in each case to the extent that the
entering into such Security Agreement or Subsidiary Guaranty is permitted by the
laws of the respective foreign jurisdiction and with all documents delivered
pursuant to this Section 7.14 to be in form and substance reasonably
satisfactory to the Agent and the Required Banks.
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7.15 Interest Rate Protection. The Borrower shall no later than 90
------------------------
days following the Initial Borrowing Date enter into, and thereafter maintain,
Interest Rate Protection Agreements, satisfactory to the Agent, with a term of
at least three years, establishing a fixed or maximum interest rate acceptable
to the Agent in respect of an amount of the then outstanding Term Loans equal to
at least $50,000,000.
7.16 Maintenance of Corporate Separateness. Holdings will, and will
-------------------------------------
cause the Borrower and each of the Borrower's Subsidiaries to, satisfy customary
corporate formalities, including the maintenance of corporate and/or partnership
records. Neither the Borrower nor any Subsidiary of the Borrower shall make any
payment to a creditor of Holdings in respect of any liability of Holdings, and
no bank account of Holdings shall be commingled with any bank account of the
Borrower or any Subsidiary of the Borrower. Any financial statements
distributed to any creditors of Holdings shall, to the extent permitted by GAAP,
clearly establish the corporate separateness of Holdings from the Borrower and
each of the Borrower's Subsidiaries. Finally, neither Holdings nor any of its
Subsidiaries shall take any action, or conduct its affairs in a manner, which is
likely to result in the corporate existence of Holdings on the one hand and of
the Borrower or any Subsidiary of the Borrower on the other hand being ignored,
or in the assets and liabilities of the Borrower or any Subsidiary of the
Borrower being substantively consolidated with those of Holdings in a
bankruptcy, reorganization or other insolvency proceeding.
7.17 Permitted Holdings PIK Securities. Holdings shall pay all
---------------------------------------
dividends or interest, as the case may be, on the Permitted Holdings PIK
Securities through the issuance of additional Permitted Holdings PIK Securities
rather than in cash; provided that in lieu of issuing additional Permitted
--------
Holdings PIK Securities as dividend or interest payments, Holdings may increase
the liquidation preference or outstanding amount, as the case may be, of the
outstanding Permitted Holdings PIK Securities in respect of which such dividends
or interest have accrued.
SECTION 8. Negative Covenants. Holdings and the Borrower hereby
------------------
covenant and agree that as of the Effective Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Letters of Credit (other than Letters of Credit, together with all Fees that
have accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
respective Letter of Credit Issuer in its sole and absolute discretion) or Notes
are outstanding and the Loans and Unpaid Drawings, together with interest, Fees
and all other Obligations (other than any indemnities described in Section 12.13
hereof which are not then due and payable) incurred hereunder, are paid in full:
8.01 Changes in Business. (a) Holdings and its Subsidiaries will
-------------------
not engage in any business other than the business engaged in by the Borrower as
of the Effective Date and activities directly related thereto, and similar or
related businesses.
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(b) Holdings will engage in no business other than (i) its ownership
of the capital stock of the Borrower and those obligations of officers and
employees of Holdings and its Subsidiaries to the extent permitted by Section
8.05(e) and having those liabilities which it is responsible for under this
Agreement and the other Documents to which it is a party, (ii) the issuance of
the Permitted Holdings PIK Securities, the Shareholder Subordinated Notes,
shares of Holdings Common Stock and options and warrants to purchase Holdings
Common Stock to the extent permitted by Section 8.13(v) and (iii) activities
associated with expenses paid with dividends made by the Borrower pursuant to
Section 8.06(iv). Notwithstanding the foregoing, Holdings may engage in those
activities that are incidental to (a) the maintenance of its corporate existence
in compliance with applicable law, (b) legal, tax and accounting matters in
connection with any of the foregoing activities and (c) the entering into, and
performing its obligations under, this Agreement and the other Documents to
which it is a party.
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc.
-------------------------------------------------------
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets (other than inventory in the ordinary course of business), or enter into
any partnerships, joint ventures or sale-leaseback transactions, or purchase or
otherwise acquire (in one or a series of related transactions) any part of the
property or assets (other than purchases or other acquisitions of inventory,
materials and equipment in the ordinary course of business) of any Person,
except that the following shall be permitted:
(a) the Transaction;
(b) the Borrower and its Subsidiaries may lease as lessee or license
as licensee real or personal property in the ordinary course of business
and otherwise in compliance with this Agreement;
(c) Capital Expenditures by the Borrower and its Subsidiaries to the
extent not in violation of Section 8.08;
(d) the advances, investments and loans permitted pursuant to Section
8.05;
(e) each of the Borrower and its Subsidiaries may sell assets,
provided that (w) each such sale shall be for an amount at least equal to
--------
the fair market value thereof (as determined in good faith by senior
management of the Borrower), (x) each such sale results in consideration at
least 80% of which (taking the amount of cash, the principal amount of any
promissory notes and the fair market value, as determined in good faith by
senior management of the Borrower, of any other consideration) shall be in
the form of cash, (y) the aggregate sale proceeds from all assets subject
to such sales pursuant to this clause (e) shall not exceed $2,500,000
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in any fiscal year of the Borrower and (z) the Net Proceeds therefrom are
either applied to repay Term Loans as provided in Section 4.02(A)(c) or
reinvested in replacement assets to the extent permitted by Section
4.02(A)(c);
(f) each of the Borrower and its Subsidiaries may sell assets,
provided that (w) each such sale shall be for an amount at least equal to
--------
the fair market value thereof (as determined in good faith by senior
management of the Borrower), (x) each such sale results in consideration at
least 80% of which (taking the amount of cash, the principal amount of any
promissory notes and the fair market value, as determined in good faith by
senior management of the Borrower, of any other consideration) shall be in
the form of cash, and (y) the aggregate sale proceeds from all assets
subject to such sales pursuant to this clause (f) shall not exceed $500,000
in any fiscal year of the Borrower;
(g) the Borrower and its Subsidiaries may sell or discount, in each
case without recourse, accounts receivables arising in the ordinary course
of business, but only in connection with the compromise or collection
thereof;
(h) the Borrower and its Subsidiaries may sell for cash or exchange
specific items of equipment, so long as the purpose of each such sale or
exchange is to acquire (and results within 180 days of such sale or
exchange in the acquisition of) replacement items of equipment which are
the functional equivalent of the item of equipment so sold or exchanged;
(i) the Borrower and its Subsidiaries may, in the ordinary course of
business, license patents, trademarks, copyrights and know-how to third
Persons and to one another, so long as each such license is permitted to be
assigned pursuant to the Security Agreement (to the extent that a security
interest in such patents, trademarks, copyrights and know-how is granted
thereunder) and does not otherwise prohibit the granting of a Lien by the
Borrower or any of its Subsidiaries pursuant to the Security Agreement in
the intellectual property covered by such license;
(j) any Foreign Subsidiary of the Borrower may be merged with and
into, or be voluntarily dissolved or liquidated into, or transfer any of
its assets to, any Wholly-Owned Foreign Subsidiary of the Borrower so long
as in each case at least 65% of the total combined voting power of all
classes of capital stock of all first-tier Foreign Subsidiaries of the
Borrower are pledged pursuant to the Pledge Agreement;
(k) the assets of any Foreign Subsidiary of the Borrower may be
transferred to the Borrower or any of its Wholly-Owned Domestic
Subsidiaries, and any Foreign Subsidiary of the Borrower may be merged with
and into, or be voluntarily dissolved or liquidated into, the Borrower or
any of its Wholly-Owned Domestic
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Subsidiaries so long as the Borrower or such Wholly-Owned Domestic
Subsidiary is the surviving corporation of any such merger, dissolution or
liquidation;
(l) the Borrower or any of its Wholly-Owned Domestic Subsidiaries may
transfer to one or more Wholly-Owned Foreign Subsidiaries of the Borrower
those assets theretofore transferred to the Borrower or such Wholly-Owned
Domestic Subsidiary by a Foreign Subsidiary (whether by merger,
liquidation, dissolution or otherwise) pursuant to clause (k) of this
Section 8.02;
(m) the Borrower and its Wholly-Owned Domestic Subsidiaries may sell
or otherwise transfer inventory between or among themselves in the ordinary
course of business for resale by the Borrower or such Wholly-Owned Domestic
Subsidiaries, as the case may be, so long as the security interest granted
to the Collateral Agent for the benefit of the Secured Creditors pursuant
to the Security Agreement in the inventory so transferred shall remain in
full force and effect and perfected (to at least the same extent as in
effect immediately prior to such transfer);
(n) the Borrower may lease as lessor equipment, machinery or its Real
Property to one or more Wholly-Owned Domestic Subsidiaries of the Borrower
so long as (x) such lease is for fair market value (determined in good
faith by the Board of Directors or senior management of the Borrower) and
(y) the security interests granted to the Collateral Agent for the benefit
of the Secured Creditors pursuant to the Security Documents in the assets
so leased shall remain in full force and effect and perfected (to at least
the same extent as in effect immediately prior to such transfer);
(o) any Domestic Subsidiary of the Borrower may transfer assets to
the Borrower or to any other Wholly-Owned Domestic Subsidiary of the
Borrower so long as the security interests granted to the Collateral Agent
for the benefit of the Secured Creditors pursuant to the Security Documents
in the assets so transferred shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to
such transfer);
(p) any Wholly-Owned Domestic Subsidiary of the Borrower may merge
with and into, or be voluntarily dissolved or liquidated into, the Borrower
so long as (i) the Borrower is the surviving corporation of such merger,
dissolution or liquidation and (ii) the security interests granted to the
Collateral Agent for the benefit of the Secured Creditors pursuant to the
Security Documents in the assets of such Wholly-Owned Domestic Subsidiary
so merged, dissolved or liquidated shall remain in full force and effect
and perfected (to at least the same extent as in effect immediately prior
to such merger, dissolution or liquidation);
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(q) any Wholly-Owned Domestic Subsidiary of the Borrower may merge
with and into, or be voluntarily dissolved or liquidated into, any other
Wholly-Owned Domestic Subsidiary of the Borrower so long as the security
interests granted to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Security Documents in the assets of such Domestic
Subsidiary so merged, dissolved or liquidated shall remain in full force
and effect and perfected (to at least the same extent as in effect
immediately prior to such merger, dissolution or liquidation); and
(r) so long as no Default or Event of Default then exists or would
result therefrom, the Borrower may acquire assets constituting all or
substantially all of a business, business unit, division or product line of
any Person not already a Subsidiary of the Borrower or the capital stock of
any such Person (any such acquisition permitted by this clause (r), a
"Permitted Acquisition"), provided, that (i) such Person (or the assets so
--------
acquired) was, immediately prior to such acquisition, engaged (or used)
primarily in the business permitted pursuant to Section 8.01(a), (ii) if
such acquisition is structured as a stock acquisition, then either (A) the
Person so acquired becomes a Wholly-Owned Domestic Subsidiary of the
Borrower or (B) such Person is merged with and into a Wholly-Owned Domestic
Subsidiary of the Borrower (with such Wholly-Owned Domestic Subsidiary
being the surviving corporation of such merger), and in any case, all of
the provisions of Section 8.15 have been complied with in respect of such
Person, (iii) any Liens or Indebtedness assumed or issued in connection
with such acquisition are otherwise permitted under Section 8.03 or 8.04,
as the case may be, (iv) the only consideration paid by the Borrower in
respect of any such Permitted Acquisition consists of cash (including
Excess Equity Proceeds), Holdings Common Stock and/or Permitted Holdings
PIK Securities permitted to be issued under Section 8.13 and/or
Indebtedness to the extent permitted by Section 8.04, (v) all
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and
as of the date of such Permitted Acquisition (both before and after giving
effect thereto), unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct in
all material respects as of such earlier date, (vi) after giving effect to
any Permitted Acquisition, the aggregate amount paid (including for this
purpose all cash consideration paid (including all Excess Equity Proceeds
used in connection therewith), the face amount of all Indebtedness
(including Permitted Holdings PIK Securities, if in the form of
Indebtedness) incurred in connection with such Permitted Acquisition, and
the fair market value (determined as of the proposed date of consummation
of such Permitted Acquisition in good faith by senior management of the
Borrower) of any Permitted Holdings PIK Securities (if in the form of
equity) or Holdings Common Stock, if any, issued as consideration in
connection with such Permitted Acquisition), in connection with such
Permitted Acquisition when added to the
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aggregate amount paid (including for this purpose all cash consideration
paid, the face amount of all Indebtedness (including Permitted Holdings PIK
Securities, if in the form of Indebtedness) incurred in connection with
each such Permitted Acquisition and the fair market value (determined as of
the date of consummation of each such Permitted Acquisition in good faith
by senior management of the Borrower) of any Permitted Holdings PIK
Securities (if in the form of equity) or Holdings Common Stock, if any,
issued as consideration in connection with each such Permitted Acquisition)
in connection with all other Permitted Acquisitions consummated prior to
such proposed Permitted Acquisition, shall not exceed $25,000,000 (or, if
the Pro Forma Leverage Ratio on the date of such proposed Permitted
Acquisition is less than 3.25:1.00, $50,000,000), and (viii) the aggregate
amount paid (including for this purpose all cash consideration paid
(including all Excess Equity Proceeds used in connection therewith), the
face amount of all Indebtedness (including Permitted Holdings PIK
Securities, if in the form of Indebtedness) incurred in connection with
such Permitted Acquisition, and the fair market value (determined as of the
proposed date of consummation of such Permitted Acquisition in good faith
by senior management of the Borrower) of any Permitted Holdings PIK
Securities (if in the form of equity) or Holdings Common Stock, if any,
issued as consideration in connection with such Permitted Acquisition), in
connection with any single Permitted Acquisition or series of related
Permitted Acquisitions, shall not exceed $12,500,000 (or, if the Pro Forma
Leverage Ratio on the date of such proposed Permitted Acquisition is less
than 3.25:1.00, $25,000,000).
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 8.02, such Collateral
in each case shall be sold or otherwise disposed of free and clear of the Liens
created by the Security Documents and the Agent shall take such actions
(including, without limitation, directing the Collateral Agent to take such
actions) as are appropriate in connection therewith.
8.03 Liens. Holdings will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to
Holdings or any of its Subsidiaries) or assign any right to receive income,
except for the following (collectively, the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes, assessments or governmental charges
or levies being
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contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business and which have not arisen to secure Indebtedness for borrowed
money, such as carriers', warehousemen's and mechanics' Liens, statutory
landlord's Liens, and other similar Liens arising in the ordinary course of
business, and which either (x) do not in the aggregate materially detract
from the value of such property or assets or materially impair the use
thereof in the operation of the business of the Borrower or any of its
Subsidiaries or (y) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the Security
Documents;
(d) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Annex VIII, without
giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09;
(f) Liens incurred or deposits made (x) in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money); and (y) to
secure the performance of leases of Real Property, to the extent incurred
or made in the ordinary course of business consistent with past practices;
(g) licenses, leases or subleases granted to third Persons not
interfering in any material respect with the business of the Borrower or
any of its Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from precautionary UCC financing statements
regarding operating leases permitted by this Agreement;
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(j) any interest or title of a licensor, lessor or sublessor under
any lease permitted by this Agreement;
(k) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d);
(l) Permitted Encumbrances;
(m) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective
purchase) of assets acquired after the Initial Borrowing Date, provided
--------
that (i) any such Liens attach only to the assets so purchased, (ii) the
Indebtedness secured by any such Lien does not exceed 100%, nor is less
than 80% of the lesser of the fair market value or the purchase price of
the property being purchased at the time of the incurrence of such
Indebtedness and (iii) the Indebtedness secured thereby is permitted to be
incurred pursuant to Section 8.04(d);
(n) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Borrower in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition, provided that (i) any Indebtedness that is secured by such
--------
Liens is permitted to exist under Section 8.04(j), and (ii) such Liens are
not incurred in connection with, or in contemplation or anticipation of,
such Permitted Acquisition and do not attach to any other asset of the
Borrower or any of its Subsidiaries; and
(o) additional Liens incurred by the Borrower and its Subsidiaries so
long as the value of the property subject to such Liens, and the
Indebtedness and other obligations secured thereby, do not exceed
2,000,000.
8.04 Indebtedness. Holdings will not, and will not permit any of its
------------
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Existing Indebtedness outstanding on the Initial Borrowing Date
and listed on Annex VII, without giving effect to any subsequent extension,
renewal or refinancing thereof;
(c) Indebtedness under Interest Rate Protection Agreements entered
into to protect the Borrower against fluctuations in interest rates in
respect of the Obligations;
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(d) Capitalized Lease Obligations and Indebtedness of the Borrower and
its Subsidiaries incurred pursuant to purchase money Liens permitted under
Section 8.03(m); provided, that (x) all such Capitalized Lease Obligations
--------
are permitted under Section 8.08 and (y) the sum of (i) the aggregate
Capitalized Lease Obligations plus (ii) the aggregate outstanding principal
amount of such purchase money Indebtedness shall not exceed $7,500,000 at
any time;
(e) Indebtedness of the Borrower and its Domestic Subsidiaries
incurred under the Senior Subordinated Notes in an aggregate outstanding
principal amount not to exceed $100,000,000;
(f) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 8.05(g);
(g) Indebtedness under Other Hedging Agreements providing protection
against fluctuations in currency values in connection with the Borrower's or
any of its Subsidiaries' operations so long as management of the Borrower or
such Subsidiary, as the case may be, has determined that the entering into
of such Other Hedging Agreements are bona fide hedging activities;
(h) Indebtedness of Foreign Subsidiaries to the Borrower or any of its
Domestic Subsidiaries as a result of any investment made pursuant to Section
8.05(n);
(i) Indebtedness consisting of guaranties (x) by the Borrower of
Indebtedness and leases permitted to be incurred by Wholly-Owned Domestic
Subsidiaries of the Borrower, (y) by Domestic Subsidiaries of the Borrower
of Indebtedness and leases permitted to be incurred by the Borrower or
other Wholly-Owned Domestic Subsidiaries of the Borrower and (z) by Foreign
Subsidiaries of Indebtedness and leases permitted to be incurred by other
Wholly-Owned Foreign Subsidiaries of the Borrower;
(j) Indebtedness of a Subsidiary acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition
of an asset securing such Indebtedness), provided that (i) such
Indebtedness was not incurred in connection with, or in anticipation or
contemplation of, such Permitted Acquisition, (ii) such Indebtedness does
not constitute debt for borrowed money, it being understood and agreed that
Capitalized Lease Obligations and purchase money Indebtedness shall not
constitute debt for borrowed money for purposes of this clause (j), and
(iii) at the time of such Permitted Acquisition such Indebtedness does not
exceed 20% of the total value of the assets of the Subsidiary so acquired,
or of the assets so acquired, as the case may be;
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<PAGE>
(k) Indebtedness of Holdings under the Shareholder Subordinated
Notes;
(l) Indebtedness of Holdings incurred under Permitted Holdings PIK
Securities issued in connection with Permitted Acquisitions (to the extent
permitted under Section 8.02(r)) plus the amount of interest on such
Permitted Holdings PIK Securities paid in kind or through accretion; and
(m) additional Indebtedness of the Borrower and its Domestic
Subsidiaries not otherwise permitted hereunder not exceeding $5,000,000 in
aggregate principal amount at any time outstanding.
8.05 Advances, Investments and Loans. Holdings will not, and will
-------------------------------
not permit any of its Subsidiaries to, lend money or credit or make advances to
any Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any Person, or
purchase or own a futures contract or otherwise become liable for the purchase
or sale of currency or other commodities at a future date in the nature of a
futures contract, or hold any cash, Cash Equivalents or Foreign Cash
Equivalents, except:
(a) Holdings and its Subsidiaries may invest in cash and Cash
Equivalents;
(b) the Borrower and its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms of the Borrower or such Subsidiary;
(c) the Borrower and its Subsidiaries may acquire and own investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in good faith settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
(d) Interest Rate Protection Agreements entered into in compliance
with Section 8.04(c) shall be permitted;
(e) Holdings may acquire and hold obligations of one or more officers
or other employees of Holdings or its Subsidiaries in connection with such
officers' or employees' acquisition of shares of Holdings Common Stock so
long as no cash is paid by Holdings or any of its Subsidiaries in
connection with the acquisition of any such obligations;
(f) deposits made in the ordinary course of business consistent with
past practices to secure the performance of leases shall be permitted;
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<PAGE>
(g) the Borrower may make intercompany loans and advances to any of
its Subsidiaries, any Subsidiary of the Borrower may make intercompany
loans and advances to the Borrower, and any Subsidiary of the Borrower may
make intercompany loans and advances to any other Subsidiary of the
Borrower (collectively, "Intercompany Loans"), provided, that (w) at no
--------
time shall the aggregate outstanding principal amount of all Intercompany
Loans made pursuant to this clause (g) by the Borrower and its Wholly-Owned
Domestic Subsidiaries to non-Wholly-Owned Domestic Subsidiaries and Foreign
Subsidiaries, when added to the amount of contributions, capitalizations
and forgiveness theretofore made pursuant to Section 8.05(m)(ii), exceed
$2,000,000 (determined without regard to any write-downs or write-offs of
such loans and advances), (x) each Intercompany Loan made by a Foreign
Subsidiary or a non-Wholly-Owned Domestic Subsidiary to the Borrower or a
Wholly-Owned Domestic Subsidiary of the Borrower shall contain the
subordination provisions set forth on Exhibit I, (y) each Intercompany Loan
shall be evidenced by an Intercompany Note and (z) each such Intercompany
Note (other than (1) Intercompany Notes issued by Foreign Subsidiaries of
the Borrower to the Borrower or any of its Domestic Subsidiaries and (2)
Intercompany Notes held by Foreign Subsidiaries of the Borrower, in each
case except to the extent provided in Section 7.14) shall be pledged to the
Collateral Agent pursuant to the Pledge Agreement;
(h) loans and advances by the Borrower and its Subsidiaries to
employees of Holdings and its Subsidiaries for moving and travel expenses
and other similar expenses, in each case incurred in the ordinary course of
business, in an aggregate outstanding principal amount not to exceed
$1,000,000 at any time (determined without regard to any write-downs or
write-offs of such loans and advances), shall be permitted;
(i) Holdings may make equity contributions to the capital of the
Borrower;
(j) Foreign Subsidiaries of the Borrower may invest in Foreign Cash
Equivalents;
(k) Other Hedging Agreements may be entered into in compliance with
Section 8.04(g);
(l) advances, loans and investments in existence on the Initial
Borrowing Date (other than any such loans, advances or investments
described in clause (w) hereof) and listed on Annex IX shall be permitted,
without giving effect to any additions thereto or replacements thereof;
(m) (i) the Borrower may contribute cash to one or more of its
Wholly-Owned Domestic Subsidiaries formed after the Initial Borrowing Date
in accordance
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<PAGE>
with Section 8.15 and (ii) the Borrower and its Wholly-Owned Domestic
Subsidiaries may make cash capital contributions to non-Wholly-Owned
Domestic Subsidiaries and Foreign Subsidiaries of the Borrower, and may
capitalize or forgive any Indebtedness owed to them by a non-Wholly-Owned
Domestic Subsidiary or Foreign Subsidiary of the Borrower and outstanding
under clause (g) of this Section 8.05, provided that (x) the aggregate
amount of such contributions, capitalizations and forgiveness pursuant to
this sub-clause (ii), when added to the aggregate outstanding principal
amount of Intercompany Loans made to non-Wholly-Owned Domestic Subsidiaries
and Foreign Subsidiaries under such clause (g) (determined without regard
to any write-downs or write-offs thereof), shall not exceed an amount equal
to $2,000,000 and (y) the aggregate amount of such cash so contributed
under this clause (m) to all such Subsidiaries does not exceed $4,000,000;
(n) the Borrower and its Subsidiaries may make investments in their
respective Subsidiaries in connection with the transfers of those assets
permitted to be transferred pursuant to Sections 8.02(j), (k) and (l), it
being understood that the Borrower and its Subsidiaries may convert any
investment initially made as an equity investment to intercompany
Indebtedness held by the Borrower or such Subsidiary;
(o) the Borrower and its Domestic Subsidiaries may make and hold
investments in their respective Foreign Subsidiaries to the extent that
such investments arise from the sale of inventory in the ordinary course of
business by the Borrower or such Domestic Subsidiary to such Foreign
Subsidiaries for resale by such Foreign Subsidiaries (including any such
investments resulting from the extension of the payment terms with respect
to such sales);
(p) the Borrower and its Subsidiaries may hold additional investments
in their respective Subsidiaries to the extent that such investments
reflect an increase in the value of such Subsidiaries;
(q) the Borrower and its Subsidiaries may capitalize one or more
foreign sales corporations created in accordance with Section 8.15 with
cash contributions in an aggregate amount not to exceed $100,000 for all
such foreign sales corporations;
(r) the Borrower and its Subsidiaries may make transfers of assets to
their respective Subsidiaries in accordance with Section 8.02(m) and (o);
(s) Holdings, the Borrower and their respective Subsidiaries may
purchase or acquire their own stock and other securities and obligations as
and to the extent permitted by Sections 8.06 and 8.13;
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<PAGE>
(t) Permitted Acquisitions shall be permitted in accordance with
Section 8.02(r);
(u) the Borrower and its Subsidiaries may acquire and hold debt
securities as partial consideration for a sale of assets pursuant to
Section 8.02(e) or (f) to the extent permitted by any such Section;
(v) the Borrower may continue to own and hold its investments in
existence on the Initial Borrowing Date in its Existing Joint Ventures,
without giving effect to any additions thereto or replacements thereof;
(w) so long as no Default or Event of Default then exists or would
result therefrom, the Borrower may make Joint Venture Investments in
Permitted Joint Ventures and/or Existing Joint Ventures, provided that the
--------
aggregate amount of all Joint Venture Investments in Permitted Joint
Ventures and Existing Joint Ventures made after the Initial Borrowing Date
pursuant to this clause (w) shall not exceed $7,500,000;
(x) so long as no Default or Event of Default then exists or would
result therefrom, the Borrower may make additional Joint Venture
Investments in Permitted Joint Ventures and/or Existing Joint Ventures,
provided that the aggregate amount of all such additional Joint Venture
--------
Investments in Permitted Joint Ventures and Existing Joint Ventures made
after the Initial Borrowing Date pursuant to this clause (x) shall not
exceed the lesser of (i) $7,500,000 and (ii) the Excess Amount at such
time; and
(y) in addition to investments permitted by clauses (a) through (x)
above, the Borrower and its Subsidiaries may make additional loans,
advances and investments to or in a Person (other than loans, advances or
investments, (x) in or to any Existing Joint Venture, (y) in or to any
Permitted Joint Venture or (z) of the type constituting a permitted
existing investment pursuant to clause (l) of this Section 8.05), so long
as the amount of any such loan, advance or investment (at the time of the
making thereof) does not exceed an amount equal to $5,000,000 less the
aggregate amount of such $5,000,000 previously used to make loans, advances
and investments pursuant to this clause (y) to the extent same are then
still outstanding (determined without regard to any write-downs or write-
offs thereof and net of cash repayments of principal in the case of loans
and cash equity returns (whether as a dividend or redemption) in the case
of equity investments) provided, that (1) no single loan, advance or
--------
investment (or series of related loans, advances or investments) in excess
of $5,000,000 may be made, and (2) neither the Borrower nor any of its
Subsidiaries may make or own any investment in Margin Stock.
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<PAGE>
8.06 Dividends, etc. Holdings will not, and will not permit any of
---------------
its Subsidiaries to, declare or pay any dividends (other than dividends payable
solely in common stock of Holdings or any such Subsidiary, as the case may be)
or return any capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock, now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, and Holdings will not permit any of its Subsidiaries to
purchase or otherwise acquire for consideration any shares of any class of the
capital stock of Holdings or any other Subsidiary, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that:
(i) any Subsidiary of the Borrower may pay Dividends to the
Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) Holdings may redeem or purchase shares of Holdings Common
Stock or options to purchase Holdings Common Stock, respectively, held by
former employees of Holdings or any of its Subsidiaries following the
termination of their employment, provided that (w) the only consideration
paid by Holdings in respect of such redemptions and/or purchases shall be
cash and Shareholder Subordinated Notes, (x) the sum of (A) the aggregate
amount paid by Holdings in cash in respect of all such redemptions and/or
purchases plus (B) the aggregate amount of all principal and interest
payments made on Shareholder Subordinated Notes, shall not exceed
$1,000,000 in any fiscal year of Holdings, provided that such amount shall
be increased by an amount (not to exceed $5,000,000 for purposes of this
clause (ii)) equal to the proceeds received by Holdings after the Initial
Borrowing Date from the sale or issuance of Holdings Common Stock to
management of Holdings or any of its Subsidiaries and (y) at the time of
any cash payment permitted to be made pursuant to this Section 8.06(ii),
including any cash payment under a Shareholder Subordinated Note, no
Default or Event of Default shall then exist or result therefrom;
(iii) so long as no Default or Event of Default then exists or
would result therefrom, the Borrower may pay cash Dividends to Holdings so
long as Holdings promptly uses such proceeds for the purposes described in
clause (ii) of this Section 8.06;
(iv) the Borrower may (x) make cash payments to Holdings pursuant
to the Holdings Services Agreement and (y) pay cash Dividends to Holdings
so long as the proceeds thereof are promptly used by Holdings to pay
operating expenses in the ordinary course of business (including, without
limitation, professional fees
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<PAGE>
and expenses) and other similar corporate overhead costs and expenses, or
to pay salaries or other compensation of employees who perform services for
Holdings and the Borrower, provided that the aggregate amount of cash
payments and cash Dividends paid pursuant to this clause (iv) shall not
during any fiscal year of the Borrower exceed $500,000;
(v) the Borrower may pay cash Dividends to Holdings, provided
that (x) the proceeds thereof are immediately used by Holdings to make the
payments referred to in Section 8.07(iii) or (iv) and (y) such cash
Dividends are only made at the times and up to the amounts permitted by
Section 8.07(iii) and (iv) and the last sentence of Section 8.07;
(vi) the Borrower may pay cash Dividends to Holdings in the
amounts and at the times of any payment by Holdings in respect of taxes,
provided that (x) the amount of cash Dividends paid pursuant to this clause
(vi) to enable Holdings to pay federal income taxes at any time shall not
exceed, when added to the amount of payments made pursuant to the Holdings
Tax Allocation Agreement for such purposes, the lesser of (A) the amount of
such federal income taxes owing by Holdings at such time for the respective
period and (B) the amount of such federal income taxes that would be owing
by the Borrower and its Subsidiaries on a consolidated basis for such
period if determined without regard to Holdings' ownership of the Borrower
and (y) any refunds shall promptly be returned by Holdings to the Borrower;
(vii) the liquidation preference of the Holdings Preferred Stock
may accrete in accordance with the terms of the Holdings Preferred Stock
Certificate;
(viii) in the event that Holdings consummates an initial
registered public offering of Holdings Common Stock, Holdings may redeem
shares of its outstanding Holdings Preferred Stock as and to the extent
permitted by Section 8.13(i)(y);
(ix) Holdings may pay regularly scheduled Dividends on the
Permitted Holdings PIK Securities (to the extent issued as preferred stock)
pursuant to the terms thereof solely through the issuance of additional
shares of such Permitted Holdings PIK Securities, provided that in lieu of
issuing additional shares of such Permitted Holdings PIK Securities as
Dividends, Holdings may increase the liquidation preference of the shares
of Permitted Holdings PIK Securities in respect of which such Dividends
have accrued; and
(x) the Borrower may pay cash Dividends to Holdings on the
Initial Borrowing Date in an aggregate amount not to exceed the amount
needed by Holdings to redeem in full the Holdings Senior Subordinated Debt
and the Holdings
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<PAGE>
Junior Subordinated Debt in accordance with Section 5.01(h) provided that
the proceeds thereof are immediately used by Holdings to redeem the
Holdings Senior Subordinated Debt and the Holdings Junior Subordinated
Debt.
8.07 Transactions with Affiliates. Holdings will not, and will not
----------------------------
permit any of its Subsidiaries to, enter into any transaction or series of
transactions with any Affiliate other than in the ordinary course of business
and on terms and conditions substantially as favorable to Holdings or such
Subsidiary as would be obtainable by Holdings or such Subsidiary at the time in
a comparable arm's-length transaction with a Person other than an Affiliate;
provided, that the following shall in any event be permitted: (i) the
- - --------
Transaction; (ii) the payment on the Initial Borrowing Date of one time
consulting fees to Bain Capital and/or the Bain Affiliates in an aggregate
amount (for Bain Capital and all such Bain Affiliates taken together) not to
exceed $3,800,000 plus reasonable out-of-pocket expenses incurred by Bain
Capital and/or the Bain Affiliates in providing services to the Borrower; (iii)
the payment of management fees to Bain Capital and the Bain Affiliates in an
aggregate amount (for all such Persons taken together) not to exceed $950,000 in
any fiscal year of the Borrower; (iv) the reimbursement of Bain Capital and the
Bain Affiliates for their reasonable out-of-pocket expenses incurred by them in
connection with performing management services to the Borrower and its
Subsidiaries under the Consulting Agreement; and (v) Holdings and the Borrower
and its Domestic Subsidiaries may enter into the Holdings Tax Allocation
Agreement and the Holdings Services Agreement and may make any payments required
thereunder.
8.08 Capital Expenditures. (a) Holdings will not, and will not
--------------------
permit any of its Subsidiaries to, make any Capital Expenditures, except that,
subject to clause (b) below, (i) during the fiscal year ending December 31,
1997, the Borrower and its Subsidiaries may make Capital Expenditures so long as
the aggregate amount of such Capital Expenditures does not exceed $15,000,000;
and (ii) during any fiscal year thereafter, the Borrower and its Subsidiaries
may make Capital Expenditures so long as the aggregate amount of such Capital
Expenditures does not exceed $25,000,000 in any such fiscal year.
(b) Notwithstanding the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by the Borrower and its Subsidiaries
pursuant to clause (a) above in any fiscal year (before giving effect to any
increase in such permitted expenditure amount pursuant to this clause (b)) is
greater than the amount of such Capital Expenditures made by the Borrower and
its Subsidiaries during such fiscal year, such excess (the "Rollover Amount")
may be carried forward and utilized to make Capital Expenditures in succeeding
fiscal years, provided that in no event shall the aggregate amount of Capital
Expenditures made by the Borrower and its Subsidiaries during any fiscal year
pursuant to Section 8.08(a)(ii) exceed 150% of the amount set forth in Section
8.08(a)(ii).
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<PAGE>
(c) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Capital Expenditures (which Capital Expenditures will not be included
in any determination under the foregoing clause (a)) with the insurance proceeds
received by the Borrower or any of its Subsidiaries from any Recovery Event so
long as such Capital Expenditures are to replace or restore any properties or
assets in respect of which such proceeds were paid within 360 days following the
date of the receipt of such insurance proceeds to the extent such insurance
proceeds are not required to be applied to repay Term Loans pursuant to Section
4.02(A)(g) and are not used by the Borrower to effect Permitted Acquisitions.
(d) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Capital Expenditures (which Capital Expenditures will not be included
in any determination under the foregoing clause (a)) with the Net Proceeds of
Asset Sales, to the extent such Net Proceeds are not required to be applied to
repay Term Loans pursuant to Section 4.02(A)(c) and are not used by the Borrower
to effect Permitted Acquisitions.
(e) Notwithstanding the foregoing, the Borrower may make Capital
Expenditures (which Capital Expenditures will not be included in any
determination under the foregoing clause (a)) constituting Permitted
Acquisitions.
(f) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Capital Expenditures at any time in an aggregate amount equal to the
Excess Amount at such time (which Capital Expenditures will not be included in
any determination under the foregoing clause (a)), and are not used by the
Borrower to effect Permitted Acquisitions; provided, however, that the aggregate
-------- -------
amount of Capital Expenditures made by the Borrower and its Subsidiaries
pursuant to this clause (f) and clause (a) of this Section 8.08 shall not exceed
$35,000,000 in any fiscal year of the Borrower.
8.09 Minimum Consolidated EBITDA. (a) The Borrower will not permit
---------------------------
Consolidated EBITDA for any Test Period ending on a date set forth below to be
less than the amount set forth opposite such date:
<TABLE>
<CAPTION>
Minimum Consolidated
Date EBITDA
---- --------------------
<S> <C>
September 30, 1997 $10,000,000
December 31, 1997 $20,000,000
March 31, 1998 $35,000,000
June 30, 1998 $42,500,000
September 30, 1998 $45,000,000
December 31, 1998 $48,200,000
</TABLE>
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<PAGE>
<TABLE>
Minimum Consolidated
Date EBITDA
---- --------------------
<S> <C>
March 31, 1999 $51,000,000
June 30, 1999 $54,000,000
September 30, 1999 $55,000,000
December 31, 1999 $57,000,000
March 31, 2000 $60,000,000
June 30, 2000 $63,000,000
September 30, 2000 $65,500,000
December 31, 2000 $69,000,000
March 31, 2001 $70,300,000
June 30, 2001 $70,300,000
September 30, 2001 $70,300,000
December 31, 2001 $71,600,000
March 31, 2002 $73,400,000
June 30, 2002 $73,400,000
September 30, 2002 $73,400,000
December 31, 2002 $75,100,000
March 31, 2003 $76,900,000
June 30, 2003 $76,900,000
September 30, 2003 $76,900,000
December 31, 2003 $78,700,000
March 31, 2004 $80,600,000
June 30, 2004 $80,600,000
September 30, 2004 $80,600,000
December 31, 2004 $82,500,000
March 31, 2005 $82,500,000
June 30, 2005 $82,500,000
</TABLE>
(b) The Borrower will not permit Consolidated EBITDA for the period
beginning on July 1, 1997 and ending on a date set forth below to be less than
the amount set forth opposite such date:
<TABLE>
<CAPTION>
Minimum Consolidated
Date EBITDA
---- --------------------
<S> <C>
September 30, 1997 $ 10,000,000
December 31, 1997 $ 20,000,000
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Minimum Consolidated
Date EBITDA
---- --------------------
<S> <C>
March 31, 1998 $ 35,000,000
June 30, 1998 $ 42,500,000
September 30, 1998 $ 60,000,000
December 31, 1998 $ 75,100,000
March 31, 1999 $ 92,600,000
June 30, 1999 $110,200,000
September 30, 1999 $127,700,000
December 31, 1999 $145,300,000
March 31, 2000 $165,000,000
June 30, 2000 $184,700,000
September 30, 2000 $204,400,000
December 31, 2000 $224,100,000
March 31, 2001 $244,500,000
June 30, 2001 $265,000,000
September 30, 2001 $285,400,000
December 31, 2001 $305,900,000
March 31, 2002 $327,400,000
June 30, 2002 $348,800,000
September 30, 2002 $370,300,000
December 31, 2002 $391,700,000
March 31, 2003 $414,200,000
June 30, 2003 $436,700,000
September 30, 2003 $459,200,000
December 31, 2003 $481,700,000
March 31, 2004 $505,200,000
June 30, 2004 $528,800,000
September 30, 2004 $552,400,000
December 31, 2004 $576,000,000
March 31, 2005 $600,000,000
June 30, 2005 $624,000,000
</TABLE>
8.10 Interest Coverage Ratio. The Borrower will not permit the
-----------------------
Interest Coverage Ratio for any Test Period ending on a date set forth below to
be less than the ratio set forth opposite such date:
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<PAGE>
<TABLE>
Date Ratio
---- -----
<S> <C>
September 30, 1997 1.7:1.0
December 31, 1997 1.7:1.0
March 31, 1998 1.7:1.0
June 30, 1998 1.7:1.0
September 30, 1998 1.7:1.0
December 31, 1998 1.7:1.0
March 31, 1999 1.8:1.0
June 30, 1999 1.9:1.0
September 30, 1999 1.9:1.0
December 31, 1999 2.0:1.0
March 31, 2000 2.1:1.0
June 30, 2000 2.3:1.0
September 30, 2000 2.4:1.0
December 31, 2000 2.5:1.0
March 31, 2001 2.8:1.0
June 30, 2001 2.9:1.0
September 30, 2001 3.0:1.0
December 31, 2001 3.0:1.0
March 31, 2002 3.1:1.0
June 30, 2002 3.3:1.0
September 30, 2002 3.3:1.0
December 31, 2002 3.5:1.0
March 31, 2003 3.7:1.0
June 30, 2003 4.0:1.0
September 30, 2003 4.1:1.0
December 31, 2003 4.2:1.0
and each fiscal quarter
ending thereafter
</TABLE>
8.11 Leverage Ratio. The Borrower will not permit the Leverage Ratio
--------------
at any time during a fiscal quarter set forth below to be more than the ratio
set forth opposite such fiscal quarter:
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<PAGE>
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio
--------------------- -----
<S> <C>
September 30, 1997 6.0:1.0
December 31, 1997 6.0:1.0
March 31, 1998 6.0:1.0
June 30, 1998 6.0:1.0
September 30, 1998 6.0:1.0
December 31, 1998 6.0:1.0
March 31, 1999 5.7:1.0
June 30, 1999 5.4:1.0
September 30, 1999 5.1:1.0
December 31, 1999 4.9:1.0
March 31, 2000 4.6:1.0
June 30, 2000 4.4:1.0
September 30, 2000 4.0:1.0
December 31, 2000 3.9:1.0
March 31, 2001 3.6:1.0
June 30, 2001 3.5:1.0
September 30, 2001 3.1:1.0
December 31, 2001 3.2:1.0
March 31, 2002 3.1:1.0
June 30, 2002 3.0:1.0
September 30, 2002 2.8:1.0
December 31, 2002 2.6:1.0
March 31, 2003 2.4:1.0
June 30, 2003 2.3:1.0
September 30, 2003 2.2:1.0
December 31, 2003 2.0:1.0
and the last day of
each fiscal quarter
ending thereafter
</TABLE>
8.12 Designated Senior Debt. Holdings will not, and will not permit
----------------------
any of its Subsidiaries to (i) designate any Indebtedness (other than the
Obligations) as "Designated Senior Debt" for purposes of, and as defined in, the
Senior Subordinated Notes Documents or (ii) designate any documents with respect
to any Indebtedness (other than this Agreement) as the "Credit Agreement" as
defined in the Senior Subordinated Notes
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<PAGE>
Documents for purposes of the receipt of notices by the Agent, and delivery of
blockage notices pursuant to the subordination provisions of the Senior
Subordinated Notes Documents.
8.13 Limitation on Voluntary Payments and Modifications of
-----------------------------------------------------
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
- - --------------------------------------------------------------------------------
Other Agreements; etc. Holdings will not, and will not permit any of its
- - ----------------------
Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto or any other Person money or securities before due for the
purpose of paying when due) any Existing Indebtedness, any Shareholder
Subordinated Notes, any Permitted Holdings PIK Security, any Holdings
Preferred Stock or any Senior Subordinated Notes, provided that (x) the
--------
Series B Senior Subordinated Notes may be issued in exchange for the Series
A Senior Subordinated Notes in accordance with the terms of the Senior
Subordinated Note Indenture and (y) Holdings may redeem and/or repay up to
50% of the outstanding Holdings Preferred Stock with the portion of an
initial registered public offering of Holdings Common Stock not required to
be applied to repay the Term Loans under Section 4.02(A)(d);
(ii) make (or give any notice in respect of) any principal or
interest payment on, or any redemption or acquisition for value of, any
Shareholder Subordinated Note, except to the extent permitted by
Section 8.06(ii);
(iii) amend or modify, or permit the amendment or modification of,
any provision of any Existing Indebtedness, any Existing Indebtedness
Agreement, any Senior Subordinated Notes Document, any Holdings Preferred
Stock Document or any Shareholder Subordinated Note;
(iv) amend or modify, or permit the amendment or modification of, any
provision of any Permitted Holdings PIK Security in any manner inconsistent
with the definition of Permitted Holdings PIK Security;
(v) amend, modify or change in any way adverse to the interests of
the Banks, any Management Agreement (including, without limitation, the
Consulting Agreement), the Holdings Tax Allocation Agreement, the Holdings
Services Agreement, its Certificate of Incorporation (including, without
limitation, by filing or modification of any certificate of designation
(other than the Holdings Preferred Stock Certificate which shall be
governed by the preceding clause (iii)) or with respect to the Voplex
Canada Preferred Stock) or By-Laws, or any agreement entered into by it,
with respect to its capital stock (including any Shareholders' Agreement
(including, without limitation, the Stockholders' Agreement, the Option
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Agreements and the Registration Rights Agreement)), or enter into any new
agreement with respect to its capital stock which in any way could be
adverse to the interests of the Banks or enter into any Tax Allocation
Agreement other than the Holdings Tax Allocation Agreement and the Holdings
Services Agreement; and
(vi) issue any class of capital stock other than (x) in the case of
the Borrower and its Subsidiaries, non-redeemable common stock and (y) in
the case of Holdings, issuances of Holdings Common Stock or Permitted
Holdings PIK Securities where, after giving effect to such issuance, no
Event of Default will exist under Section 9.10 and to the extent the
proceeds thereof are applied in accordance with Sections 4.02(A)(d) and
7.13.
8.14 Limitation on Certain Restrictions on Subsidiaries. Holdings
--------------------------------------------------
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Holdings or any Subsidiary of
Holdings, or pay any Indebtedness owed to Holdings or a Subsidiary of Holdings,
(b) make loans or advances to Holdings or any of Holdings' Subsidiaries or (c)
transfer any of its properties or assets to Holdings or any of Holdings'
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Borrower or a Subsidiary of the
Borrower, (iv) customary provisions restricting assignment of any licensing
agreement entered into by the Borrower or a Subsidiary of the Borrower in the
ordinary course of business, (v) customary provisions restricting the transfer
of assets subject to Liens permitted under Sections 8.03(k) and (m) and (vi) the
Senior Subordinated Notes Documents.
8.15 Limitation on the Creation of Subsidiaries. Notwithstanding
------------------------------------------
anything to the contrary contained in this Agreement, Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Initial Borrowing Date any Subsidiary; provided that, the Borrower and its
--------
Wholly-Owned Subsidiaries shall be permitted to establish or create (x)
Subsidiaries as a result of investments made pursuant to Section 8.05(y); and
(y) Wholly-Owned Subsidiaries so long as (i) at least 30 days' prior written
notice thereof is given to the Agent, (ii) the capital stock of such new
Subsidiary is pledged pursuant to, and to the extent required by, the Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent, (iii) such
new Subsidiary (other than a Foreign Subsidiary except to the extent otherwise
required pursuant to Section 7.14) executes a counterpart of the Subsidiary
Guaranty, the Pledge Agreement and the Security Agreement, (iv) such new
Subsidiary (if same is a Wholly-Owned Subsidiary or would otherwise be
consolidated with the Borrower for federal income tax purposes) executes a
counterpart of the Holdings Tax
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Allocation Agreement or enters into an amendment thereto in form satisfactory to
the Agent, and (v) to the extent requested by the Agent or the Required Banks,
takes all actions required pursuant to Section 7.11. In addition, each new
Wholly-Owned Subsidiary shall execute and deliver, or cause to be executed and
delivered, all other relevant documentation of the type described in Section 5
as such new Subsidiary would have had to deliver if such new Subsidiary were a
Credit Party on the Initial Borrowing Date.
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when
--------
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more days, in the payment when due of any Unpaid Drawing,
any interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document;
9.02 Representations, etc. Any representation, warranty or statement
---------------------
made by Holdings, the Borrower or any other Credit Party herein or in any other
Credit Document or in any statement or certificate delivered pursuant hereto or
thereto shall prove to be untrue in any material respect on the date as of which
made or deemed made; or
9.03 Covenants. Any Credit Party shall (a) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Sections 7.10, 7.11, 7.13, 7.17, or 8, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 9.01, 9.02 or clause (a) of this Section 9.03) contained in this
Agreement and such default shall continue unremedied for a period of at least 30
days after notice to the defaulting party by the Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) Holdings or any of its
------------------------------
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause any such Indebtedness to become due
prior to its stated maturity; or (b) any Indebtedness (other than the
Obligations) of Holdings or any of its Subsidiaries shall be declared to be due
and payable, or shall be required to be prepaid other than by a regularly
scheduled required prepayment or as a mandatory prepayment (unless such required
prepayment or mandatory prepayment results from a default thereunder or an event
of the type that constitutes an Event of Default), prior to the stated maturity
thereof; pro-
----
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vided, that it shall not constitute an Event of Default pursuant to clause (a)
- - -----
or (b) of this Section 9.04 unless the principal amount of any one issue of such
Indebtedness, or the aggregate amount of all such Indebtedness referred to in
clauses (a) and (b) above, exceeds $5,000,000 at any one time; or
9.05 Bankruptcy, etc. Holdings or any of its Subsidiaries shall
----------------
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against
Holdings or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of Holdings or any of its
Subsidiaries; or Holdings or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Holdings or any of
its Subsidiaries; or there is commenced against Holdings or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Holdings or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or
Holdings or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
-----
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or is likely to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is likely to be terminated
or the subject of termination proceedings under ERISA, any Plan shall have an
Unfunded Current Liability, a contribution required to be made to a Plan or a
Foreign Pension Plan has not been timely made, Holdings or any Subsidiary of
Holdings or any ERISA Affiliate has incurred or is likely to incur a liability
to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or
4980 of the Code, or Holdings or any Subsidiary of Holdings has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) which provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or employee pension benefit plans (as defined in Section 3(2) of ERISA)
or Foreign Pension Plans; (b) there shall result from any such event or events
the imposition of a lien, the granting of a security interest, or a liability or
a material risk of incurring a liability; and (c) which lien, security interest
or liability which arises from such event or events will have a Material Adverse
Effect; or
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9.07 Security Documents. (a) Except in each case to the extent
------------------
resulting from the failure of the Collateral Agent to retain possession of the
applicable Pledged Securities, any Security Document shall cease to be in full
force and effect, or shall cease to give the Collateral Agent the Liens, rights,
powers and privileges purported to be created thereby in favor of the Collateral
Agent, or (b) any Credit Party shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document and such default shall continue
beyond any cure or grace period specifically applicable thereto pursuant to the
terms of such Security Document; or
9.08 Guaranties. The Guaranties or any provision thereof shall cease
----------
to be in full force and effect, or any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations
under any Guaranty or any Guarantor shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to any Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be entered
---------
against Holdings or any of its Subsidiaries involving a liability (not paid or
not fully covered by insurance) in excess of $5,000,000 for all such judgments
and decrees and all such judgments or decrees shall not have been vacated,
discharged or stayed or bonded pending appeal within 60 days from the entry
thereof; or
9.10 Ownership. A Change of Control Event shall have occurred;
---------
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against any Guarantor or the Borrower, except as otherwise
specifically provided for in this Agreement (provided, that if an Event of
--------
Default specified in Section 9.05 shall occur with respect to the Borrower, the
result which would occur upon the giving of written notice by the Agent as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitment (or the unutilized
portion thereof) terminated, whereupon the Commitment of each Bank (or the
unutilized portion thereof) shall forthwith terminate immediately and any
Commitment Fees shall forthwith become due and payable without any other notice
of any kind; (ii) declare the principal of and any accrued interest in respect
of all Loans and all Obligations owing hereunder (including Unpaid Drawings) to
be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; (iii) enforce, as Collateral Agent (or direct the
Collateral Agent to enforce), any or all of the Liens and security interests
created pursuant to the Security Documents; (iv) terminate any Letter of Credit
which may be terminated in accordance with its terms; and (v) direct the
Borrower to pay (and the Borrower hereby agrees upon receipt of such notice, or
upon the
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occurrence of any Event of Default specified in Section 9.05, to pay) to the
Collateral Agent at the Payment Office such additional amounts of cash, to be
held as security for the Borrower's reimbursement obligations in respect of
Letters of Credit then outstanding, equal to the aggregate Stated Amount of all
Letters of Credit then outstanding.
SECTION 10. Definitions. As used herein, the following terms shall
-----------
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acquisitions" shall mean the acquisition by the Borrower of all or
substantially all of the assets of (i) E.P. Plastics from Eagle-Picher and
(ii) Goodyear Composites from Goodyear.
"Acquisition Agreements" shall mean (i) the asset purchase agreement
(or similar agreement), between the Borrower and Eagle-Picher and (ii) the asset
purchase agreement between the Borrower and Goodyear, in each case to the extent
in effect at such time.
"Acquisition Documents" shall mean, at any time, the Acquisition
Agreements and all other agreements and documents relating to each of the
Acquisitions, in each case to the extent in effect at such time.
"A Term Loan" shall have the meaning provided in Section 1.01(A)(a).
"A Term Loan Availability Termination Date" shall mean
August 10, 1997.
"A Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled "A Term Loan Commitment," as the same may be reduced or terminated
pursuant to Section 3.02, 3.03 and/or 9.
"A Term Loan Facility" shall mean the Facility evidenced by the Total
A Term Loan Commitment.
"A Term Loan Maturity Date" shall mean June 30, 2002.
"A Term Note" shall have the meaning provided in Section 1.05(a).
"A TL Percentage" shall mean, at any time, a fraction (expressed as a
percentage) the numerator of which is equal to the aggregate principal amount of
all A Term Loans outstanding at such time and the denominator of which is equal
to the aggregate principal amount of all Term Loans outstanding at such time.
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"Additional Security Documents" shall have the meaning provided in
Section 7.11.
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing
(x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market as
published in the most recent Federal Reserve System publication entitled "Select
Interest Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing or, if such quotations are unavailable, then on the
basis of other sources reasonably selected by the Agent, by (y) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements as
specified in Regulation D applicable on such day to a three-month certificate of
deposit of a member bank of the Federal Reserve System in excess of $100,000
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves), plus (2) the then daily net annual assessment rate as
estimated by the Agent for determining the current annual assessment payable by
BTCo to the Federal Deposit Insurance Corporation for insuring three month
certificates of deposit.
"Affected Eurodollar Loans" shall have the meaning provided in
Section 4.02(B)(c).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.10.
"Aggregate Unutilized Commitment" with respect to any Bank at any time
shall mean the sum of (a) such Bank's A Term Loan Commitment at such time, if
any, and (b) such Bank's Revolving Loan Commitment at such time less the sum of
(x) the aggregate outstanding principal amount of all Revolving Loans made by
such Bank and (y) such Bank's RL Percentage of the Letter of Credit Outstandings
at such time.
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"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
"Applicable Base Rate Margin" shall mean (i) in the case of A Term
Loans and Revolving Loans, 1.50% less the then applicable Interest Reduction
Discount, if any, and (ii) in the case of B Term Loans, 2.00% less the then
applicable Interest Reduction Discount, if any.
"Applicable Commitment Fee Percentage" shall mean (i) for the period
from the Effective Date through but not including the first Start Date, .500%
per annum and (ii) from and after any Start Date to and including the
corresponding End Date, the respective percentage per annum set forth in clause
(A), (B) or (C) below if, but only if, as of the Test Date for such Start Date
the applicable condition set forth in clause (A), (B) or (C) below, as the case
may be, is met:
(A) .500% if, but only if, the Leverage Ratio on such Test Date is
greater than or equal to 3.50:1.00;
(B) .375% if, but only if, the Leverage Ratio on such Test Date is
greater than or equal to 3.00:1.00 but less than 3.50:1.00; and
(C) .300% if, but only if, the Leverage Ratio on such Test Date is
less than 3:00:1.00.
Notwithstanding anything to the contrary contained above in the
definition, the Applicable Commitment Fee Percentage shall be .500% at any time
when (i) an Event of Default shall exist and/or (ii) financial statements have
not been delivered when required pursuant to Section 7.01(b) or (c), as the case
may be.
"Applicable Eurodollar Margin" shall mean (i) in the case of A Term
Loans and Revolving Loans, 2.50% less the then applicable Interest Reduction
Discount, if any, and (ii) in the case of B Term Loans, 3.00% less the then
applicable Interest Reduction Discount, if any.
"Asset Sale" shall mean any sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person other than the Borrower or any
Wholly-Owned Subsidiary of the Borrower of any asset (including, without
limitation, any capital stock or other securities of another Person) of Holdings
or such Subsidiary other than (i) sales, transfers or other dispositions of
inventory made in the ordinary course of business and (ii) sales of assets
pursuant to Section 8.02(f), (g), (h) and (i).
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit J (appropriately
completed).
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"Authorized Officer" shall mean any senior officer of Holdings or the
Borrower designated as such in writing to the Agent by Holdings or the Borrower,
in each case to the extent reasonably acceptable to the Agent.
"B Banks" shall have the meaning provided in Section 4.02(C).
"B Term Loan" shall have the meaning provided in Section 1.01(A)(b).
"B Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled "B Term Loan Commitment," as the same may be terminated pursuant to
Section 3.03 and/or 9.
"B Term Loan Facility" shall mean the Facility evidenced by the
Total B Term Loan Commitment.
"B Term Loan Maturity Date" shall mean June 30, 2005.
"B Term Note" shall have the meaning provided in Section 1.05(a).
"B TL Percentage" shall mean, at any time, a fraction (expressed as a
percentage) the numerator of which is equal to the aggregate principal amount of
all B Term Loans outstanding at such time and the denominator of which is equal
to the aggregate principal amount of Term Loans outstanding at such time.
"Bain Affiliates" shall mean any Affiliate of Bain Capital, provided
that for purposes of the definition of "Change of Control Event", the term Bain
Affiliate shall not include (x) any portfolio company of either Bain Capital or
any Affiliate of Bain Capital or (y) any officer or director of Holdings or any
of its Subsidiaries that is not also a partner or stockholder of Bain Capital on
the Initial Borrowing Date.
"Bain Capital" shall mean Bain Capital, Inc. a Delaware corporation.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.04(c) or (ii) a Bank having notified the Agent and/or the
Borrower that it does not intend to comply with the obligations under Section
1.01(A), 1.01(C) or 2.04(c), in the case of either clause (i) or (ii) above as a
result of the appointment of a receiver or conservator with respect to such Bank
at the direction or request of any regulatory agency or authority.
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"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (x) the rate which is
1/2 of 1% in excess of the Adjusted Certificate of Deposit Rate and (y) the
Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first paragraph
hereof.
"Borrower Subordinated Debt" shall mean general unsecured and
unguaranteed subordinated Indebtedness of the Borrower incurred under the
Borrower Subordinated Debt Agreement.
"Borrower Subordinated Debt Agreement" shall mean the Senior
Subordinated Credit Agreement dated as of December 14, 1995, among the Borrower,
Bain Capital V Mezzanine Fund, L.P. and BCIP Trust Associates, L.P., thereto as
amended, modified or supplemented from time to time.
"Borrowing" shall mean the incurrence of one Type of Loan pursuant to
a single Facility by the Borrower from all of the Banks having Commitments with
respect to such Facility on a pro rata basis on a given date (or resulting from
--- ----
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period; provided, that Base Rate Loans incurred pursuant to Section
--------
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with GAAP,
including, without duplication, all such expenditures with respect to fixed or
capital assets (including, without limitation, expenditures for maintenance and
repairs which should be capitalized in accordance with GAAP), and the amount of
all Capitalized Lease Obligations incurred
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by such Person; provided that there shall be excluded from "Capital
Expenditures" all one-time expenditures incurred in connection with
consolidating (i) the operations of the Borrower and E.P. Plastics (not to
exceed $1,000,000), to the extent that such expenditures would otherwise
constitute Capital Expenditures and (ii) the operations of the Borrower and
Goodyear Composites (not to exceed $1,000,000) extent that such expenditures
would otherwise constitute Capital Expenditures.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided, that the full faith and credit of the United
--------
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers acceptances of (x) any Bank or (y)
any bank whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof
(any such bank or Bank, an "Approved Bank"), in each case with maturities of not
more than six months from the date of acquisition, (iii) commercial paper issued
by any Approved Bank or by the parent company of any Approved Bank and
commercial paper issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's,
or guaranteed by any industrial company with a long term unsecured debt rating
of at least A or A-2, or the equivalent of each thereof, from S&P or Moody's, as
the case may be, and in each case maturing within six months after the date of
acquisition, (iv) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within six months from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's and (v) investments in
money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv) above.
"Change of Control Event" shall mean (a) Holdings shall cease to own
directly 100% on a fully diluted basis of the economic and voting interest in
the Borrower's capital stock or (b) Bain Capital and/or the Bain Affiliates and
Crawford shall cease to own on a fully diluted basis in the aggregate at least
51% of the economic and voting interest in Holdings' capital stock or (c) Bain
Capital and/or the Bain Affiliates shall cease to own more than 50% of the
Voting Stock of Holdings owned by such Persons on the Initial
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Borrowing Date or (d) Crawford shall cease to own more than 50% of the Voting
Stock of Holdings owned by Crawford on the Initial Borrowing Date or (e) the
Board of Directors of Holdings shall cease to consist of the majority of
Continuing Directors or (f) any "Change of Control" as such term is defined in
the Senior Subordinated Notes Indenture, or any successor or similar provision,
shall occur.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.01(n)(ii).
"Commitment" shall mean, with respect to each Bank, such Bank's A Term
Loan Commitment, B Term Loan Commitment and Revolving Loan Commitment.
"Commitment Fee" shall have the meaning provided in Section 3.01(a).
"Consolidated Current Assets" shall mean, at any time, the current
assets of the Borrower and its Subsidiaries at such time determined on a
consolidated basis plus the Total Unutilized Revolving Loan Commitment at such
time.
"Consolidated Current Liabilities" shall mean, at any time, the
current liabilities of the Borrower and its Subsidiaries determined on a
consolidated basis, but excluding deferred income taxes and the current portion
of and accrued but unpaid interest on any Indebtedness under this Agreement and
any other long-term Indebtedness which would otherwise be included therein.
"Consolidated Debt" shall mean, at any time, all Indebtedness of
Borrower and its Subsidiaries determined on a consolidated basis.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income, before total interest expense (inclusive of amortization of deferred
financing fees and as original issue discount) and interest income of the
Borrower and its Subsidiaries determined on a consolidated basis, and provisions
for taxes based on income and foreign withholding
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taxes, and determined (i) without giving effect to any extraordinary gains or
losses but with giving effect to gains or losses from sales of assets sold in
the ordinary course of business, (ii) without giving effect to any impact from
the LIFO method of inventory accounting, (iii) without giving effect to any
gains, income, losses or charges otherwise included in Consolidated Net Income
for such period and related to a Joint Venture Investment made by the Borrower
or any of its Subsidiaries and (iv) without giving effect to any one-time
expenditures incurred in connection with consolidating the operations of the
Borrower, E.P. Plastics and Goodyear Composites (not to exceed $1,000,000), to
the extent that such expenditures are otherwise deducted in determining
Consolidated Net Income for such period.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all depreciation expense and
amortization expense that were deducted in determining Consolidated EBIT for
such period.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its Subsidiaries determined on a consolidated
basis with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs or benefits under Interest Rate Protection
Agreements, but excluding, however, amortization of deferred financing costs and
any interest expense on deferred compensation arrangements to the extent
included in total interest expense.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss), after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period but
excluding any unrealized losses and gains for such period resulting from mark-
to-market of Other Hedging Agreements; provided, however, that (A) there shall
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be excluded (without duplication) (i) income (or loss) of any Person (other than
a consolidated Subsidiary of such Person) in which any other Person (other than
such Person or any of its consolidated Subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other distributions actually
paid to such Person or (subject to subclause (iii) below) any of its
consolidated Subsidiaries by such other Person during such period, (ii) the
income (or loss) of any Person during such period accrued prior to the date it
becomes a consolidated Subsidiary of such Person or is merged into or
consolidated with such Person or any of its consolidated Subsidiaries, (iii) the
income of any consolidated Subsidiary of the Borrower to the extent attributable
to minority interests held therein by Persons other than the Borrower and its
Wholly-Owned Subsidiaries, and (iv) the income of any consolidated Subsidiary of
the Borrower during such period to the extent that the declaration or payment of
dividends or similar distributions by that consolidated Subsidiary of such
income is not at the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order,
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statute, rule or governmental regulation applicable to that Subsidiary or the
Borrower or any of its other Subsidiaries.
"Consulting Agreement" shall mean the Management Services Agreement,
dated as of November 17, 1995 by and among the Borrower and Bain Capital, as
amended, modified or supplemented from time to time, in accordance with the
terms hereof and thereof.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof; provided, however, that
-------- -------
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection or standard contractual indemnities entered into, in each
case in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on the
Effective Date and each other director if such director's nomination for the
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors.
"Crawford" shall mean Crawford Investment Group, L.L.C., a Michigan
limited liability company.
"Credit Documents" shall mean this Agreement, the Notes, the
Guaranties and each Security Document.
"Credit Event" shall mean the making of a Loan (other than a Revolving
Loan made pursuant to a Mandatory Borrowing) or the issuance of a Letter of
Credit.
"Credit Party" shall mean Holdings, the Borrower and each Subsidiary
Guarantor.
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"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividends" shall have the meaning provided in Section 8.06.
"Documents" shall mean, at any time, (i) the Credit Documents, (ii)
the Senior Subordinated Notes Documents, (iii) the Refinancing Documents and
(iv) the Acquisition Documents for each Acquisition, to the extent that such
Acquisition is then being, or has theretofore been, consummated.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower which
is not a Foreign Subsidiary.
"Eagle-Picher" shall mean Eagle-Picher Industries, Inc., an Ohio
corporation.
"Effective Date" shall have the meaning provided in Section 12.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in Section
5.01(n)(i).
"Employment Agreements" shall have the meaning provided in Section
5.01(n)(vi).
"End Date" shall mean, for any Margin Reduction Period, the last day
of such Margin Reduction Period.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any violation (or alleged violation) by Holdings or any of its
Subsidiaries under any Environmental Law or any permit issued to Holdings or any
of its subsidiaries under any such law (hereafter, "Claims"), including, without
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or
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injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any federal, state or local statute,
law, rule, regulation, ordinance, code, policy or rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment (for purposes of this definition
(collectively, "Laws")), relating to the environment or Hazardous Materials or
health and safety (to the extent such health and safety issues arise under the
Occupational Safety and Health Act of 1970, as amended), or any such similar
Laws.
"E.P. Plastics" shall mean the plastics division of Eagle-Picher.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to ERISA are to ERISA as in
effect at the date of this Agreement and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/100 of
1%) of the offered quotation to first-class banks in the interbank Eurodollar
market by the Agent for U.S. dollar deposits of amounts in same day funds
comparable to the outstanding principal amount of the Eurodollar Loan of the
Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in respect
of Eurocurrency liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
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"Excess Amount" shall initially be $0, which amount shall be (A)
increased on each date of delivery of the annual financial statements of the
- - ---------
Borrower to the Banks pursuant to Section 7.01(c), commencing with the delivery
of the financial statements for the fiscal year ending December 31, 1997, if the
Consolidated EBITDA for the fiscal year for the financial statements then
delivered is more than the projected Consolidated EBITDA set forth on Annex X
for such fiscal year (the amount by which such actual Consolidated EBITDA for
such fiscal year exceeds such projected Consolidated EBITDA, the "Surplus"), by
an amount equal to the Surplus multiplied by 0.25 and (B) reduced (i) at the
-------
time any Capital Expenditure is made pursuant to Section 8.08(f), by the amount
thereof, and (ii) at the time any Joint Venture Investment is made pursuant to
Section 8.05(x), by the amount expended in connection therewith.
"Excess Cash Flow" shall mean, for any period (i) the sum of (A)
Consolidated Net Income for such period, plus (B) the amount of all non-cash
charges (including, without limitation or duplication, depreciation,
amortization and non-cash interest expense, but excluding those non-cash charges
included in determining Working Capital for such period) included in determining
Consolidated Net Income for such period plus (C) the decrease, if any, in
Working Capital from the first day to the last day of such period, minus (ii)
the sum (without duplication) of (A) any non-cash credits (including from sales
of assets) included in determining Consolidated Net Income for such period, (B)
gains from sales of assets (other than sales of inventory in the ordinary course
of business) included in determining Consolidated Net Income for such period,
(C) an amount equal to (1) all Capital Expenditures (excluding Capital
Expenditures made pursuant to Section 8.08(c), (d), (e) or (f) made during such
period that are not financed by Indebtedness (including Capitalized Lease
Obligations but excluding Loans hereunder) or with Excess Equity Proceeds plus
(or minus, if negative) (2) the Rollover Amount for such period to be carried
forward to the next period less the Rollover Amount (if any) for the preceding
period carried forward to the current period, (D) the amount expended in respect
of Permitted Acquisitions during such period, except to the extent constituting
Capital Expenditures or financed with Indebtedness or Excess Equity Proceeds,
(E) the aggregate principal amount of permanent principal payments of
Indebtedness for borrowed money of the Borrower and its Subsidiaries (other than
(1) repayments in respect of the Indebtedness to be Refinanced, (2) repayments
of Indebtedness with proceeds of issuance or other Indebtedness or equity or
equity contributions or with proceeds of assets sales, Recovery Events or
Pension Plan Refunds and (3) repayments of Loans or other Obligations, provided
that repayments of Loans shall be deducted in determining Excess Cash Flow if
such repayments were (x) required as a result of a Scheduled Repayment under
Section 4.02(A)(b) or (y) made as a voluntary prepayment with internally
generated funds (but in the case of a voluntary prepayment of Revolving Loans or
Swingline Loans, only to the extent accompanied by a voluntary reduction to the
Total Revolving Loan Commitment)) during such period, (F) non-cash charges added
back in a previous period pursuant to clause (i)(B) above to the extent any such
charge has become a cash item in the current period, (G) the increase, if any,
in Working Capital from the first day to the last day of
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such period, (H) costs incurred by Holdings during such period and paid for with
the proceeds of dividends paid by the Borrower pursuant to Section 8.07(iv) to
the extent not deducted in determining Consolidated Net Income for such period,
(I) any cash disbursements made against non-current liabilities to the extent
included in determining Consolidated Net Income for such period and (J) to the
extent not already deducted in the determination of Consolidated Net Income or
Excess Cash Flow, the aggregate amount of cash payments in respect of Joint
Venture Investments made during such period, except to the extent financed with
Indebtedness or Excess Equity Proceeds.
"Excess Cash Flow Period" shall mean with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of the Borrower.
"Excess Cash Payment Date" shall mean the date occurring 90 days after
the last day of a fiscal year of the Borrower (beginning with its fiscal year
ending on December 31, 1997).
"Excess Equity Proceeds" shall have the meaning provided in Section
4.02(A)(d).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Credit Agreement" shall mean the amended and restated credit
agreement dated March 1, 1996 among Holdings, the Borrower, the financial
institutions party thereto and the Agent (as amended, modified or supplemented
prior to the date hereof).
"Existing Indebtedness" shall have the meaning provided in Section
6.24.
"Existing Indebtedness Agreements" shall have the meaning provided
in Section 5.01(n)(iii).
"Existing Joint Ventures" shall mean and include each of (i)
Connection Systems Group, L.L.C., a Michigan limited liability company, (ii) the
existing venture between the Borrower and Dong Yang Eagle-Picher Limited, a
stock company organized under the laws of Korea, and (iii) the existing venture
between the Borrower and E.I. duPont de Nemours and Company, a Delaware
corporation.
"Existing Letter of Credit" shall have the meaning provided in
Section 2.01(d).
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"Existing Subordinated Debt" shall mean collectively, the indebtedness
arising pursuant to (i) the Holdings Senior Subordinated Debt, (ii) the Holdings
Junior Subordinated Debt and (iii) the Borrower Subordinated Debt.
"Facility" shall mean any of the credit facilities established under
this Agreement, i.e., the A Term Loan Facility, the B Term Loan Facility or the
----
Revolving Loan Facility.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 3.01.
"Foreign Cash Equivalents" shall mean certificates of deposit or
bankers acceptances of any bank organized under the laws of Canada, Japan or any
country that is a member of the European Economic Community whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof, in each case with
maturities of not more than six months from the date of acquisition.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Holdings or any one or more
of its Subsidiaries primarily for the benefit of employees of Holdings or such
Subsidiaries residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower that
is incorporated under the laws of any jurisdiction other than the United States
of America, any State thereof, or any territory thereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of Section 8,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 12.07(a).
"Goodyear" shall mean Goodyear Tire and Rubber Company, an Ohio
corporation.
"Goodyear Composites" shall mean the engineered composites business
of Goodyear located in Jackson, Ohio.
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"Guaranteed Creditors" shall mean and include each of the Agent, the
Collateral Agent, the Banks and each party (other than any Credit Party) party
to an Interest Rate Protection Agreement or Other Hedging Agreement to the
extent such party constitutes a Secured Creditor under the Security Documents.
"Guaranteed Obligations" shall mean (i) the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Note issued by the Borrower to each Bank, and
Loans made, under this Agreement and all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit, together with all the other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of the
Borrower to such Bank now existing or hereafter incurred under, arising out of
or in connection with this Agreement or any other Credit Document and the due
performance and compliance with all the terms, conditions and agreements
contained in the Credit Documents by the Borrower and (ii) the full and prompt
payment when due (whether by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) of the Borrower owing under any such
Interest Rate Protection Agreement or Other Hedging Agreement entered into by
the Borrower or any of its Subsidiaries with any Bank or any affiliate thereof
(even if such Bank subsequently ceases to be a Bank under this Agreement for any
reason) so long as such Bank or affiliate participates in such Interest Rate
Protection Agreement or Other Hedging Agreement, and their subsequent assigns,
if any, whether now in existence or hereafter arising, and the due performance
and compliance with all terms, conditions and agreements contained therein.
"Guarantor" shall mean Holdings and each Subsidiary Guarantor.
"Guaranty" shall mean and include each of the Holdings Guaranty and
the Subsidiary Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar meaning and regulatory
effect.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
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"Holdings Class A Common Stock" shall have the meaning provided in
Section 6.16.
"Holdings Class L Common Stock" shall have the meaning provided in
Section 6.16.
"Holdings Class P Common Stock" shall have the meaning provided in
Section 6.16.
"Holdings Common Stock" shall mean, collectively, the Holdings Class A
Common Stock, the Holdings Class L Common Stock, and the Holdings Class P Common
Stock.
"Holdings Guaranty" shall mean the guaranty of Holdings pursuant to
Section 13.
"Holdings Junior Subordinated Debt" shall mean general unsecured and
unguaranteed subordinated Indebtedness of Holdings incurred under the Holdings
Junior Subordinated Debt Agreement.
"Holdings Junior Subordinated Debt Agreement" shall mean the Junior
Subordinated Credit Agreement dated as of March 1, 1996 among Holdings, Bain
Capital V Mezzanine Fund, L.P. and BCIP Trust Associates, L.P., as amended,
modified or supplemented from time to time.
"Holdings Preferred Stock" shall mean Preference Stock of Holdings,
liquidation preference of $18,150 per share, and all preferred shares thereof
subsequently issued in payment of dividends thereon.
"Holdings Preferred Stock Certificate" shall mean the Certificate of
Designation (or that part of the Certificate of Incorporation of Holdings
containing the terms of the Holdings Preferred Stock) authorizing and
establishing the terms of the Holdings Preferred Stock, as in effect on the
Initial Borrowing Date and as the same may be modified, supplemented or amended
from time to time pursuant to the terms thereof and hereof.
"Holdings Preferred Stock Documents" shall mean and include each of
the Holdings Preferred Stock Certificate and the other documents and agreements
entered into by Holdings relating to the issuance by Holdings of each issue of
Holdings Preferred Stock, as in effect on the Initial Borrowing Date and as the
same may be modified, supplemented or amended from time to time pursuant to the
terms hereof and thereof.
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"Holdings Senior Subordinated Debt" shall mean general unsecured and
unguaranteed subordinated Indebtedness of Holdings owing to GenCorp, Inc. under
the Holdings Senior Subordinated Debt Agreement.
"Holdings Senior Subordinated Debt Agreement" shall mean the Senior
Subordinated Credit Agreement dated as of March 1, 1996 among Holdings and
GenCorp, Inc., as amended, modified or supplemented from time to time.
"Holdings Services Agreement" shall mean the Holdings Services
Agreement, dated as of July 1, 1997 between Holdings and the Borrower, as in
effect on the Initial Borrowing Date and as amended, modified or supplemented
from time to time in accordance with the terms thereof and hereof.
"Holdings Tax Allocation Agreement" shall mean the Tax Sharing
Agreement, dated as of November 17, 1995 between Holdings and the Borrower, as
in effect on the Initial Borrowing Date and as amended, modified or supplemented
from time to time in accordance with the terms thereof and hereof.
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person but excluding deferred rent as determined in
accordance with GAAP, (iii) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and similar
----
obligations, (vii) all obligations under Interest Rate Protection Agreements and
Other Hedging Agreements and (viii) all Contingent Obligations of such Person,
provided, that Indebtedness shall not include trade payables and accrued
- - --------
expenses, in each case arising in the ordinary course of business.
"Indebtedness to be Refinanced" shall mean, collectively, the
indebtedness arising pursuant to (i) the Existing Credit Agreement and (ii) the
Existing Subordinated Debt.
"Initial Borrowing Date" shall mean the date upon which the initial
Term Loans are incurred hereunder.
"Intercompany Loan" shall have the meaning provided in Section
8.05(g).
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"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit K, evidencing Intercompany Loans.
"Interest Coverage Ratio" shall mean, for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense for such period.
"Interest Period," with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Interest Reduction Discount" shall mean initially zero, provided that
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from and after any Start Date to and including the corresponding End Date, the
Interest Reduction Discount shall be the respective percentage per annum set
forth in clause (A), (B), (C) or (D) below if, but only if, as of the Test Date
for such Start Date the applicable condition set forth in clause (A), (B), (C)
or (D) below, as the case may be, is met:
(A) .250% if, but only if, the Leverage Ratio on such Test Date is
less than 4.50:1.00 but greater than or equal to 4:00:1.00; or
(B) .500% if, but only if, the Leverage Ratio on such Test Date is
less than 4.00:1.00 but greater than or equal to 3.50:1.00; or
(C) .750% if, but only if, the Leverage Ratio on such Test Date is
less than 3.50:1.00 but greater than or equal to 3:00:1.00; or
(D) 1.00% if, but only if, the Leverage Ratio on such Test Date is
less than 3.00:1.00.
Notwithstanding anything to the contrary contained above in this
definition, the Interest Reduction Discount shall be zero at any time when an
Event of Default shall exist.
"Joint Venture Investments" shall mean any investment, capital
contribution, advance, loan, or guaranty, or any other investment by the
Borrower or any of its Subsidiaries in a joint venture related to any business
permitted by Section 8.01(a).
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Borrower or its Subsidiaries incurred in the ordinary course of business with
respect to insurance obligations and workers' compensation, surety bonds and
other similar statutory obligations and (ii) such other obligations of the
Borrower or any of its Subsidiaries as are reasonably
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acceptable to the Agent and the respective Letter of Credit Issuer and otherwise
permitted to exist pursuant to the terms of this Agreement.
"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean BTCo, and any Bank which at the
request of the Borrower and with the consent of the Agent agrees, in such Bank's
sole discretion, to become a Letter of Credit Issuer for the purpose of issuing
Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02(a).
"Leverage Ratio" shall mean, at any time, the ratio of Consolidated
Debt at such time to Consolidated EBITDA for the Test Period then last ended;
provided that solely in determining the Leverage Ratio (1) for the Test Period
ended September 30, 1997, Consolidated EBITDA for such Test Period shall be
multiplied by 4, (ii) for the Test Period ended December 31, 1997, Consolidated
EBITDA for such Test Period shall be multiplied by 2 and (iii) for the Test
Period ended March 31, 1998, Consolidated EBITDA, for such period shall be
multiplied by 4/3.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall mean each and every Loan made by any Bank hereunder,
including A Term Loans, B Term Loans, Revolving Loans or Swingline Loans.
"Majority Banks" of any Facility shall mean those Non-Defaulting Banks
which would constitute the Required Banks under, and as defined in, this
Agreement if all
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outstanding Obligations of the other Facilities under this Agreement were repaid
in full and all Commitments with respect thereto were terminated.
"Management Agreements" shall have the meaning provided in Section
5.01(n)(v).
"Management Stockholders" shall mean and include Crawford.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(C).
"Margin Reduction Period" shall mean each period which shall commence
on a date on which the financial statements are delivered pursuant to Section
7.01(b) or (c), as the case may be, and which shall end on the earlier of (i)
the date of actual delivery of the next financial statements pursuant to Section
7.01(b) or (c), as the case may be, and (ii) the latest date on which the next
financial statements are required to be delivered pursuant to Section 7.01(b) or
(c), as the case may be; provided that no Margin Reduction Period shall commence
--------
on a date occurring prior to the date of delivery of financial statements
pursuant to Section 7.01(b) in respect of the fiscal quarter ending September
30, 1997.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, Holdings, Holdings and its Subsidiaries taken as a
whole or the Borrower and its Subsidiaries taken as a whole.
"Material Contracts" shall have the meaning provided in Section
5.01(n)(ix).
"Maturity Date" with respect to any Facility shall mean either the A
Term Loan Maturity Date, the B Term Loan Maturity Date or the Revolving Loan
Maturity Date, as the case may be.
"Maximum Swingline Amount" shall mean $10,000,000.
"Minimum Borrowing Amount" shall mean (i) for Base Rate Loans (other
than Swingline Loans), $1,000,000; (ii) for Eurodollar Loans, $2,000,000 and
(iii) for Swingline Loans, $500,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall have the meaning provided in 5.01(m)(i).
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"Mortgage Policies" shall mean the Mortgage title insurance policies
issued in respect of each of the Mortgaged Properties.
"Mortgaged Properties" shall mean and include (i) all Real Properties
owned by Holdings and its Domestic Subsidiaries to the extent designated on
Annex III and (ii) each Real Property subjected to a mortgage in favor of the
Collateral Agent for the benefit of the Secured Creditors pursuant to Section
7.11.
"Net Proceeds" shall mean, with respect to any Asset Sale, the
Proceeds resulting therefrom net of (a) reasonable and customary cash expenses
of sale (including brokerage fees, if any, transfer taxes and payment of
principal, premium and interest of Indebtedness other than the Loans required to
be repaid as a result of such Asset Sale) and (b) incremental income taxes paid
or payable as a result thereof.
"Non-Compete Agreements" shall have the meaning provided in
Section 5.01(n)(vii).
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean each A Term Note, each B Term Note, each Revolving
Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York 10006 or such other office as the Agent
may designate to Holdings, the Borrower and the Banks from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Option Agreement" shall mean the Option Agreement, dated as of
November 17, 1995 between Holdings and Richard S. Crawford, as in effect on the
Initial Borrowing Date and as the same may be amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
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"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York 10006 or such other office as the Agent
may designate to Holdings, the Borrower and the Banks from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Pension Plan Refund" shall mean any cash payments (net of reasonable
costs associated therewith, including income, excise and other taxes payable
thereon) received by Holdings and/or of its Subsidiaries from any return of any
surplus assets from any single Plan or Foreign Pension Plan.
"Permitted Acquisition" shall have the meaning provided in
Section 8.02(r).
"Permitted Covenant" shall mean (i) any periodic reporting covenant,
(ii) any covenant restricting payments by Holdings with respect to any
securities of Holdings which are junior to the Permitted Holdings PIK
Securities, (iii) any covenant the default of which can only result in an
increase in the amount of any redemption price, repayment amount, dividend rate
or interest rate, (iv) any covenant the default of which gives rise only to
rights or remedies which are subject to subordination terms reasonably
acceptable to the Agent, (v) any covenant providing board observance rights with
respect to Holdings' board of directors and (vi) any other covenant that does
not adversely affect the interests of the Banks (as reasonably determined by the
Agent).
"Permitted Encumbrances" shall mean (i) those liens, encumbrances and
other matters affecting title to any Mortgaged Property listed in the Mortgage
Policies in respect thereof and found, on the date of delivery of such Mortgage
Policies to the Agent in accordance with the terms hereof, reasonably acceptable
by the Agent, (ii) as to any particular Mortgaged Property at any time, such
easements, encroachments, covenants, rights of way, minor defects,
irregularities or encumbrances on title which do not, in the reasonable opinion
of the Agent, materially impair such Mortgaged Property for the purpose for
which it is held by the mortgagor thereof, or the lien held by the Collateral
Agent, (iii) zoning and other municipal ordinances, which are not violated in
any material respect by the existing improvements and the present use made by
the mortgagor thereof of the Premises (as defined in the respective Mortgage),
(iv) general real estate taxes and assessments not yet delinquent, and (v) such
other items as the Agent may consent to (such consent not to be unreasonably
withheld).
"Permitted Holdings PIK Securities" shall mean any preferred stock or
subordinated promissory note of Holdings (or any security of Holdings that is
convertible or exchangeable into any preferred stock or subordinated promissory
note of Holdings), so
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long as the terms of any such preferred stock, subordinated promissory note or
security of Holdings (i) do not provide any collateral security, (ii) do not
provide any guaranty or other support by the Borrower or any Subsidiaries of the
Borrower, (iii) do not contain any mandatory put, redemption, repayment, sinking
fund or other similar provision occurring before the ninth anniversary of the
Initial Borrowing Date, (iv) do not require the cash payment of dividends or
interest before the ninth anniversary of the Initial Borrowing Date, (v) do not
contain any covenants other than any Permitted Covenant, (vi) do not grant the
holders thereof any voting rights except for (x) voting rights required to be
granted to such holders under applicable law and (y) limited customary voting
rights on fundamental matters such as mergers, consolidations, sales of
substantial assets, or liquidations involving Holdings, and (vii) are otherwise
reasonably satisfactory to the Agent.
"Permitted Joint Venture" shall mean any Person engaged in business of
the type described in Section 8.01(a) of which the Borrower shall own, directly
or indirectly, 25% or more but less than or equal to 50% of the equity and
voting interests and another Person (or group of Persons which acts together in
relation to such Permitted Joint Venture) owns the remaining equity and voting
interests.
"Permitted Liens" shall have the meaning provided in Section 8.03.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as defined
in Section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute of) Holdings, any of its Subsidiaries or
any ERISA Affiliate and each such plan for the five calendar year period
immediately following the latest date on which Holdings, any of its Subsidiaries
or any ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5.01(k).
"Pledged Securities" shall mean all the Pledged Securities as defined
the Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
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"Proceeds" shall mean with respect to any Asset Sale, the aggregate
cash payments (including any cash received by way of deferred payment pursuant
to a note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when so
received) received by Holdings and/or any of its Subsidiaries from such Asset
Sale.
"Pro Forma Leverage Ratio" shall mean, at any time for the
determination thereof, the ratio of (x) Consolidated Debt at such time to
(y) Consolidated EBITDA for the Test Period then last ended, with such Pro Forma
Leverage Ratio to be determined on a pro forma basis as if the respective
--- -----
Permitted Acquisition (and the incurrence, assumption and/or repayment of any
Indebtedness in connection with such Permitted Acquisition), as the case may be,
had occurred on the first day of such Test Period (and such Indebtedness, if
any, had remained outstanding (or had not been outstanding, as the case may be)
throughout such Test Period). On the date of a Permitted Acquisition pursuant
to which the Pro Forma Leverage Ratio is to be calculated, the Borrower shall
deliver to the Agent a certificate of the Borrower's chief financial officer
setting forth in reasonable detail the pro forma calculations required to
--- -----
establish the Pro Forma Leverage Ratio (with such pro forma calculations to be
--- -----
made on a basis reasonably satisfactory to the Agent and to assume that the
interest expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the date of such Permitted Acquisition (taking into account any
Interest Rate Protection Agreement applicable to such Indebtedness if such
Interest Rate Protection Agreement has a remaining term in excess of 12 months)
had been the applicable rate for the entire period. In calculating the Pro
Forma Leverage Ratio in connection with any Permitted Acquisition, it is
understood that Consolidated EBITDA shall include the results of operations of
the Person or assets acquired pursuant to such Permitted Acquisition on a pro
---
forma basis as if such acquisition had occurred on the first day of the
- - -----
respective Test Period.
"Projections" shall have the meaning provided in Section 5.01(p).
"Quarterly Payment Date" shall mean the last Business Day of each
March, June, September and December.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of
any theft, physical destruction or damage or any other similar event with
respect to any properties or assets of Holdings or any of its Subsidiaries,
(ii) by reason any condemnation, taking, seizing or similar event with respect
to any properties or assets of Holdings or any of its Subsidiaries and
(iii) under any policy of insurance required to be maintained under
Section 7.03.
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"Refinancing" shall mean the refinancing and repayment in full of all
amounts outstanding under, and the termination in full of all commitments and
letters of credit in respect of the Indebtedness to be Refinanced.
"Refinancing Documents" shall mean each of the agreements, documents
and instruments entered into in connection with the Refinancing.
"Regal Plastics" shall mean Regal Plastics Company, a Michigan
corporation.
"Register" shall have the meaning provided in Section 7.12.
"Registration Rights Agreement" shall mean the Registration Agreement,
dated as of November 17, 1995, among Holdings, the Borrower, Bain Capital,
Crawford and the other parties signatory thereto, as the same may be amended,
modified or supplemented from time to time, in accordance with the terms hereof
and thereof.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC
Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans and Revolving Loan Commitments (or, if after the Total
Revolving Loan Commitment has been terminated, outstanding Revolving Loans and
RL Percentages of outstanding Swingline Loans and Letter of Credit Outstandings)
constitute greater than 50% of the sum of (i) the total outstanding Term Loans
of Non-Defaulting Banks and (ii) the Total Revolving Loan Commitment less the
aggregate Revolving Loan Commitments
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of Defaulting Banks (or, if after the Total Revolving Loan Commitment has been
terminated, the total outstanding Revolving Loans of Non-Defaulting Banks and
the aggregate RL Percentages of all Non-Defaulting Banks of the total
outstanding Swingline Loans and Letter of Credit Outstandings at such time).
"Returns" shall have the meaning provided in Section 6.23.
"Revolving Loan" shall have the meaning provided in Section
1.01(A)(c).
"Revolving Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled "Revolving Loan Commitment," as the same may be reduced from time to
time pursuant to Section 3.02, 3.03 and/or 9.
"Revolving Loan Facility" shall mean the Facility evidenced by the
Total Revolving Loan Commitment.
"Revolving Loan Maturity Date" shall mean June 30, 2002.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RL Bank" shall mean at any time each Bank with a Revolving Loan
Commitment or with outstanding Revolving Loans.
"RL Percentage" shall mean at any time for each Bank, the percentage
obtained by dividing such Bank's Revolving Loan Commitment by the Total
Revolving Loan Commitment; provided, that if the Total Revolving Loan Commitment
--------
has been terminated, the RL Percentage of each Bank shall be determined by
dividing such Bank's Revolving Loan Commitment immediately prior to such
termination by the Total Revolving Loan Commitment immediately prior to such
termination.
"Rollover Amount" shall have the meaning provided in Section 8.08(b).
"S&P" shall mean Standard & Poor's Corporation.
"Scheduled A Repayment" shall have the meaning provided in Section
4.02(A)(b)(i).
"Scheduled B Repayment" shall have the meaning provided in Section
4.02(A)(b)(ii).
"Scheduled Repayment" shall mean any Scheduled A Repayment and
Scheduled B Repayment.
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"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the Security
Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall have the meaning provided in
Section 5.01(l).
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean and include the Security Agreement,
the Pledge Agreement, each Mortgage, each Additional Security Document, if any
and each other document or instrument entered into pursuant to Sections 5.01(k),
5.01(l) and 7.14, if any, in each case as and when executed and delivered in
accordance with the terms of this Agreement.
"Senior Subordinated Notes" shall mean the Series A Senior
Subordinated Notes and any Series B Senior Subordinated Notes issued in exchange
therefor in accordance with the terms of the Senior Subordinated Note Indenture.
"Senior Subordinated Notes Documents" shall mean and include each of
the documents and other agreements entered into (including, without limitation,
the Senior Subordinated Notes Indenture) relating to the issuance by the
Borrower of the Senior Subordinated Notes, as in effect on the Initial Borrowing
Date (to the extent thereof) and as the same may be entered into, modified,
supplemented or amended from time to time pursuant to the terms hereof and
thereof.
"Senior Subordinated Notes Indenture" shall mean the Indenture entered
into by and between the Borrower and American Bank National Association, as
trustee thereunder, as in effect on the Initial Borrowing Date and as the same
may be modified, amended or supplemented from time to time in accordance with
the terms hereof and thereof.
"Series A Senior Subordinated Notes" shall mean the Borrower's 10-1/4%
Senior Subordinated Notes due 2007 as in effect on the Initial Borrowing Date
and as the same may be modified, supplemented or amended from time to time
pursuant to the terms hereof and thereof.
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"Series B Senior Subordinated Notes" shall mean the Borrower's 10-1/4%
Series B Senior Subordinated Notes due 2007 issued in exchange for Series A
Senior Subordinated Notes, in the form set forth in the Senior Subordinated Note
Indenture as in effect on the Initial Borrowing Date, and as such Series B
Senior Subordinated Notes may be modified, supplemented or amended from time to
time, pursuant to the terms hereof and thereof.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by Holdings (and not guaranteed or supported in any way
by the Borrower or any of its Subsidiaries) in the form of Exhibit L.
"Shareholders' Agreements" shall have the meaning set forth in
Section 5.01(n)(iv).
"Start Date" shall mean, with respect to any Margin Reduction Period,
the first day of such Margin Reduction Period.
"Stated Amount" of each Letter of Credit shall mean at any time the
maximum amount available to be drawn thereunder (regardless of whether any
conditions for drawing could then be met).
"Stockholders' Agreement" shall mean the Stockholders' Agreement,
dated as of November 17, 1995, among Holdings, Bain Capital, Crawford and the
other parties signatory thereto, as amended, modified or supplemented from time
to time, in accordance with the terms hereof and thereof.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Subsidiary of Holdings (other
than the Borrower) (other than a Foreign Subsidiary except to the extent
otherwise provided in Section 7.14) that is or becomes a party to the Subsidiary
Guaranty.
"Subsidiary Guaranty" shall have the meaning provided in
Section 5.01(s).
"Supermajority Banks" of any Facility shall mean those Non-Defaulting
Banks which would constitute the Required Banks under, and as defined in, this
Agreement
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if (x) all outstanding Obligations of the other Facilities under this Agreement
were repaid in full and all Commitments with respect thereto were terminated and
(y) the percentage "50%" contained therein were changed to "66-2/3%."
"Surplus" shall have the meaning provided in the definition of
"Excess Amount".
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(B).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall have the meaning provided in Section
1.01(A)(a).
"Tax Allocation Agreements" shall have the meaning provided in
Section 5.01(n)(viii).
"Taxes" shall have the meaning provided in Section 4.04.
"Term Loan" shall mean each A Term Loan and each B Term Loan.
"Term Loan Commitment" shall mean, with respect to each Bank at any
time, the sum of the A Term Loan Commitment and the B Term Loan Commitment of
such Bank at such time.
"Term Loan Facilities" shall mean the A Term Loan Facility and the B
Term Loan Facility.
"Test Date" shall mean with respect to any Start Date, the last day of
the most recent fiscal quarter of the Borrower ended immediately prior to such
Start Date.
"Test Period" shall mean (i) for any determination made on and prior
to June 30, 1998, the period from July 1, 1997 to the last day of the fiscal
quarter of the Borrower then last ended, and (ii) for any determination made
thereafter, the four consecutive fiscal quarters of the Borrower then last
ended.
"Total A Term Loan Commitment" shall mean the sum of the A Term Loan
Commitments of each of the Banks.
"Total B Term Loan Commitment" shall mean the sum of the B Term Loan
Commitments of each of the Banks.
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"Total Commitment" shall mean the sum of the Total Term Loan
Commitment and the Total Revolving Loan Commitment.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean the sum of the Total A Term
Loan Commitment and the Total B Term Loan Commitment.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
(i) the Total Revolving Loan Commitment at such time less (ii) the sum of the
aggregate principal amount of all Revolving Loans and Swingline Loans at such
time plus the Letter of Credit Outstandings at such time.
"Transaction" shall mean, at any time, collectively, (i) each
Acquisition (to the extent that such Acquisition is then being, or has
theretofore been, consummated), (ii) the issuance of the Senior Subordinated
Notes on the Initial Borrowing Date, (iii) the incurrence of the Loans hereunder
on the Initial Borrowing Date, (iv) the Refinancing and (v) the payment of fees
and expenses in connection with the foregoing.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
----
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.03(a).
"U.S. Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
"Voplex" shall mean Voplex Corporation, a Michigan corporation.
"Voplex Canada" shall mean Voplex of Canada, a New Brunswick, Canada
corporation.
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"Voplex Canada Preferred Stock" shall mean the 5,980 non-voting,
redeemable, preferred shares of Voplex Canada, par value $.01 per share, with a
liquidation preference of $1,000 per share, as amended, modified and
supplemented to the Initial Borrowing Date and as further amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interest) which ordinarily, in
the absence of contingencies, entitles holders thereof to vote for the election
of directors (or Persons performing similar functions) of such corporation, even
though the right so to vote has been suspended by the happening of such a
contingency.
"Waivable Mandatory Repayment" shall have the meaning provided in
Section 4.02(C).
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying shares
and/or other nominal amounts of shares required to be held other than by such
Person under applicable law) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
"Wolf" shall mean Wolf Engineering Corporation, a Michigan
corporation.
"Working Capital" shall mean the excess of Consolidated Current Assets
(but excluding therefrom all cash, Cash Equivalents, the Total Unutilized
Revolving Loan Commitment at such time and deferred income taxes to the extent
included in current assets) over Consolidated Current Liabilities.
"Written," "written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile device, telegraph
or cable.
SECTION 11. The Agent.
---------
11.01 Appointment. Each Bank hereby irrevocably designates and
-----------
appoints BTCo as Agent of such Bank (such term to include for purposes of this
Section 11, BTCo acting as Collateral Agent) to act as specified herein and in
the other Credit Documents, and each such Bank hereby irrevocably authorizes
BTCo as the Agent to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Credit Documents, together with such other
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powers as are reasonably incidental thereto. The Agent agrees to act as such
upon the express conditions contained in this Section 11. Notwithstanding any
provision to the contrary elsewhere in this Agreement or in any other Credit
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein or in the other Credit Documents, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agent. The provisions of this Section
11 are solely for the benefit of the Agent and the Banks, and neither Holdings
nor any of its Subsidiaries shall have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and duties under
this Agreement, the Agent shall act solely as agent of the Banks and the Agent
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for Holdings or any of its Subsidiaries.
11.02 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care except to the extent otherwise required by Section 11.03.
11.03 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or the other Credit Documents
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by Holdings, any of its Subsidiaries or any
of their respective officers contained in this Agreement or the other Credit
Documents, any other Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Document or for any failure of
Holdings or any of its Subsidiaries or any of their respective officers to
perform its obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or the other Documents, or to inspect the properties, books or records
of Holdings or any of its Subsidiaries. The Agent shall not be responsible to
any Bank for the effectiveness, genuineness, validity, enforceability,
collectability or sufficiency of this Agreement or any other Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made by the Agent to the Banks or by or on behalf of
Holdings or any of its Subsidiaries to the Agent or any Bank or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions,
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covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Default
or Event of Default.
11.04 Reliance by Agent. The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to Holdings or any of its Subsidiaries),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Required Banks as it deems appropriate or it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Credit
Documents in accordance with a request of the Required Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Banks.
11.05 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has actually received notice from a Bank, Holdings or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Banks; provided, that, unless and until the Agent shall have received such
--------
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
11.06 Non-Reliance on Agent, and Other Banks. Each Bank expressly
--------------------------------------
acknowledges that neither the Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of Holdings or any of its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other condition, prospects and creditworthiness of Holdings and
its Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Agent or any other Bank, and based on such
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documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations, property,
financial and other condition, prospects and creditworthiness of Holdings and
its Subsidiaries. The Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
operations, assets, property, financial and other condition, prospects or
creditworthiness of Holdings or any of its Subsidiaries which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
11.07 Indemnification. The Banks agree to indemnify the Agent in its
---------------
capacity as such ratably according to their respective "percentages" as used in
determining the Required Banks at such time (determined as if there are no
Defaulting Banks), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, reasonable
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Agent in its
capacity as such in any way relating to or arising out of this Agreement or any
other Credit Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by the Agent under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by Holdings or any of its
Subsidiaries; provided, that no Bank shall be liable to the Agent for the
--------
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
primarily from the gross negligence or willful misconduct of the Agent. To the
extent any Bank would be required to indemnify the Agent pursuant to the
immediately preceding sentence but for the fact that it is a Defaulting Bank,
such Defaulting Bank shall not be entitled to receive any portion of any payment
or other distribution hereunder until each other Bank shall have been reimbursed
for the excess, if any, of the aggregate amount paid by such Bank under this
Section 11.07 over the aggregate amount such Bank would have been obligated to
pay had such first Bank not been a Defaulting Bank. If any indemnity furnished
to the Agent for any purpose shall, in the opinion of the Agent be insufficient
or become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished. The agreements in this Section 11.07 shall survive the payment of
all Obligations.
11.08 Agent in its Individual Capacity. The Agent and its affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with Holdings and its Subsidiaries as though the Agent were not the
Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, the Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not the Agent and the terms
"Bank" and "Banks" shall include the Agent in its individual capacity.
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11.09 Holders. The Agent may deem and treat the payee of any Note as
-------
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person or
entity who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
11.10 Resignation of the Agent; Successor Agent. The Agent may
-----------------------------------------
resign as the Agent upon 20 days' notice to the Banks. Upon the resignation of
the Agent, the Required Banks shall appoint from among the Banks a successor
Agent which is a bank or a trust company for the Banks subject, to the extent
that no payment Default or Event of Default has occurred and is then continuing,
to prior approval by the Borrower (such approval not to be unreasonably withheld
or delayed), whereupon such successor agent shall succeed to the rights, powers
and duties of the Agent, and the term "Agent" shall include such successor agent
effective upon its appointment, and the resigning Agent's rights, powers and
duties as the Agent shall be terminated, without any other or further act or
deed on the part of such former Agent or any of the parties to this Agreement.
If a successor Agent shall not have been so appointed within such 20 day period
after the date such notice of resignation was given by the Agent, the Agent's
resignation shall become effective and the Banks shall thereafter perform all
duties of the Agent hereunder and/or under any other Credit Documents until such
time, if any, as the Required Banks appoint a successor Agent as provided above.
After the resignation of the Agent hereunder, the provisions of this Section 11
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
SECTION 12. Miscellaneous.
-------------
12.01 Payment of Expenses, etc. The Borrower hereby agrees to: (i)
-------------------------
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and disbursements of White & Case and local
counsel) in connection with the negotiation, preparation, execution and delivery
of the Credit Documents and the documents and instruments referred to therein
and any amendment, waiver or consent relating thereto and in connection with the
Agent's syndication efforts with respect to this Agreement; (ii) pay all
reasonable out-of-pocket costs and expenses of the Agent and each of the Banks
in connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein and, after an Event of Default shall have
occurred and be continuing, the protection of the rights of the Agent and each
of the Banks thereunder (including, without limitation, the reasonable fees and
disbursements of counsel (including in-house counsel) for the Agent and for each
of the Banks); (iii) pay and hold each of the Banks harmless from and against
any and all present and future stamp and other similar
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taxes with respect to the foregoing matters and save each of the Banks harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Bank) to pay
such taxes; and (iv) indemnify the Agent, the Collateral Agent and each Bank,
its officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, (a) any investigation, litigation or other
proceeding (whether or not the Agent, the Collateral Agent or any Bank is a
party thereto) related to the entering into and/or performance of this Agreement
or any other Document or the use of the proceeds of any Loans hereunder or the
Transaction or the consummation of any other transactions contemplated in any
Document (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified), or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or on
the surface or subsurface of any Real Property or any Environmental Claim, in
each case, including, without limitation, the reasonable fees and disbursements
of counsel and independent consultants incurred in connection with any such
investigation, litigation or other proceeding.
12.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Bank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to Holdings or any of its Subsidiaries or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of Holdings or any of its Subsidiaries against and on
account of the Obligations and liabilities of Holdings or any of its
Subsidiaries to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations of
Holdings or any of its Subsidiaries purchased by such Bank pursuant to Section
12.06(b), and all other claims of any nature or description arising out of or
connected with this Agreement or any other Credit Document, irrespective of
whether or not such Bank shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
12.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address specified
for such Bank on Annex II; or, at such other address as shall be designated by
any party in a written notice to the other parties hereto. All such notices and
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communications shall be mailed, telegraphed, telexed, telecopied or cabled or
sent by overnight courier, and shall be effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, no Credit Party may assign
-------- -------
or transfer any of its rights, obligations or interest hereunder or under any
other Credit Document without the prior written consent of all of the Banks and,
provided further, that, although any Bank may transfer, assign or grant
- - ----------------
participations in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of its
Commitments hereunder except as provided in Section 12.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
----------------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Loan Maturity Date) in which such participant
is participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount thereof,
or increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default or of a mandatory reduction in the Total Commitment shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any participant
if the participant's participation is not increased as a result thereof), (ii)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Collateral under all of the Security Documents (except as expressly provided
in the Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Revolving
Loan Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans (i) to its parent company and/or any affiliate of such
Bank which is at least 50% owned by such Bank or its parent company or to one or
more Banks or (ii) in the case of any Bank that is a fund that invests in loans,
any other fund that invests in bank loans and is advised by the same investment
advisor of such Bank or by an Affiliate of such investment advisor or (y) assign
all, or if less than all, a portion equal to at least
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$5,000,000 in the aggregate for the assigning Bank or assigning Banks, of such
Revolving Loan Commitments and/or outstanding principal amount of Term Loans
hereunder to one or more Eligible Transferees (treating any fund that invests in
loans and any other fund that invests in loans and is advised by the same
investment advisor of such fund or by an Affiliate of such investment advisor as
a single Eligible Transferee), each of which assignees shall become a party to
this Agreement as a Bank by execution of an Assignment and Assumption Agreement,
provided that (i) at such time Annex I shall be deemed modified to reflect the
- - --------
Commitments (and/or outstanding Term Loans, as the case may be) of such new Bank
and of the existing Banks, (ii) upon surrender of the old Notes, new Notes will
be issued, at the Borrower's expense, to such new Bank and to the assigning
Bank, such new Notes to be in conformity with the requirements of Section 1.05
(with appropriate modifications) to the extent needed to reflect the revised
Commitments (and/or outstanding Term Loans, as the case may be), (iii) the
consent of the Agent shall be required in connection with any such assignment
pursuant to clause (y) of this Section 12.04(b) (which consent shall not be
unreasonably withheld or delayed), (iv) the consent of each Letter of Credit
Issuer shall be required in connection with any such assignment of Revolving
Loan Commitments pursuant to clause (y) of this Section 12.04(b) (which consent
shall not be unreasonably withheld), and (v) the Agent shall receive at the time
of each such assignment, from the assigning or assignee Bank, the payment of a
non-refundable assignment fee of $3,500 and, provided further, that such
----------------
transfer or assignment will not be effective until recorded by the Agent on the
Register pursuant to Section 7.12 hereof. To the extent of any assignment
pursuant to this Section 12.04(b), the assigning Bank shall be relieved of its
obligations hereunder with respect to its assigned Commitments. At the time of
each assignment pursuant to this Section 12.04(b) to a Person which is not
already a Bank hereunder and which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes,
the respective assignee Bank shall provide to the Borrower and the Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) described in Section 4.04(b). To the extent that an
assignment of all or any portion of a Bank's Commitments and related outstanding
Obligations pursuant to Section 1.13 or this Section 12.04(b) would, at the time
of such assignment, result in increased costs under Section 1.10, 1.11, 2.05 or
4.04 from those being charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and the
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Agent or any Bank shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Agent or any Bank would otherwise have. No notice
to or demand on any Credit Party in any case shall entitle any Credit Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or the Banks to any other or
further action in any circumstances without notice or demand.
12.06 Payments Pro Rata. (a) The Agent agrees that promptly after
-----------------
its receipt of each payment from or on behalf of any Credit Party in respect of
any Obligations of such Credit Party, it shall, except as otherwise provided in
this Agreement, distribute such payment to the Banks (other than any Bank that
has consented in writing to waive its pro rata share of such payment) pro rata
--- ---- --- ----
based upon their respective shares, if any, of the Obligations with respect to
which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings or Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Credit Party to such Banks in such amount as shall result in a
proportional participation by all of the Banks in such amount; provided, that if
--------
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
12.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by Holdings or the Borrower to the Banks); provided, that except as otherwise
--------
specifically provided herein (including in Section 12.07(c)), all computations
determining compliance with Sections 4.02 and 8, including definitions used
therein, shall utilize accounting principles and policies in effect at the time
of the preparation of, and in conformity with those used to prepare, the
December 31, 1996 financial statements delivered to the Banks pursuant to
Section 6.10(b).
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(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
(c) Computations determining compliance with Section 8, including
definitions used therein, shall be made as if the Transaction had occurred on
June 30, 1997, and shall utilize the same pro forma adjustments as those
described in the preliminary Offering Memorandum, dated June 19, 1997, relating
to the Senior Subordinated Notes.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
------------------------------------------------
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Credit Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Credit Party hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Credit Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or any
other Credit Document brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Credit Party. Each Credit Party irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Credit Party, at its address for notices pursuant to Section 12.03, such
service to become effective 30 days after such mailing. Each Credit Party
hereby irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
the Agent, any Bank or the holder of any Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Credit Document brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
12.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together
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constitute one and the same instrument. A complete set of counterparts executed
by all the parties hereto shall be lodged with Holdings, the Borrower and the
Agent.
12.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which Holdings, the Borrower and each of the
Banks shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same to the Agent at the Notice
Office or, in the case of the Banks, shall have given to the Agent telephonic
(confirmed in writing), written, telex or facsimile notice (actually received)
at such office that the same has been signed and mailed to it. The Agent will
give Holdings, the Borrower and each Bank prompt written notice of the
occurrence of the Effective Date.
12.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
-------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby in the case of following clause
(i)), (i) extend the final scheduled maturity of any Loan or Note or extend the
stated maturity of any Letter of Credit beyond the Revolving Loan Maturity Date,
or reduce the rate or extend the time of payment of interest or Fees thereon, or
reduce the principal amount thereof, (ii) release all or substantially all of
the Collateral (except as expressly provided in the Security Documents) under
all the Security Documents, (iii) amend, modify or waive any provision of this
Section 12.12, (iv) reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent of the Required
Banks, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Required Banks on substantially the same
basis as the extensions of Term Loans and Revolving Loan Commitments are
included on the Effective Date) or (v) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement; provided
--------
further, that no such change, waiver, discharge or termination shall (1)
- - -------
increase the Commitments of any Bank over the amount thereof then in effect
without the consent of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Commitment shall not constitute an
increase of the Commitment of any Bank, and that an increase in the available
portion of any Commitment of any Bank shall not constitute an increase in the
Commitment of such Bank), (2) without the consent of BTCo, amend, modify or
waive any provision of Section 2 or alter its rights or obligations with respect
to Letters of Credit or Swingline Loans, (3) without the consent of the Agent,
amend, modify or waive any provision of Section 11 as same applies to the
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Agent or any other provision as same relates to the rights or obligations of the
Agent, (4) without the consent of the Collateral Agent, amend, modify or waive
any provision relating to the rights or obligations of the Collateral Agent, (5)
without the consent of the Majority Banks of each Facility which is being
allocated a lesser prepayment, repayment or commitment reduction as a result of
the actions described below (or without the consent of the Majority Banks of
each Facility in the case of an amendment to the definition of Majority Banks),
amend the definition of Majority Banks or alter the required application of any
prepayments or repayments (or commitment reduction), as between the various
Facilities pursuant to Section 4.01(a) or 4.02(B)(b) (although the Required
Banks may waive, in whole or in part, any such prepayment, repayment or
commitment reduction so long as the application, as amongst the various
Facilities, of any such prepayment, repayment or commitment reduction which is
still required to be made is not altered) or (6) without the consent of the
Supermajority Banks of the respective Facility, amend the definition of
Supermajority Banks or amend, modify or waive any Scheduled Repayment of such
affected Facility.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by clause
(a)(i) through (v), inclusive, of the first proviso to Section 12.12(a), the
consent of the Required Banks is obtained but the consent of one or more of such
other Banks whose consent is required is not obtained, then the Borrower shall
have the right, so long as all non-consenting Banks whose individual consent is
required are treated as described in either clause (A) or (B) below, to either
(A) replace each such non-consenting Bank or Banks with one or more Replacement
Banks pursuant to Section 1.13 so long as at the time of such replacement, each
such Replacement Bank consents to the proposed change, waiver, discharge or
termination or (B) terminate all of such non-consenting Bank's Commitments and
repay in full its outstanding Loans, in accordance with Sections 3.02(b) and/or
4.01(b), provided that, unless the Commitments terminated and Loans repaid
--------
pursuant to preceding clause (B) are immediately replaced in full at such time
through the addition of new Banks or the increase of the Commitments and/or
outstanding Loans of existing Banks (who in each case must specifically consent
thereto), then in the case of any action pursuant to preceding clause (B) the
Required Banks (determined before giving effect to the proposed action) shall
specifically consent thereto, provided further, that the Borrower shall not have
----------------
the right to replace a Bank solely as a result of the exercise of such Bank's
rights (and the withholding of any required consent by such Bank) pursuant to
the second proviso to Section 12.12(a).
12.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.07 or 12.01, shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank; provided,
--------
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<PAGE>
that the Borrower shall not be responsible for costs arising under Section 1.10,
1.11, 2.05 or 4.04 resulting from any such transfer (other than a transfer
pursuant to Section 1.12) to the extent such costs would not otherwise be
applicable to such Bank in the absence of such transfer.
12.15 Confidentiality. (a) Each of the Banks agrees that it will
---------------
use its best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, auditors, counsel or other professional advisors,
to affiliates or to another Bank if the Bank or such Bank's holding or parent
company in its sole discretion determines that any such party should have access
to such information or as may be required pursuant to laws and regulations
applicable to any Bank's operations) any information with respect to Holdings,
the Borrower or any of its Subsidiaries which is furnished pursuant to this
Agreement; provided, that any Bank may disclose any such information (a) as has
--------
become generally available to the public or has become available to such Bank on
a non-confidential basis, (b) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over such Bank or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or appropriate in response to any summons or subpoena or
in connection with any litigation, (d) in order to comply with any law, order,
regulation or ruling applicable to such Bank, and (e) to any prospective
transferee in connection with any contemplated transfer of any of the Notes or
any interest therein by such Bank; provided, that such prospective transferee
--------
agrees, for the benefit of such Bank and the Borrower, to provisions
substantially identical to those contained in this Section.
(b) Each of Holdings and the Borrower hereby acknowledges and agrees
that each Bank may share with any of its affiliates any information related to
Holdings or any of its Subsidiaries (including, without limitation, any
nonpublic customer information regarding the creditworthiness of Holdings and
its Subsidiaries, provided that such Persons shall be subject to the provisions
of this Section 12.15 to the same extent as such Bank).
12.16 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 13. Holdings Guaranty.
-----------------
13.01 The Guaranty. In order to induce the Banks to enter into this
------------
Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by Holdings from the proceeds of the Loans and the
issuance of the Letters of
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<PAGE>
Credit, Holdings hereby agrees with the Banks as follows: Holdings hereby
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment when due, whether upon maturity, acceleration
or otherwise, of any and all of the Guaranteed Obligations of the Borrower to
the Guaranteed Creditors. If any or all of the Guaranteed Obligations of the
Borrower to the Guaranteed Creditors becomes due and payable hereunder, Holdings
unconditionally promises to pay such indebtedness to the Agent and/or the Banks,
or order, on demand, together with any and all expenses which may be incurred by
the Agent or the Banks in collecting any of the Guaranteed Obligations. If
claim is ever made upon any Guaranteed Creditor for repayment or recovery of any
amount or amounts received in payment or on account of any of the Guaranteed
Obligations and any of the aforesaid payees repays all or part of said amount by
reason of (i) any judgment, decree or order of any court or administrative body
having jurisdiction over such payee or any of its property or (ii) any
settlement or compromise of any such claim effected by such payee with any such
claimant (including the Borrower), then and in such event Holdings agrees that
any such judgment, decree, order, settlement or compromise shall be binding upon
Holdings, notwithstanding any revocation of this Guaranty other instrument
evidencing any liability of the Borrower, and Holdings shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee.
13.02 Bankruptcy. Additionally, Holdings unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Borrower to the Guaranteed Creditors whether or not due or payable by the
Borrower upon the occurrence of any of the events specified in Section 9.05, and
unconditionally, jointly and severally, promises to pay such indebtedness to the
Guaranteed Creditors, or order, on demand, in lawful money of the United States.
13.03 Nature of Liability. The liability of Holdings hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrower whether executed by Holdings, any other
guarantor or by any other party, and the liability of Holdings hereunder is not
affected or impaired by (a) any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
Guaranteed Obligations of the Borrower, or (c) any payment on or in reduction of
any such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any payment
made to any Guaranteed Creditor on the Guaranteed Obligations which any such
Guaranteed Creditor repays to the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and Holdings waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
13.04 Independent Obligation. The obligations of Holdings hereunder
----------------------
are independent of the obligations of any other guarantor, any other party or
the Borrower, and
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<PAGE>
a separate action or actions may be brought and prosecuted against Holdings
whether or not action is brought against any other guarantor, any other party or
the Borrower and whether or not any other guarantor, any other party or the
Borrower be joined in any such action or actions. Holdings waives, to the full
extent permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to any Guarantor.
13.05 Authorization. Holdings authorizes the Guaranteed Creditors
-------------
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed
or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than
the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of Holdings or the Borrower
remain unpaid;
-132-
<PAGE>
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this Agreement
or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under this Guaranty.
13.06 Reliance. It is not necessary for any Guaranteed Creditor to
--------
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
13.07 Subordination. Any of the indebtedness of the Borrower
-------------
relating to the Guaranteed Obligations now or hereafter owing to Holdings is
hereby subordinated to the Guaranteed Obligations of the Borrower owing to the
Guaranteed Creditors; and if the Agent so requests at a time when an Event of
Default exists, all such indebtedness relating to the Guaranteed Obligations of
the Borrower to Holdings shall be collected, enforced and received by Holdings
for the benefit of the Guaranteed Creditors and be paid over to the Agent on
behalf of the Guaranteed Creditors on account of the Guaranteed Obligations of
the Borrower to the Guaranteed Creditors, but without affecting or impairing in
any manner the liability of Holdings under the other provisions of this
Guaranty. Prior to the transfer by Holdings of any note or negotiable
instrument evidencing any of the indebtedness relating to the Guaranteed
Obligations of the Borrower to Holdings, Holdings shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, Holdings
hereby agrees with the Guaranteed Creditors that it will not exercise any right
of subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably paid in full
in cash.
13.08 Waiver. (a) Holdings waives any right (except as shall be
------
required by applicable statute and cannot be waived) to require any Guaranteed
Creditor to (i) proceed against the Borrower, any other guarantor or any other
party, (ii) proceed against or exhaust any security held from the Borrower, any
other guarantor or any other party or (iii) pursue any other remedy in any
Guaranteed Creditor's power whatsoever. Holdings waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the validity, legality or unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower other than payment in full of the Guaranteed
Obligations. The Guaranteed Creditors may, at their elec-
-133-
<PAGE>
tion, foreclose on any security held by the Agent, the Collateral Agent or any
other Guaranteed Creditor by one or more judicial or nonjudicial sales, whether
or not every aspect of any such sale is commercially reasonable (to the extent
such sale is permitted by applicable law), or exercise any other right or remedy
the Guaranteed Creditors may have against the Borrower or any other party, or
any security, without affecting or impairing in any way the liability of
Holdings hereunder except to the extent the Guaranteed Obligations have been
paid. Holdings waives any defense arising out of any such election by the
Guaranteed Creditors, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of Holdings
against the Borrower or any other party or any security.
(b) Holdings waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Guaranteed Obligations. Holdings assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which Holdings assumes
and incurs hereunder, and agrees that the Agent and the Banks shall have no duty
to advise Holdings of information known to them regarding such circumstances or
risks.
13.09 Nature of Liability. It is the desire and intent of Holdings
-------------------
and the Secured Creditors that this Guaranty shall be enforced against Holdings
to the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. If, however, and to the
extent that, the obligations of Holdings under this Guaranty shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of Holdings shall be deemed to be reduced and Holdings shall pay the
maximum amount of the Guaranteed Obligations which would be permissible under
applicable law.
* * *
-134-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- - -------
c/o Cambridge Industries, Inc. CAMBRIDGE INDUSTRIES
555 Horace Brown Drive HOLDINGS, INC.
Madison Heights, Michigan 48701
Attention: Richard S. Crawford
Telephone: (810) 616-0500 By /signature appears here/
Telecopy: (810) 616-0530 -------------------------
Title:
555 Horace Brown Drive CAMBRIDGE INDUSTRIES, INC.
Madison Heights, Michigan 48701
Attention: Richard S. Crawford
Telephone: (810) 616-0500 By /signature appears here/
Telecopy: (810) 616-0530 -------------------------
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually and as Agent
By /signature appears here/
-------------------------
Title:
<PAGE>
THOROUGHBRED LIMITED
PARTNERSHIP I
By: Appaloosa Management L.P., Its
Partner
By: Appaloosa Partners Inc.
By /signature appears here/
-------------------------
Title:
<PAGE>
BANKBOSTON, N.A.
By /signature appears here/
-------------------------
Title:
<PAGE>
CITY NATIONAL BANK
By /signature appears here/
-------------------------
Title:
<PAGE>
COMERICA BANK
By /signature appears here/
-------------------------
Title:
<PAGE>
CREDIT LYONNAIS CHICAGO BRANCH
By /signature appears here/
-------------------------
Title:
<PAGE>
CYPRESS TREE INVESTMENT
MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on Behalf
of First Allmerica Financial Life Insurance
Company
By /signature appears here/
-------------------------
Title:
<PAGE>
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By /signature appears here/
-------------------------
Title:
By /signature appears here/
-------------------------
Title:
<PAGE>
DEEPROCK & COMPANY
By: Eaton Vance Management, as
Investment Advisor
By /signature appears here/
-------------------------
Title:
<PAGE>
FLEET NATIONAL BANK
By /signature appears here/
-------------------------
Title:
<PAGE>
HELLER FINANCIAL, INC.
By /signature appears here/
-------------------------
Title:
<PAGE>
INDOSUEZ CAPITAL FUNDING III,
LIMITED
By: Indosuez Capital Luxembourg, as
Collateral Manager
By /signature appears here/
-------------------------
Title:
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By /signature appears here/
-------------------------
Title:
<PAGE>
ROYALTON COMPANY, BY PACIFIC
INVESTMENT MANAGEMENT
COMPANY, AS ITS INVESTMENT
ADVISOR
By /signature appears here/
-------------------------
Title:
<PAGE>
SANWA BUSINESS CREDIT
CORPORATION
By /signature appears here/
-------------------------
Title:
<PAGE>
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By /signature appears here/
-------------------------
Title:
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /signature appears here/
-------------------------
Title:
<PAGE>
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By /signature appears here/
-------------------------
Title:
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /signature appears here/
-------------------------
Title:
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION
By /signature appears here/
-------------------------
Title:
<PAGE>
CORESTATES BANK, N.A.
By /signature appears here/
-------------------------
Title:
<PAGE>
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (A Unit of The Chase
Manhattan Bank)
By /signature appears here/
-------------------------
Title:
<PAGE>
BANK POLSKA KASA OPIEKI S.A.,
PEKAO S.A. GROUP, NEW YORK BRANCH
By /signature appears here/
-------------------------
Title:
<PAGE>
CORESTATES BANK, N.A.
By /signature appears here/
-------------------------
Title:
<PAGE>
DLJ CAPITAL FUNDING, INC.
By /signature appears here/
-------------------------
Title:
<PAGE>
Exhibit 10.28
SUBSIDIARY GUARANTY
-------------------
GUARANTY, dated as of July 10, 1997 (as amended, modified or supplemented
from time to time, this "Guaranty"), made by each of the undersigned (each, a
"Guarantor" and, collectively, the "Guarantors"). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as defined below)
shall be used herein as therein defined.
WITNESSETH:
----------
WHEREAS, Cambridge Industries Holdings, Inc. ("Holdings"), Cambridge
Industries, Inc. (the "Borrower"), various lenders from time to time party
thereto (the "Banks"), and Bankers Trust Company, as Agent (the "Agent"), have
entered into a Credit Agreement, dated as of July 10, 1997 (as amended, modified
or supplemented from time to time, the "Credit Agreement"), providing for the
making of Loans to the Borrower and the issuance of, and participation in,
Letters of Credit for the account of the Borrower, all as contemplated therein
(the Banks, the Agent and the Collateral Agent are herein called the "Bank
Creditors");
WHEREAS, the Borrower may from time to time be party to one or more (i)
interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors," and together with the Bank Creditors, are herein called the
"Creditors");
WHEREAS, each Guarantor is a Subsidiary of the Borrower;
WHEREAS, it is a condition to the making of Loans and the issuance of, and
participation in, Letters of Credit under the Credit Agreement that each
Guarantor shall have executed and delivered this Guaranty; and
<PAGE>
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans
by the Borrower and the issuance of, and participation in, Letters of Credit for
the account of the Borrower under the Credit Agreement and the entering into of
Interest Rate Protection Agreements or Other Hedging Agreements and,
accordingly, desires to execute this Guaranty in order to satisfy the conditions
described in the preceding paragraph and to induce the Banks to make Loans to
the Borrower and issue Letters of Credit for the account of the Borrower and
Other Creditors to enter into Interest Rate Protection Agreements or Other
Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:
1. Each Guarantor, jointly and severally, irrevocably and unconditionally
guarantees: (i) to the Bank Creditors the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of (x) the
principal of and interest on the Notes issued by, and the Loans made to, the
Borrower under the Credit Agreement and all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit and (y) all other obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities owing by the Borrower to
the Bank Creditors under the Credit Agreement (including, without limitation,
indemnities, Fees and interest thereon) whether now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement or any
other Credit Document and the due performance and compliance with the terms of
the Credit Documents by the Borrower (all such principal, interest, liabilities
and obligations under this clause (i), except to the extent consisting of
obligations or liabilities with respect to Interest Rate Protection Agreements
or Other Hedging Agreements, being herein collectively called the "Credit
Document Obligations"); and (ii) to each Other Creditor the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
owing by the Borrower under any Interest Rate Protection Agreements or Other
Hedging Agreements, whether now in existence or hereafter arising, and the due
performance and compliance by the Borrower with all terms, conditions and
agreements contained therein (all such obligations and liabilities being herein
collectively called the "Other Obligations", and together with the Credit
Document Obligations are herein collectively called the "Guaranteed
Obligations"), provided that the maximum amount payable by each Guarantor
hereunder shall at no time exceed the Maximum Amount (as hereinafter defined) of
such Guarantor. As used herein, "Maximum Amount" of any Guarantor means an
amount equal to 95% of the amount by
2
<PAGE>
which (i) the present fair saleable value of such Guarantor's assets exceeds
(ii) the amount reasonably expected to come due in respect of all liabilities
(including, without limitation, contingent liabilities), other than contingent
liabilities of such Guarantor hereunder, in each case determined on the Initial
Borrowing Date or on the day any demand is made under this Guaranty, whichever
date results in a higher Maximum Amount. Subject to the proviso in the second
preceding sentence, each Guarantor understands, agrees and confirms that the
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against each Guarantor without proceeding against any other
Guarantor, the Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. All payments by each Guarantor under this Guaranty shall be made
on the same basis as payments by the Borrower under Sections 4.03 and 4.04 of
the Credit Agreement.
2. Additionally, each Guarantor, jointly and severally, unconditionally
and irrevocably, guarantees the payment of any and all Guaranteed Obligations of
the Borrower to the Creditors whether or not due or payable by the Borrower upon
the occurrence in respect of the Borrower of any of the events specified in
Section 9.05 of the Credit Agreement, and unconditionally and irrevocably,
jointly and severally, promises to pay such Guaranteed Obligations to the
Creditors, or order, on demand, in lawful money of the United States.
3. The liability of each Guarantor hereunder is exclusive and independent
of any security for or other guaranty of the Guaranteed Obligations of the
Borrower whether executed by such Guarantor, any other Guarantor, any other
guarantor or by any other party, and the liability of each Guarantor hereunder
shall not be affected or impaired by (a) any direction as to application of
payment by the Borrower or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the Guaranteed Obligations of the Borrower, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any dissolution,
termination or increase, decrease or change in personnel by the Borrower or (e)
any payment made to any Creditor on the Guaranteed Obligations which any
Creditor repays the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor of the Borrower or the
Borrower, and a separate action or actions may be brought and prosecuted against
each Guarantor whether or not action is brought against any other Guarantor, any
other guarantor of the Borrower or the Borrower and whether or not any other
Guarantor, any other guarantor of the Borrower or the Borrower be joined in any
such action or actions. Each Guarantor
3
<PAGE>
waives, to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by the Borrower or other circumstance which operates to toll any statute
of limitations as to the Borrower shall operate to toll the statute of
limitations as to each Guarantor.
5. Each Guarantor hereby waives (to the fullest extent permitted by
applicable law) notice of acceptance of this Guaranty and notice of any
liability to which it may apply, and waives promptness, diligence, presentment,
demand of payment, protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking of other action by the Agent or any other Creditor
against, and any other notice to, any party liable thereon (including such
Guarantor or any other guarantor of the Borrower or the Borrower).
6. Any Creditor may (except as shall be required by applicable statute and
cannot be waived) at any time and from time to time without the consent of, or
notice to, any Guarantor, without incurring responsibility to such Guarantor,
without impairing or releasing the obligations of such Guarantor hereunder, upon
or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the guaranty herein
made shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise deal
with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the Borrower or
others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not)
of the Borrower to creditors of the Borrower;
4
<PAGE>
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Creditors regardless of
what liabilities of the Borrower remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or supplement
any of the Interest Rate Protection Agreements or Other Hedging Agreements,
the Credit Documents or any of such other instruments or agreements; and/or
(g) act or fail to act in any manner referred to in this Guaranty
which may deprive such Guarantor of its right to subrogation against the
Borrower to recover full indemnity for any payments made pursuant to this
Guaranty.
7. No invalidity, irregularity or unenforceability of all or any part
of the Guaranteed Obligations or of any security therefor shall affect, impair
or be a defense to this Guaranty, and this Guaranty shall be primary, absolute
and unconditional notwithstanding the occurrence of any event or the existence
of any other circumstances which might constitute a legal or equitable discharge
of a surety or guarantor except payment in full of the Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Creditor to inquire into the
capacity or powers of the Borrower or any of its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the Agent,
after an Event of Default
5
<PAGE>
has occurred and is continuing, so requests, shall be collected, enforced and
received by such Guarantor as trustee for the Creditors and be paid over to the
Creditors on account of the indebtedness of the Borrower to the Creditors, but
without affecting or impairing in any manner the liability of such Guarantor
under the other provisions of this Guaranty. Prior to the transfer by any
Guarantor of any note or negotiable instrument evidencing any indebtedness of
the Borrower to such Guarantor, such Guarantor shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with the Guaranteed Creditors that it will not exercise any right
of subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably paid in full
in cash.
10. (a) Each Guarantor waives any right (except as shall be required by
applicable statute or law and cannot be waived) to require the Creditors to:
(i) proceed against the Borrower, any other Guarantor, any other guarantor of
the Borrower or any other party; (ii) proceed against or exhaust any security
held from the Borrower, any other Guarantor, any other guarantor of the Borrower
or any other party; or (iii) pursue any other remedy in the Creditors' power
whatsoever. Each Guarantor waives any (to the fullest extent permitted by
applicable law) defense based on or arising out of any defense of the Borrower,
any other Guarantor, any other guarantor of the Borrower or any other party
other than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor of the Borrower or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Creditors may, at
their election, foreclose on any security held by the Agent, the Collateral
Agent or the other Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Each Guarantor waives any defense arising out of any such
election by the Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes
6
<PAGE>
all responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks which such Guarantor assumes and incurs hereunder, and
agrees that the Creditors shall have no duty to advise any Guarantor of
information known to them regarding such circumstances or risks.
11. The Creditors agree that this Guaranty may be enforced only by
the action of the Agent or the Collateral Agent, in each case acting upon the
instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least a majority
of the outstanding Other Obligations) and that no other Creditor shall have any
right individually to seek to enforce or to enforce this Guaranty or to realize
upon the security to be granted by the Security Documents, it being understood
and agreed that such rights and remedies may be exercised by the Agent or the
Collateral Agent or the holders of at least a majority of the outstanding Other
Obligations, as the case may be, for the benefit of the Creditors upon the terms
of this Guaranty and the Security Documents. The Creditors further agree that
this Guaranty may not be enforced against any director, officer, employee, or
stockholder of any Guarantor (except to the extent such stockholder is also a
Guarantor hereunder).
12. In order to induce the Banks to make Loans and issue, and
participate in, Letters of Credit pursuant to the Credit Agreement, and in order
to induce the Other Creditors to execute, deliver and perform the Interest Rate
Protection Agreements or Other Hedging Agreements, each Guarantor represents,
warrants and covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation and is in good standing under the laws of the jurisdiction of
its organization, and has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (ii) is duly qualified and is authorized
to do business and is in good standing in all jurisdictions where it is
required to be so qualified and where the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and each
other Credit Document to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance by it
of each such Credit Document. Such Guarantor has duly executed and
delivered this Guaranty and each other Credit Document to which it is a
party and each such Credit Document constitutes the legal, valid and
binding obligation of such Guarantor enforceable in accordance with its
terms, except to the extent that the enforceability hereof or thereof may
be limited by applicable bankruptcy, insolvency, reorganization, mora-
7
<PAGE>
torium or other similar laws affecting creditors' rights generally and by
equitable principles (regardless of whether enforcement is sought in equity
or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty or any other Credit Document to which it is a party, nor
compliance by it with the terms and provisions hereof or thereof (i) will
contravene any applicable provision of any law, statute, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to
the Security Documents) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets
of such Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, credit agreement or any
other material agreement or other instrument to which such Guarantor or any
of its Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the certificate of incorporation or by-laws of such Guarantor
or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Guaranty or any other Credit
Document to which such Guarantor is a party, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty or any other
Credit Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or threatened
(i) with respect to such Guarantor that could reasonably be expected to
have a Material Adverse Effect or (ii) that could reasonably be expected to
have a material adverse effect on the rights or remedies of the Creditors
or on the ability of such Guarantor to perform its respective obligations
to the Creditors hereunder and under the other Credit Documents to which it
is a party.
13. Each Guarantor covenants and agrees that on and after the date
hereof and until the termination of the Total Commitment and all Interest Rate
Protection Agreements or Other Hedging Agreements and when no Note or Letter of
Credit remains outstanding (other than Letters of Credit, together with all Fees
that have accrued and will accrue thereon through the stated termination date of
such Letters of Credit, which have been supported in a manner satisfactory to
the Letter of Credit Issuer in its sole and absolute discretion) and all
Guaranteed Obligations have been paid in full (other than
8
<PAGE>
indemnities described in Section 12.13 of the Credit Agreement and analogous
provisions in the Security Documents which are not then due and payable), such
Guarantor shall take, or will refrain from taking, as the case may be, all
actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in Section 7 or 8 of the Credit
Agreement, and so that no Default or Event of Default, is caused by the actions
of such Guarantor or any of its Subsidiaries.
14. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses of each Creditor in connection with
the enforcement of this Guaranty and any amendment, waiver or consent relating
hereto (including, without limitation, the reasonable fees and disbursements of
counsel (including in-house counsel) employed by any of the Creditors).
15. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
16. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of each
Guarantor directly affected thereby and either (x) the Required Banks (or to the
extent required by Section 12.12 of the Credit Agreement, with the written
consent of each Bank) at all times prior to the time on which all Credit
Document Obligations have been paid in full or (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time on
which all Credit Document Obligations have been paid in full; provided, that any
--------
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Creditors (and not all Creditors in a like or
similar manner) shall require the written consent of the Requisite Creditors (as
defined below) of such Class of Creditors (it being understood that the addition
or release of any Guarantor hereunder shall not constitute a change, waiver,
discharge or termination affecting any Guarantor other than the Guarantor so
added or released). For the purpose of this Guaranty the term "Class" shall
mean each class of Creditors, i.e., whether (x) the Bank Creditors as holders of
----
the Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the purpose of this Guaranty, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
17. Each Guarantor acknowledges that an executed (or conformed) copy
of each of the Credit Documents and Interest Rate Protection Agreements or Other
Hedging Agreements has been made available to its principal executive officers
and such officers are familiar with the contents thereof.
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<PAGE>
18. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Protection Agreement or Other
Hedging Agreement continuing after any applicable grace period), each Creditor
is hereby authorized at any time or from time to time, without notice to any
Guarantor or to any other Person, any such notice being expressly waived, to set
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by such Creditor to or for the
credit or the account of such Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Creditor under this
Guaranty, irrespective of whether or not such Creditor shall have made any
demand hereunder and although said obligations, liabilities, deposits or claims,
or any of them, shall be contingent or unmatured.
19. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the Credit Agreement, (ii)
in the case of any Guarantor, at its address set forth opposite its signature
below and (iii) in the case of any Other Creditor, at such address as such Other
Creditor shall have specified in writing to the Guarantor; or in any case at
such other address as any of the Persons listed above may hereafter notify the
others in writing.
20. If claim is ever made upon any Creditor for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
21. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Guaranty
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<PAGE>
or any other Credit Document to which such Guarantor is a party may be brought
in the courts of the State of New York or of the United States of America for
the Southern District of New York, and, by execution and delivery of this
Guaranty, each Guarantor hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Guarantor hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Guarantor, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Guaranty or any
other Credit Document to which such Guarantor is a party brought in any of the
aforesaid courts, that any such court lacks jurisdiction over such Guarantor.
Each Guarantor further irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to each
Guarantor at its address set forth opposite its signature below, such service to
become effective 30 days after such mailing. Each Guarantor hereby irrevocably
waives any objection to such service of process and further irrevocably waives
and agrees not to plead or claim in any action or proceeding commenced hereunder
or under any other Credit Document to which such Guarantor is a party that
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of any of the Creditors to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Guaranty or any other
credit document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.
22. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 8.02 of the Credit Agreement (or such sale or other
disposition has been approved in writing by the Required Banks (or all Banks if
required by Section 12.12 of the Credit Agreement)) and the proceeds of such
sale, disposition or liquidation are applied in accordance with the provisions
of the Credit Agreement, to the extent applicable, such Guarantor shall be
released from this Guaranty and this Guaranty shall, as to each such Guarantor
or Guarantors, terminate, and have no further force or effect (it being
understood and agreed that the sale of one or more Persons that own, directly or
indirectly, all of the capital stock or partnership interests of any Guarantor
shall be deemed to be a sale of such Guarantor for the purposes of this Section
22).
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23. This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Agent.
24. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
25. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense.
26. It is understood and agreed that any Subsidiary of Holdings that
is required to execute a counterpart of this Guaranty after the date hereof
pursuant to the Credit Agreement shall automatically become a Guarantor
hereunder by executing a counterpart hereof and delivering the same to the
Agent.
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<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Address: CE AUTOMOTIVE TRIM SYSTEMS,
INC., as a Guarantor
555 Horace Brown Drive
Madison Heights, MI 48071 By /signature appears here/
Attention: Richard S. Crawford ------------------------------
Telephone: (810) 616-0500 Title:
Telecopy: (810) 616-0530
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent for the Banks
By /signature appears here/
---------------------------------
Title:
<PAGE>
Exhibit 10.29
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of July 10, 1997 (as amended, modified or
supplemented from time to time, this "Agreement"), made by each of the
undersigned (each, a "Pledgor" and, collectively, the "Pledgors"), in favor of
BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the benefit of
the Secured Creditors (as defined below). Except as otherwise defined herein,
terms used herein and defined in the Credit Agreement (as defined below) shall
be used herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Cambridge Industries Holdings, Inc. ("Holdings"), Cambridge
Industries, Inc. (the "Borrower"), various lenders from time to time party
thereto (the "Banks"), and Bankers Trust Company, as Agent (together with any
successor agent, the "Agent", and together with the Pledgee and the Banks, the
"Bank Creditors"), have entered into a Credit Agreement, dated as of July 10,
1997 (as amended, modified or supplemented from time to time, the "Credit
Agreement"), providing for the making of Loans to the Borrower and the issuance
of, and participation in, Letters of Credit for the account of the Borrower, all
as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
(i) interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and\or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's
<PAGE>
or affiliate's successors and assigns, collectively, the "Other Creditors," and
together with Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to
the Secured Creditors the payment when due of all obligations and liabilities of
the Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, pursuant to the Subsidiary Guaranty, each Pledgor (other than
Holdings and the Borrower) has jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower under the Credit Agreement that each Pledgor shall have executed and
delivered to the Pledgee this Agreement;
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and liabilities
(including obligations which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due) of such Pledgor, now
existing or hereafter incurred under, arising out of or in connection with
any Credit Document to which it is a party and the due performance and
compliance by such Pledgor with the terms of each such Credit Document (all
such obligations and liabilities under this clause (i), except to the
extent consisting of obligations or indebtedness with respect to Interest
Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations");
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(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor, now
existing or hereafter incurred under, arising out of or in connection with
any Interest Rate Protection Agreement or Other Hedging Agreement
including, in the case of Pledgors other than the Borrower, all obligations
of such Pledgor under its Guaranty in respect of Interest Rate Protection
Agreements or Other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called the
"Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) or preserve its security interest
in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement
of any indebtedness, obligations, or liabilities referred to in clauses
(i), (ii) and (iii) above, after an Event of Default (such term, as used in
this Agreement, shall mean any Event of Default under, and as defined in,
the Credit Agreement, or any payment default by the Borrower under any
Interest Rate Protection Agreement or Other Hedging Agreement and shall in
any event include, without limitation, any payment default (after the
expiration of any applicable grace period) on any of the Obligations (as
hereinafter defined)) shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing or realizing on the Collateral, or of any exercise by
the Pledgee of its rights hereunder, together with reasonable attorneys'
fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such Secured
Creditor has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations".
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein: (i)
the term "Stock" shall mean (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each a
"Domestic Corporation"), all of the issued and outstanding shares of capital
stock of any Domestic Corporation at any time owned by each Pledgor and (y) with
respect to corporations not Domestic Corporations (each a "Foreign
Corporation"), all of the issued and outstanding shares of capital stock at any
time owned by any Pledgor of any Foreign Corporation, provided that, except as
provided in the last sentence of this Section 2, such Pledgor shall not be
required to pledge hereunder more than 65% of the total combined voting power of
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<PAGE>
all classes of capital stock of any Foreign Corporation entitled to vote,
provided that the term "Stock" shall not include any capital stock of any joint
- - --------
venture which the Pledgor owns if the terms of the agreement establishing such
joint venture would be breached by the pledge of such stock pursuant to the
terms of this Agreement; (ii) the term "Notes" shall mean (x) all Intercompany
Notes at any time issued to each Pledgor and (y) all other promissory notes from
time to time issued to, or held by, each Pledgor, provided, that, except as
provided in the last sentence of this Section 2, no Pledgor shall be required to
pledge hereunder any promissory notes issued to such Pledgor by any Subsidiary
of such Pledgor which is a Foreign Corporation and (iii) the term "Securities"
shall mean all of the Stock and Notes. Each Pledgor represents and warrants
that on the date hereof (i) each Subsidiary of such Pledgor, and the direct
ownership thereof, is listed in Annex A hereto; (ii) the Stock held by such
Pledgor consists of the number and type of shares of the stock of the
corporations as described in Annex B hereto; (iii) such Stock constitutes that
percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex B hereto; (iv) the Notes held by such
Pledgor consist of the promissory notes described in Annex C hereto where such
Pledgor is listed as the lender; and (v) on the date hereof, such Pledgor owns
no other Securities. In the circumstances and to the extent provided in Section
7.14 of the Credit Agreement, the 65% limitation set forth in clause (i)(y) and
the limitation in the proviso of clause (ii) in each case of this Section 2 and
in Section 3.2 hereof shall no longer be applicable and such Pledgor shall duly
pledge and deliver to the Pledgee such of the Securities not theretofore
required to be pledged hereunder.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes set
------
forth in Section 1 hereof, each Pledgor hereby: (i) grants to the Pledgee a
security interest in all of the Collateral owned by such Pledgor; (ii) pledges
and deposits as security with the Pledgee the Securities owned by such Pledgor
on the date hereof, and delivers to the Pledgee certificates or instruments
therefor, duly endorsed in blank in the case of Notes and accompanied by undated
stock powers duly executed in blank by such Pledgor in the case of Stock, or
such other instruments of transfer as are acceptable to the Pledgee; and (iii)
assigns, transfers, hypothecates, mortgages, charges and sets over to the
Pledgee all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall acquire
--------------------------------
(by purchase, stock dividend or otherwise) any additional Securities at any time
or from time to time after the date hereof, such Pledgor will forthwith pledge
and deposit such Securities (or certificates or instruments representing such
Securities) as security with the Pledgee and
4
<PAGE>
deliver to the Pledgee certificates therefor or instruments thereof, duly
endorsed in blank in the case of Notes and accompanied by undated stock powers
duly executed in blank in the case of Stock, or such other instruments of
transfer as are acceptable to the Pledgee, and will promptly thereafter deliver
to the Pledgee a certificate executed by any Authorized Officer of such Pledgor
describing such Securities and certifying that the same have been duly pledged
with the Pledgee hereunder. Subject to the last sentence of Section 2 hereof,
no Pledgor shall be required at any time to pledge hereunder any Stock which is
more than 65% of the total combined voting power of all classes of capital stock
of any Foreign Corporation entitled to vote.
3.3. Uncertificated Securities. Notwithstanding anything to the
-------------------------
contrary contained in Sections 3.1 and 3.2 hereof, if any Securities (whether
now owned or hereafter acquired) are uncertificated securities, the respective
Pledgor shall promptly notify the Pledgee thereof, and shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8-321 of the
New York UCC, if applicable). Each Pledgor further agrees to take such actions
as the Pledgee deems reasonably necessary or desirable to effect the foregoing
and to permit the Pledgee to exercise any of its rights and remedies hereunder,
and agrees to provide an opinion of counsel reasonably satisfactory to the
Pledgee with respect to any such pledge of uncertificated Securities promptly
upon request of the Pledgee.
3.4 Definition of Pledged Stock, Pledged Notes, Pledged Securities
--------------------------------------------------------------
and Collateral. All Stock at any time pledged or required to be pledged
- - --------------
hereunder is hereinafter called the "Pledged Stock," all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes," all of the Pledged Stock and Pledged Notes together are hereinafter
called the "Pledged Securities," which together with all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, is hereinafter called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of such Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee. The Pledgee agrees to promptly notify the
relevant Pledgor after the appointment of any sub-agent; provided, however, that
-------- -------
the failure to give such notice shall not affect the validity of such
appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until (i) an
Event of Default shall have occurred and be continuing and (ii) written notice
thereof shall have been given by the Pledgee to the relevant Pledgor (provided,
--------
that if an Event of
5
<PAGE>
Default specified in Section 9.05 of the Credit Agreement shall occur, no such
notice shall be required), each Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged Securities and
to give all consents, waivers or ratifications in respect thereof; provided,
--------
that no vote shall be cast or any consent, waiver or ratification given or any
action taken which would violate or be inconsistent with any of the terms of
this Agreement, any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement (collectively, the "Secured Debt
Agreements"), or which would have the effect of impairing the position or
interests of the Pledgee or any other Secured Creditor. All such rights of such
Pledgor to vote and to give consents, waivers and ratifications shall cease in
case an Event of Default shall occur and be continuing, and Section 7 hereof
shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing, all cash dividends payable in respect of
the Pledged Stock and all payments in respect of the Pledged Notes shall be paid
to the respective Pledgor; provided, that all cash dividends payable in respect
--------
of the Pledged Stock which are determined by the Pledgee to represent in whole
or in part an extraordinary, liquidating or other distribution in return of
capital shall be paid, to the extent so determined to represent an
extraordinary, liquidating or other distribution in return of capital, to the
Pledgee and retained by it as part of the Collateral. The Pledgee shall also be
entitled to receive directly, and to retain as part of the Collateral:
(i) all other or additional stock or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock;
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock by way
of stock-split, spin-off, split-up, reclassification, combination of shares
or similar rearrangement; and
(iii) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions or other
payments which are received by any Pledgor contrary to the provisions of this
Section 6 and Section 7 shall be received in trust for the benefit of the
Pledgee, shall be segregated from other property or funds of such
6
<PAGE>
Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the
same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of Default
shall have occurred and be continuing, the Pledgee shall be entitled to exercise
all of the rights, powers and remedies (whether vested in it by this Agreement
or by any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, and the Pledgee shall be
entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
payable to such Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Securities into the
Pledgee's name or the name of its nominee or nominees (the Pledgee agrees
to promptly notify the relevant Pledgor after such transfer; provided,
--------
however, that the failure to give such notice shall not affect the validity
-------
of such transfer);
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon any
Pledged Note (including, without limitation, to make any demand for payment
thereon);
(iv) subject to the giving of written notice to the relevant Pledgor
in accordance with clause (ii) of Section 5 hereof, to vote all or any part
of the Pledged Stock (whether or not transferred into the name of the
Pledgee) and give all consents, waivers and ratifications in respect of the
Collateral and otherwise act with respect thereto as though it were the
outright owner thereof (each Pledgor hereby irrevocably constituting and
appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with
full power of substitution to do so); and
(v) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided, that at least 10 days' written
--------
notice of the time and place of any such sale shall be given to such
Pledgor.
<PAGE>
Each Pledgor hereby waives and releases to the fullest extent permitted by law
any right or equity of redemption with respect to the Collateral, whether before
or after sale hereunder, and all rights, if any, of marshalling the Collateral
and any other security for the Obligations or otherwise. At any such sale,
unless prohibited by applicable law, the Pledgee on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so sold
free from any such right or equity of redemption. Neither the Pledgee nor any
Secured Creditor shall be liable for failure to collect or realize upon any or
all of the Collateral or for any delay in so doing nor shall any of them be
under any obligation to take any action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any other
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Agreement or any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. The Secured Creditors agree that
this Agreement may be enforced only by the action of the Agent or the Pledgee,
in each case acting upon the instructions of the Required Banks (or, after the
date on which all Credit Document Obligations have been paid in full, the
holders of at least the majority of the outstanding Other Obligations) and that
no other Secured Creditor shall have any right individually to seek to enforce
or to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Agent or the Pledgee or the holders of at least a majority of
the outstanding Other Obligations, as the case maybe, for the benefit of the
Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral pursuant to the terms of
this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided in the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
<PAGE>
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor from and against any and all claims, demands, losses, judgments and
liabilities of whatsoever kind or nature, and (ii) to reimburse the Pledgee and
each other Secured Creditor for all costs and expenses, including attorneys'
fees, in the case of each of clauses (i) and (ii) above, growing out of or
resulting from this Agreement or the exercise by the Pledgee of any right or
remedy granted to it hereunder or under any other Secured Debt Agreement except,
with respect to clauses (i) and (ii) above, for those arising from the Pledgee's
or such other Secured Creditor's gross negligence or willful misconduct. In no
event shall the Pledgee be liable, in the absence of gross negligence or willful
misconduct on its part, for any matter or thing in connection with this
Agreement other than to account for moneys actually received by it in accordance
with the terms hereof. If and to the extent that the obligations of the
Pledgors under this Section 11 are unenforceable for any reason, each Pledgor
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law.
12. FURTHER ASSURANCES. Each Pledgor agrees that it will join with
the Pledgee in executing and, at such Pledgor's own expense, file and refile
under the applicable UCC or appropriate local equivalent, such financing
statements, continuation statements and other documents in such offices as the
Pledgee may deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral and hereby authorizes the Pledgee to file financing statements and
amendments thereto relative to all or any part of the Collateral without the
signature of such Pledgor where permitted by law, and agrees to do such further
acts and things and to execute and deliver to the Pledgee such additional
conveyances, assignments, agreements and instruments as the Pledgee may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement or to further assure and confirm unto the Pledgee its rights, powers
and remedies hereunder.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise
9
<PAGE>
under this Agreement, are only those expressly set forth in this Agreement. The
Pledgee shall act hereunder on the terms and conditions set forth herein and in
Section 11 of the Credit Agreement.
14. TRANSFER BY PLEDGORS. Except for transfer or sales of Collateral
permitted pursuant to the Credit Agreement, no Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except in accordance
with the terms of this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. Each
Pledgor represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Securities
pledged by it hereunder, subject to no pledge, lien, mortgage, hypothecation,
security interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by this Agreement and liens permitted under
clauses (a) and (e) of Section 8.03 of the Credit Agreement; (ii) it has full
power, authority and legal right to pledge all the Securities pledged by it
pursuant to this Agreement; (iii) this Agreement has been duly authorized,
executed and delivered by such Pledgor and constitutes a legal, valid and
binding obligation of such Pledgor enforceable in accordance with its terms,
except to the extent that the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law); (iv) no consent of any other
party (including, without limitation, any stockholder or creditor of such
Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by such
Pledgor in connection with the execution, delivery or performance of this
Agreement, or in connection with the exercise of its rights and remedies
pursuant to this Agreement, except as may be required in connection with the
disposition of the Securities by laws affecting the offering and sale of
securities generally; (v) the execution, delivery and performance of this
Agreement by such Pledgor does not violate any provision of any applicable law,
statute, rule or regulation or of any order, writ, injunction or decree of any
court or governmental authority, domestic or foreign, or of the certificate of
incorporation or by-laws of such Pledgor or of any securities issued by such
Pledgor or any of its Subsidiaries, or of any mortgage, indenture, deed of
trust, loan agreement, credit agreement or any other material agreement,
instrument or undertaking to which such Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in the
creation or imposition of any lien or encumbrance on any of the assets of such
Pledgor or any of its Subsidiaries except as contemplated by this Agreement;
(vi) all the shares of Stock of Subsidiaries of Holdings have been duly and
validly issued, are fully paid and nonassessable; (vii) each of the Pledged
Notes constituting
10
<PAGE>
Intercompany Notes, when executed by the obligor thereof, will be the legal,
valid and binding obligation of such obligor, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and (viii)
the pledge and assignment of the Securities pursuant to this Agreement, together
with the delivery of the Securities pursuant to this Agreement (which delivery
has been made), creates a valid and perfected first security interest in such
Securities and the proceeds thereof, subject to no prior lien or encumbrance or
to any agreement purporting to grant to any third party a lien or encumbrance on
the property or assets of such Pledgor which would include the Securities. Each
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and such Pledgor covenants and
agrees that it will have like title to and right to pledge any other property at
any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the other Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument or this Agreement; (iii) any furnishing of any
additional security to the Pledgee or its assignee or any acceptance thereof or
any release of any security by the Pledgee or its assignee; (iv) any limitation
on any party's liability or obligations under any such instrument or agreement
or any invalidity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof; or (v) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to such Pledgor or any Subsidiary of such Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Pledgor shall have notice
or knowledge of any of the foregoing.
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any
11
<PAGE>
part of the Pledged Stock, such Pledgor as soon as practicable and at its
expense will use its reasonable efforts to cause such registration to be
effected (and be kept effective) and will use its reasonable efforts to cause
such qualification and compliance to be effected (and be kept effective) as may
be so requested and as would permit or facilitate the sale and distribution of
such Pledged Stock, including, without limitation, registration under the
Securities Act of 1933 as then in effect (or any similar statute then in
effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other government
requirements; provided, that the Pledgee shall furnish to such Pledgor such
--------
information regarding the Pledgee as such Pledgor may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. Such Pledgor will cause the Pledgee to be kept reasonably advised
in writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of the Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, such Pledged Securities or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration; provided, that
--------
at least 10 days' notice of the time and place of any such sale shall be given
to such Pledgor. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion: (i) may proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Pledged Securities or part thereof shall have been filed
under such Securities Act; (ii) may approach and negotiate with a single
possible purchaser to effect such sale; and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Securities or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability for selling all or any part
of the Pledged Securities at a price which the Pledgee, in its sole
12
<PAGE>
and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after registration as
aforesaid.
18. TERMINATION, RELEASE. (a) Immediately after the Termination
Date (as defined below), this Agreement shall terminate (provided that all
indemnities set forth herein including, without limitation, in Section 11 hereof
shall survive any such termination) and the Pledgee, at the request and expense
of the respective Pledgor, will promptly execute and deliver to such Pledgor a
proper instrument or instruments acknowledging the satisfaction and termination
of this Agreement, and will duly release from the security interest created
hereby and assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Commitment and all
Interest Rate Protection Agreements or Other Hedging Agreements have been
terminated, no Note (as defined in the Credit Agreement) or Letter of Credit is
outstanding (other than Letters of Credit, together with all Fees that have
accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
Letter of Credit issuer in its sole and absolute discretion) and all other
Obligations (other than indemnities described in Section 11 hereof and in
Section 12.13 of the Credit Agreement which are not then due and payable) have
been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 8.02 of the Credit Agreement or is
otherwise released at the direction of the Required Banks (or all the Banks if
required by Section 12.12 of the Credit Agreement), the Pledgee, at the request
and expense of such Pledgor will duly release from the security interest created
hereby and assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as is then being
(or has been) so sold or released and as may be in possession of the Pledgee and
has not theretofore been released pursuant to this Agreement.
(c) At any time that a Pledgor desires that Collateral be released as
provided in the foregoing Section 18(a) or (b), it shall deliver to the Pledgee
a certificate signed by an Authorized Officer of such Pledgor stating that the
release of the respective Collateral is permitted pursuant to Section 18(a) or
(b).
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
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<PAGE>
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.:(212) 250-2500
Telecopier No.:(212) 250-7200
(c) if to any Bank (other than the Pledgee), at such address as such
Bank shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Pledgor directly affected thereby and the
Pledgee (with the written consent of either (x) the Required Banks (or all the
Banks if required by Section 12.12 of the Credit Agreement) at all times prior
to the time on which all Credit Document Obligations have been paid in full or
(y) the holders of at least a majority of the outstanding Other Obligations at
all times after the time on which all Credit Document Obligations have been paid
in full); provided, that any change, waiver, modification or variance affecting
--------
the rights and benefits of a single Class (as defined below) of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors (as defined below) of
such Class. For the purpose of this Agreement, the term "Class" shall mean each
class of Secured Creditors, i.e., whether (i) the Bank Creditors as holders of
----
the Credit Document Obligations or (ii) the Other Creditors as holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (i) with respect to the Credit
Document Obligations, the Required Banks and (ii) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of and be
enforceable
14
<PAGE>
by the Pledgee and its successors and assigns. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK. The headings in this Agreement are for purposes of reference only
and shall not limit or define the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument.
22. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof and
delivering the same to the Pledgee.
23. LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor
and the Secured Creditors that this Agreement shall be enforced against each
Pledgor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Notwithstanding
anything to the contrary contained herein, in furtherance of the foregoing, it
is noted that the obligations of each Pledgor constituting a Subsidiary
Guarantor have been limited as provided in its respective Guaranty.
15
<PAGE>
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
Address: CAMBRIDGE INDUSTRIES
c/o Cambridge Industries HOLDINGS, INC., as a Pledgor
555 Horace Brown Drive
Madison Heights, Michigan 48701
Attention: Richard S. Crawford
Telephone: (810) 616-0500 By /signature appears here/
Telecopy: (810) 616-0530 -------------------------
Title:
Address: CAMBRIDGE INDUSTRIES, INC., as a
555 Horace Brown Drive Pledgor
Madison Heights, Michigan 48701
Attention: Richard S. Crawford
Telephone: (810) 616-0500
Telecopy: (810) 616-0530 By /signature appears here/
-------------------------
Title:
CE AUTOMOTIVE TRIM SYSTEMS,
INC., as a Pledgor
By /signature appears here/
-------------------------
Title:
BANKERS TRUST COMPANY,
as Collateral Agent and
as Pledgee
By /signature appears here/
-------------------------
Title:
<PAGE>
EXHIBIT 10.30
================================================================================
SECURITY AGREEMENT
among
CAMBRIDGE INDUSTRIES HOLDINGS, INC.,
CAMBRIDGE INDUSTRIES, INC.
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of July 10, 1997
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TABLE OF CONTENTS
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ARTICLE I SECURITY INTERESTS.............................................. 2
1.1. Grant of Security Interests...................................... 2
1.2. Power of Attorney................................................ 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.............. 3
2.1. Necessary Filings................................................ 3
2.2. No Liens......................................................... 4
2.3. Other Financing Statements....................................... 4
2.4. Chief Executive Office; Records.................................. 4
2.5. Location of Inventory and Equipment.............................. 5
2.6. Recourse......................................................... 5
2.7. Trade Names; Change of Name...................................... 5
ARTICLE III SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT RIGHTS;
INSTRUMENTS............................................................ 6
3.1. Additional Representations and Warranties........................ 6
3.2. Maintenance of Records........................................... 6
3.3. Direction to Account Debtors; Contracting Parties; etc........... 6
3.4. Modification of Terms; etc....................................... 7
3.5. Collection....................................................... 7
3.6. Instruments...................................................... 7
3.7. Further Actions.................................................. 8
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS....................... 8
4.1. Additional Representations and Warranties........................ 8
4.2. Licenses and Assignments......................................... 9
4.3. Infringements.................................................... 9
4.4. Preservation of Marks............................................ 9
4.5. Maintenance of Registration...................................... 9
4.6. Future Registered Marks.......................................... 10
4.7. Remedies......................................................... 10
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ARTICLE V SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND
TRADE SECRETS.......................................................... 11
5.1. Additional Representations and Warranties........................ 11
5.2. Licenses and Assignments......................................... 12
5.3. Infringements.................................................... 12
5.4. Maintenance of Patents and Copyrights............................ 12
5.5. Prosecution of Patent and Copyright Applications................. 12
5.6. Other Patents and Copyrights..................................... 12
5.7. Remedies......................................................... 13
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL........................... 13
6.1. Protection of Collateral Agent's Security........................ 13
6.2. Warehouse Receipts Non-negotiable................................ 14
6.3. Further Actions.................................................. 14
6.4. Financing Statements............................................. 14
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.................. 14
7.1. Remedies; Obtaining the Collateral Upon Default.................. 14
7.2. Remedies; Disposition of the Collateral.......................... 16
7.3. Waiver of Claims................................................. 17
7.4. Application of Proceeds.......................................... 18
7.5. Remedies Cumulative.............................................. 19
7.6. Discontinuance of Proceedings.................................... 19
ARTICLE VIII INDEMNITY.................................................... 20
8.1. Indemnity........................................................ 20
8.2. Indemnity Obligations Secured by Collateral; Survival............ 21
ARTICLE IX DEFINITIONS.................................................... 21
ARTICLE X MISCELLANEOUS................................................... 26
10.1. Notices......................................................... 26
10.2. Waiver; Amendment............................................... 27
10.3. Obligations Absolute............................................ 27
10.4. Successors and Assigns.......................................... 27
10.5. Headings Descriptive............................................ 28
10.6. Governing Law................................................... 28
10.7. Assignor's Duties............................................... 28
10.8. Termination; Release............................................ 28
10.9. Counterparts.................................................... 29
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10.10. The Collateral Agent........................................... 29
10.11. Severability................................................... 29
10.12. Limited Obligations............................................ 29
10.13. Additional Assignors........................................... 30
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ANNEX A Schedule of Chief Executive Offices and other Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Trade and Fictitious Names
ANNEX D List of Marks
ANNEX E List of Patents and Applications
ANNEX F List of Copyrights and Applications
ANNEX G Assignment of Security Interest in United States Trademarks and Patents
ANNEX H Assignment of Security Interest in United States Copyrights
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SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of July 10, 1997, among each of the
undersigned (each, an "Assignor" and, collectively, the "Assignors") and Bankers
Trust Company, as Collateral Agent (the "Collateral Agent"), for the benefit of
the Secured Creditors (as defined below). Except as otherwise defined herein,
terms used herein and defined in the Credit Agreement (as defined below) shall
be used herein as therein defined.
W I T N E S S E T H :
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WHEREAS, Cambridge Industries Holdings, Inc. ("Holdings"), Cambridge
Industries, Inc. (the "Borrower"), various lenders from time to time party
thereto (the "Banks"), and Bankers Trust Company, as Agent (the "Agent," and
together with the Collateral Agent and the Banks, the "Bank Creditors"), have
entered into a Credit Agreement, dated as of July 10, 1997 (as amended, modified
or supplemented from time to time, the "Credit Agreement"), providing for the
making of Loans to the Borrower and the issuance of, and participation in,
Letters of Credit for the account of the Borrower, all as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
(i) interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and\or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors", and together with the Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to
the Secured Creditors the payment when due of all obligations and liabilities of
the Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
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WHEREAS, pursuant to the Subsidiary Guaranty, each Assignor (other
than Holdings and the Borrower) has jointly and severally guaranteed to the
Secured Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower and the issuance of, and participation in, Letters of Credit for the
account of the Borrower under the Credit Agreement that the Assignors shall have
executed and delivered to the Collateral Agent this Agreement;
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt
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and complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest of first priority, subject only to
Permitted Liens, in all of the right, title and interest of such Assignor in, to
and under all of the following, whether now existing or hereafter from time to
time acquired: (i) each and every Receivable, (ii) all Contracts (other than
Excluded Contracts), together with all Contract Rights arising thereunder, (iii)
all Inventory, (iv) all Equipment, (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, (vii) all computer programs of such Assignor and all intellectual
property rights therein (to the extent not constituting Excluded Contracts) and
all other proprietary information of such Assignor, including, but not limited
to, trade secrets and Trade Secret Rights, (viii) all other Goods, General
Intangibles, Chattel Paper, Documents and Instruments, (ix) the Cash Collateral
Account and all monies, securities and instruments deposited
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or required to be deposited in such Cash Collateral Account, and (x) all
Proceeds and products of any and all of the foregoing (all of the above,
collectively, the "Collateral").
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
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appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings
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necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral creates a
perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens) and is
entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by filing a financing statement under the Uniform Commercial Code as enacted in
any relevant jurisdiction or in the United States Patent and Trademark Office or
United States Copyright Office. Notwithstanding the foregoing, Assignor shall
have thirty (30) days from the date hereof to accomplish all such filings,
registrations and recordings in the United States Patent and Trademark Office
and the United States Copyright Office.
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2.2. No Liens. Such Assignor is, and as to Collateral acquired by it
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from time to time after the date hereof such Assignor will be, the owner of, or
has rights in, all Collateral free from any Lien, security interest, encumbrance
or other right, title or interest of any Person (other than Permitted Liens),
and such Assignor shall defend the Collateral to the extent of its rights
therein against all claims and demands of all Persons at any time claiming the
same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there is no
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financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Total Commitment has not been terminated or
any Note remains unpaid or any of the Obligations remain unpaid (other than any
indemnity described in Section 8.1 hereof and Section 12.13 of the Credit
Agreement which are not then due and payable) or any Interest Rate Protection
Agreement or Other Hedging Agreement or Letter of Credit remains in effect
(other than Letters of Credit, together with all Fees that have accrued and will
accrue thereon through the stated termination date of such Letters of Credit,
which have been supported in a manner satisfactory to the Letter of Credit
Issuer in its sole and absolute discretion) or any Obligations are owed with
respect thereto, such Assignor will not execute or authorize to be filed in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby by such Assignor or as permitted
by the Credit Agreement.
2.4. Chief Executive Office; Records. The chief executive office of
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such Assignor is located at the address or addresses indicated on Annex A hereto
for such Assignor. Such Assignor will not move its chief executive office
except to such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.4. The originals of all documents
evidencing all Receivables and Contract Rights of such Assignor and the only
original books of account and records of such Assignor relating thereto are, and
will continue to be, kept at such chief executive office, at one or more of the
locations set forth on Annex A hereto or at such new locations as such Assignor
may establish in accordance with the last sentence of this Section 2.4. All
Receivables and Contract Rights of such Assignor are, and will continue to be,
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from, the office locations described above or such
new location established in accordance with the last sentence of this Section
2.4. No Assignor shall establish new locations for such offices until (i) it
shall have given to the Collateral Agent not less than 30 days' prior written
notice of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may reasonably request and (ii) with respect to such new location, it shall have
taken all action, satisfactory to the
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Collateral Agent, to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and
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Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor. Each Assignor agrees that
all Inventory and Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations shown on Annex B
hereto, or such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.5. Any Assignor may establish a new
location for Inventory and Equipment only if (i) it shall have given to the
Collateral Agent not less than 30 days prior written notice of its intention so
to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may request and (ii) with
respect to such new location, it shall have taken all action satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.6. Recourse. This Agreement is made with full recourse to each
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Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of such Assignor contained herein, in the other
Credit Documents, in the Interest Rate Protection Agreements or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates in any
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jurisdiction under, or in the preceding 12 months has had or has operated in any
jurisdiction under, any trade names, fictitious names or other names except its
legal name and such other trade or fictitious names as are listed on Annex C
hereto. No Assignor shall change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names listed
on Annex C hereto and new names established in accordance with the last sentence
of this Section 2.7. No Assignor shall assume or operate in any jurisdiction
under any new trade, fictitious or other name until (i) it shall have given to
the Collateral Agent not less than 30 days' prior written notice of its
intention so to do, clearly describing such new name and the jurisdictions in
which such new name shall be used and providing such other information in
connection therewith as the Collateral Agent may request and (ii) with respect
to such new name, it shall have taken all action requested by the Collateral
Agent, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
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ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties. As of the time when
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each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are what they purport to be, and that all
papers and documents (if any) relating thereto will be the only original
writings evidencing and embodying such obligation of the account debtor named
therein (other than copies created for general accounting purposes).
3.2. Maintenance of Records. Each Assignor will keep and maintain at
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its own cost and expense accurate records of its Receivables and Contracts,
records of all payments received, all credits granted thereon, all merchandise
returned and all other dealings therewith, and such Assignor will make the same
available on such Assignor's premises to the Collateral Agent for inspection, at
such Assignor's own cost and expense, at any and all reasonable times upon prior
notice to an Authorized Officer of such Assignor. Upon the occurrence and
during the continuance of an Event of Default and at the request of the
Collateral Agent, such Assignor shall, at its own cost and expense, deliver all
tangible evidence of its Receivables and Contract Rights (including, without
limitation, all documents evidencing the Receivables and all Contracts) and such
books and records to the Collateral Agent or to its representatives (copies of
which evidence and books and records may be retained by such Assignor). Upon
the occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs, such Assignor shall legend, in form and manner
satisfactory to the Collateral Agent, the Receivables and the Contracts, as well
as books, records and documents (if any) of such Assignor evidencing or
pertaining to such Receivables and Contracts with an appropriate reference to
the fact that such Receivables and Contracts have been assigned to the
Collateral Agent and that the Collateral Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc. Upon
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the occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (z) that the Collateral Agent may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in,
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or thereafter deposited in, the Cash Collateral Account which application shall
be effected in the manner provided in Section 7.4 of this Agreement. The costs
and expenses (including reasonable attorneys' fees) of collection, whether
incurred by the Assignor or the Collateral Agent, shall be borne by the relevant
Assignor. The Collateral Agent shall deliver a copy of each notice referred to
in the preceding clause (y) to the relevant Assignor; provided, that the failure
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by the Collateral Agent to so notify such Assignor shall not affect the
effectiveness of such notice or the other rights of the Collateral Agent created
by this Section 3.3.
3.4. Modification of Terms; etc. No Assignor shall rescind or cancel
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any indebtedness evidenced by any Receivable or under any Contract, or modify in
any material respect any term thereof or make any material adjustment with
respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent, except as permitted by Section 3.5 hereof. Each
Assignor will duly fulfill all obligations on its part to be fulfilled under or
in connection with the Receivables and Contracts and will do nothing to impair
the rights of the Collateral Agent in the Receivables or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance with
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reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
prior to the occurrence of an Event of Default, any Assignor may allow in the
ordinary course of business as adjustments to amounts owing under its
Receivables and Contracts (i) an extension or renewal of the time or times of
payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which such Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument
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constituting Collateral, such Assignor will within 10 Business Days notify the
Collateral Agent thereof, and upon request by the Collateral Agent will promptly
deliver such Instrument to
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the Collateral Agent appropriately endorsed to the order of the Collateral Agent
as further security hereunder.
3.7. Further Actions. Each Assignor will, at its own expense, make,
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execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
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represents and warrants that it is the true, lawful, sole and exclusive owner of
or otherwise has the right to use the registered Marks listed in Annex D hereto
for such Assignor, except with respect to the Marks listed under Section I of
Annex D, and that said listed Marks include all the United States marks and
applications for United States marks registered in the United States Patent and
Trademark Office that such Assignor presently owns or uses in connection with
its business. Each Assignor represents and warrants that it owns, is licensed
to use or otherwise has the right to use all Marks that it uses. Each Assignor
further warrants that it has no knowledge of any third party claim that any
aspect of such Assignor's present or contemplated business operations infringes
or will infringe any trademark, service mark or trade name. Each Assignor
represents and warrants that it is the beneficial and record owner of all
trademark registrations and applications listed in Annex D hereto and designated
as "owned" thereon and otherwise has the right to use all other trademark
registrations and applications listed in Annex D hereto and, except for any Mark
which an Assignor determines, in its reasonable business judgment, will not have
a material effect on the financial condition, business or property of such
Assignor taken as a whole, that said registrations are valid, subsisting, have
not been cancelled and that such Assignor is not aware of any third-party claim
that any of said registrations is invalid or unenforceable, or is not aware that
there is any reason that any of said registrations is invalid or unenforceable,
or is not aware that there is any reason that any of said applications will not
pass to registration. Each Assignor represents and warrants that upon the
recordation of an Assignment of Security Interest in United States Trademarks
and Patents in the form of Annex G hereto in the United States Patent and
Trademark Office, together with filings on Form UCC-1 pursuant to this
Agreement, all filings, registrations and recordings necessary or appropriate to
perfect the security interest granted to the Collateral Agent in the United
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States Marks covered by this Agreement under federal law will have been
accomplished. Each Assignor agrees to execute such an Assignment of Security
Interest in United States Trademark and Patents covering all right, title and
interest in each United States Mark, and the associated goodwill, of such
Assignor, and to record the same. Each Assignor hereby grants to the Collateral
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of an Event of Default, any document which may be required by the
United States Patent and Trademark Office or secretary of state or equivalent
governmental agency of any State of the United States or any foreign
jurisdiction in order to effect an absolute assignment of all right, title and
interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the
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Credit Agreement or this Agreement, each Assignor hereby agrees not to divest
itself of any right under any Mark absent prior written approval of the
Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
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thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who such Assignor believes is infringing or diluting or otherwise
violating in any material respect any of such Assignor's rights in and to any
Mark, or with respect to any party claiming that such Assignor's use of any Mark
violates in any material respect any property right of that party. Each
Assignor further agrees, unless otherwise agreed by the Collateral Agent, to
prosecute any Person infringing any Mark owned by such Assignor in accordance
with reasonable business practices.
4.4. Preservation of Marks. Each Assignor agrees to use its Marks in
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interstate or foreign commerce during the time in which this Agreement is in
effect, sufficiently to preserve such Marks as trademarks or service marks under
the laws of the United States or the relevant foreign jurisdiction; provided,
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that, to the extent not prohibited by the Credit Agreement, no Assignor shall be
obligated to preserve any Mark in the event such Assignor determines, in its
reasonable business judgment, that the preservation of such Mark is no longer
desirable in the conduct of its business.
4.5. Maintenance of Registration. Each Assignor shall, at its own
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expense, diligently process all documents required by the Trademark Act of 1946,
15 U.S.C. (S)(S) 1051 et seq. to maintain trademark registrations, including but
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not limited to affidavits of use and applications for renewals of registration
in the United States Patent and Trademark Office for all of its registered Marks
pursuant to 15 U.S.C. (S)(S) 1058(a), 1059 and 1065, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
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Collateral Agent; provided, that no Assignor shall be obligated to maintain the
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registration of any Mark in the event that such Assignor determines, in its
reasonable business judgment, that the maintenance of such Mark is no longer
necessary or desirable in the conduct of its business. Each Assignor agrees to
notify the Collateral Agent three (3) months prior to the dates on which the
affidavits of use or the applications for renewal registration are due with
respect to any registered Mark that the affidavits of use or the renewal is
being processed or being abandoned, as the case may be.
4.6. Future Registered Marks. If any Mark registration issues
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hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, such Assignor shall deliver to the Collateral Agent
a copy of such certificate, and an assignment for security in such Mark, to the
Collateral Agent and at the expense of such Assignor, confirming the assignment
for security in such Mark to the Collateral Agent hereunder, the form of such
security to be substantially the same as the form hereof or in such other form
as may be reasonably satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be continuing,
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the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such rights,
title and interest shall immediately vest, in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency; (ii) take and use or sell the Marks and the goodwill of
such Assignor's business symbolized by the Marks and the right to carry on the
business and use the assets of such Assignor in connection with which the Marks
have been used; and (iii) direct such Assignor to refrain, in which event such
Assignor shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change such Assignor's
corporate name to eliminate therefrom any use of any Mark and execute such other
and further documents that the Collateral Agent may request to further confirm
this and to transfer ownership of the Marks and registrations and any pending
trademark application in the United States Patent and Trademark Office or any
equivalent government agency or office in any foreign jurisdiction to the
Collateral Agent.
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ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
-----------------------------------------
represents and warrants that it is the true and lawful exclusive owner of all
rights in (i) the Patents listed in Annex E hereto for such Assignor and that
said Patents constitute all the patents and applications for patents that such
Assignor now owns and (ii) the Copyrights listed in Annex F hereto for such
Assignor and that said Copyrights constitute all registrations of copyrights and
applications for copyright registrations that such Assignor now owns. Each
Assignor further represents and warrants that it is the true and lawful
exclusive owner or licensee of all rights in all United States trade secrets and
proprietary information necessary to operate the business of the Assignor (the
"Trade Secret Rights"). Each Assignor further represents and warrants that it
has the exclusive right to use and practice under all Patents and Copyrights
that it owns, uses or practices under and has the exclusive right to exclude
others from using or practicing under any Patents its owns, uses or practices
under. Each Assignor further warrants that, as of the date hereof it has no
knowledge of any third party claim that any aspect of such Assignor's present or
contemplated business operations infringes or will infringe any rights in any
patent or copyright or such Assignor has misappropriated any trade secret or
proprietary information. Each Assignor represents and warrants that upon the
recordation of an Assignment of Security Interest in United States Trademarks
and Patents in the form of Annex G hereto in the United States Patent and
Trademark Office and the recordation of an Assignment of Security Interest in
United States Copyrights in the form of Annex H hereto in the United States
Copyright Office, together with filings on Form UCC-1 pursuant to this
Agreement, all filings, registrations and recordings necessary or appropriate to
perfect the security interest granted to the Collateral Agent in the United
States Patents and United States Copyrights covered by this Agreement under
federal law will have been accomplished. Each Assignor agrees to execute such
an Assignment of Security Interest in United States Trademarks and Patents
covering all right, title and interest in each United States Patent of such
Assignor and to record the same, and to execute such an Assignment of Security
Interest in United States Copyrights covering all right, title and interest in
each United States Copyright of such Assignor and to record the same. Each
Assignor hereby grants to the Collateral Agent an absolute power of attorney to
sign, upon the occurrence and during the continuance of any Event of Default,
any document which may be required by the U.S. Patent and Trademark Office or
equivalent governmental agency in any foreign jurisdiction or the U.S. Copyright
Office or equivalent governmental agency in any foreign jurisdiction in order to
effect an absolute assignment of all right, title and interest in each Patent
and Copyright, and to record the same.
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5.2. Licenses and Assignments. Except as otherwise permitted by the
------------------------
Credit Agreement or this Agreement, each Assignor hereby agrees not to divest
itself of any right under any Patent or Copyright absent prior written approval
of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
-------------
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement,
contributing infringement or active inducement to infringe in any Patent or
Copyright or to any claim that the practice of any Patent or the use of any
Copyright violates any property right of a third party, or with respect to any
misappropriation of any Trade Secret Right or any claim that practice of any
Trade Secret Right violates any property right of a third party. Each Assignor
further agrees, absent direction of the Collateral Agent to the contrary,
diligently to prosecute any Person infringing any Patent or Copyright or any
Person misappropriating any Trade Secret Right.
5.4. Maintenance of Patents and Copyrights. At its own expense, each
-------------------------------------
Assignor shall make timely payment of all post-issuance fees required pursuant
to 35 U.S.C. (S) 41 and any foreign equivalent thereof to maintain in force
rights under each Patent, and to apply as permitted pursuant to applicable law
for any renewal of each Copyright, in any case absent prior written consent of
the Collateral Agent; provided, that, to the extent permitted by the Credit
--------
Agreement, no Assignor shall be obligated to maintain any Patent or Copyright in
the event such Assignor determines, in its reasonable business judgment, that
the maintenance of such Patent or Copyright is no longer necessary or desirable
in the conduct of its business.
5.5. Prosecution of Patent and Copyright Applications. At its own
------------------------------------------------
expense, each Assignor shall diligently prosecute all applications for Patents
listed in Annex E hereto and for Copyrights listed in Annex F hereto for such
Assignor and shall not abandon any such application prior to exhaustion of all
administrative and judicial remedies, absent written consent of the Collateral
Agent; provided, that, to the extend permitted by the Credit Agreement, no
--------
Assignor shall be obligated to prosecute any application in the event such
Assignor determines, in its reasonable business judgment, that the prosecuting
of such application is no longer necessary or desirable in the conduct of its
business.
5.6. Other Patents and Copyrights. Within 30 days of the acquisition
----------------------------
or issuance of a United States Patent, registration of a Copyright, or
acquisition of a registered Copyright, or of filing of an application for a
United States Patent or Copyright, the relevant Assignor shall deliver to the
Collateral Agent a copy of said Copyright or certificate or registration of, or
application therefor, said Patents, as the case may be, with an assignment for
security as to such Patent or Copyright, as the case may be, to the Collateral
Agent and at the expense of such Assignor, confirming the assignment for
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security, the form of such assignment for security to be substantially the same
as the form hereof or in such other form as may be reasonably satisfactory to
the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be continuing,
--------
the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents, Copyright and Trade Secret Rights; and (iii) direct such Assignor to
refrain, in which event such Assignor shall refrain, from practicing the Patents
and using the Copyrights and/or Trade Secret Rights directly or indirectly, and
such Assignor shall execute such other and further documents as the Collateral
Agent may request further to confirm this and to transfer ownership of the
Patents, Copyrights and Trade Secret Rights to the Collateral Agent for the
benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will
-----------------------------------------
do nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at such Assignor's own expense to the extent and in the
manner provided in the Credit Agreement. If any Assignor shall fail to insure
its Inventory and Equipment in accordance with the preceding sentence, or if any
Assignor shall fail to so endorse and deposit all policies or certificates with
respect thereto, the Collateral Agent shall have the right (but shall be under
no obligation) to procure such insurance and such Assignor agrees to promptly
reimburse the Collateral Agent for all costs and expenses of procuring such
insurance. Except as otherwise permitted to be retained by the relevant
Assignor pursuant to the Credit Agreement, the Collateral Agent shall, at the
time such proceeds of such insurance are distributed to the Secured Creditors,
apply such proceeds in accordance with Section 7.4 hereof. Each Assignor
assumes all liability and responsibility in connection with the Collateral
acquired by it and the liability of such Assignor to pay the Obligations shall
in no way be affected or diminished by reason of the fact that such Collateral
may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable
to such Assignor.
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6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees that if
---------------------------------
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law).
6.3. Further Actions. Each Assignor will, at its own expense, make,
---------------
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
6.4. Financing Statements. Each Assignor agrees to execute and
--------------------
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any other
relevant law. Each Assignor will pay any applicable filing fees, recordation
taxes and related expenses relating to its Collateral. Each Assignor hereby
authorizes the Collateral Agent to file any such financing statements without
the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
-----------------------------------------------
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing
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under applicable law, shall have all rights as a secured creditor under the
Uniform Commercial Code in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the
terms of such agreement, instrument or other obligation directly to the
Collateral Agent;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof, or
direct the relevant Assignor to sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof, and, in each case, take
possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral Agent,
in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to
the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by the
Collateral Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition;
and
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(vi) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights included in the
Collateral for such term and on such conditions and in such manner as the
Collateral Agent shall in its sole judgment determine (taking into account
such provisions as may be necessary to protect and preserve such Marks,
Patents or Copyrights);
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Agent or the Collateral Agent, in each case acting upon the instructions
of the Required Banks (or, after the date on which all Credit Document
Obligations have been paid in full, the holders of at least the majority of the
outstanding Other Obligations) and that no other Secured Creditor shall have any
right individually to seek to enforce or to enforce this Agreement or to realize
upon the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Agent or the Collateral Agent or the
holders of at least a majority of the outstanding Other Obligations, as the case
maybe, for the benefit of the Secured Creditors upon the terms of this
Agreement.
7.2. Remedies; Disposition of the Collateral. Any Collateral
---------------------------------------
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option,
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be subject to reserve), after publication of notice of such auction not less
than 10 days prior thereto in two newspapers in general circulation in the City
of New York. To the extent permitted by any such requirement of law, the
Collateral Agent may bid for and become the purchaser of the Collateral or any
item thereof, offered for sale in accordance with this Section without
accountability to the relevant Assignor. If, under mandatory requirements of
applicable law, the Collateral Agent shall be required to make disposition of
the Collateral within a period of time which does not permit the giving of
notice to the relevant Assignor as hereinabove specified, the Collateral Agent
need give such Assignor only such notice of disposition as shall be reasonably
practicable in view of such mandatory requirements of applicable law.
7.3. Waiver of Claims. Except as otherwise provided in this
----------------
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or at-
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tempting to claim the Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
-----------------------
Collateral Agent (or, to the extent the Pledge Agreement, the Mortgages or the
Additional Mortgages require proceeds of collateral under such Security
Documents to be applied in accordance with the provisions of this Agreement, the
Pledgee or Mortgagee under such other Security Document) upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the Collateral
Agent of the type provided in clauses (iii) and (iv) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors as provided in Section
7.4(c) hereof with each Secured Creditor receiving an amount equal to its
outstanding Obligations or, if the proceeds are insufficient to pay in full
all such Obligations, its Pro Rata Share (as defined below) of the amount
remaining to be distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 10.8 hereof, to the
relevant Assignor or, to the extent directed by such Assignor or a court of
competent jurisdiction, to whomever may be lawfully entitled to receive
such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or amount, that
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then unpaid amount of such Secured Creditor's Obligations and the
denominator of which is the then outstanding amount of all Obligations.
(c) All payments required to be made to the Bank Creditors hereunder
shall be made to the Agent under the Credit Agreement for the account of the
Bank Creditors and all payments required to be made to the Other Creditors
hereunder shall be made directly to the respective Other Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Agent under the Credit Agreement and (ii) the Other Creditors for a
determination (which the Agent, each Other Creditor and the Secured Creditors
agree (or shall agree) to provide upon request of
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the Collateral Agent) of the outstanding Obligations owed to the Bank Creditors
or the Other Creditors, as the case may be. Unless it has actual knowledge
(including by way of written notice from a Bank Creditor or an Other Creditor)
to the contrary, the Agent under the Credit Agreement, in furnishing information
pursuant to the preceding sentence, and the Collateral Agent, in acting
hereunder, shall be entitled to assume that (x) no Credit Document Obligations
other than principal, interest and regularly accruing fees are owing to any Bank
Creditor and (y) no Interest Rate Protection Agreement or Other Hedging
Agreement, or Other Obligations in respect thereof, are in existence.
(e) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clauses (a)(i) and (ii) of this Section 7.4 with respect to the relevant
Assignor.
7.5. Remedies Cumulative. Each and every right, power and remedy
-------------------
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection Agreements or Other Hedging Agreements, the other
Credit Documents or now or hereafter existing at law, in equity or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. No notice to or demand on any Assignor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including attorneys' fees, and the amounts thereof
shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent
-----------------------------
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and
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all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
---------
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including attorneys' fees and expenses) (for the purposes of this Section 8.1
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection
Agreement or Other Hedging Agreement, any other Credit Document or any other
document executed in connection herewith or therewith or the enforcement of any
of the terms of, or the preservation of any rights under any thereof, or in any
way relating to or arising out of the manufacture, ownership, ordering,
purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee. Each
Assignor agrees that upon written notice by any Indemnitee of the assertion of
such a liability, obligation, damage, injury, penalty, claim, demand, action,
suit or judgment, the relevant Assignor shall assume full responsibility for the
defense thereof. Each Indemnitee agrees to use its best efforts to promptly
notify the relevant Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
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discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
-----------------------------------------------------
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all other
Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Agent" shall have the meaning provided in the recitals to this
Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first paragraph
of this Agreement.
"Bank Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
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"Borrower" shall have the meaning provided in the recitals to this
Agreement.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of
this Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreements or Other Hedging Agreements).
"Copyrights" shall mean any United States or foreign copyright owned
by any Assignor, including any registrations of any Copyrights, in the United
States Copyright Office or the equivalent thereof in any foreign country, as
well as any application for a United States copyright registration or a foreign
copyright registration now or hereafter made with the United States Copyright
Office or the equivalent thereof in any foreign jurisdiction by any Assignor.
"Credit Agreement" shall have the meaning provided in the recitals
to this Agreement.
"Credit Document Obligations" shall have the meaning provided in
the definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time,
or both, would constitute an Event of Default.
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"Documents" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Excluded Contracts" shall mean one or more Contracts which by their
terms would be breached by the grant of the security interests created therein
pursuant to the terms of this Agreement.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Interest Rate Protection Agreements or Other Hedging Agreements"
shall have the meaning provided in the recitals to this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through work-
in-process to finished goods -- and all products and proceeds of whatever sort
and wherever located and any portion thereof which may be returned, rejected,
reclaimed or repossessed by the Collateral Agent from any Assignor's customers,
-23-
<PAGE>
and shall specifically include all "inventory" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any United
States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration or application
for registration of any trademarks and service marks in the United States Patent
and Trademark Office or the equivalent thereof in any State of the United States
or in any foreign country and any trade dress including logos, trade names,
company names, business names, fictitious names, other business identifiers
and/or designs used by any Assignor in the United States or any foreign country.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of each
Assignor, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document to which it is a party and the due
performance and compliance by each Assignor with the terms of each such Credit
Document (all such obligations and liabilities under this clause (i), except to
the extent consisting of obligations or indebtedness with respect to Interest
Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
of each Assignor now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other Hedging
Agreement including, in the case of Assignors other than the Borrower, all
obligations of such Assignor under its Guaranty in respect of Interest Rate
Protection Agreements or Other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called the "Other
Obligations"); (iii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of each Assignor referred to in
clauses (i) and (ii), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as
-24-
<PAGE>
to which such Indemnitee has the right to reimbursement under Section 8.1 of
this Agreement.
"Other Creditors" shall have the meaning provided in the recitals
to this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to which any
Assignor now or hereafter has title and any divisions or continuations thereof,
as well as any application for a United States or foreign patent now or
hereafter made by any Assignor.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or any Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b)
of this Agreement.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements
and indemnifications on, or of, any of the foregoing, (d) all powers of attorney
for the execution of any evidence of indebtedness or security or other writing
in connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing state-
-25-
<PAGE>
ments and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"Requisite Creditors" shall have the meaning provided in Section
10.2 of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals
to this Agreement.
"Termination Date" shall have the meaning provided in Section 10.8
of this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section
5.1 of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all notices,
-------
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at it address set forth opposite its
signature below;
(b) if to the Collateral Agent:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-2500
Facsimile No.: (212) 250-7200;
(c) if to any Bank Creditor (other than the Collateral Agent), at
such address as such Bank Creditor shall have specified in the Credit
Agreement;
-26-
<PAGE>
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Assignor and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of this
-----------------
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly affected thereby and the
Collateral Agent (with the consent of (x) either the Required Banks or, to the
extent required by Section 12.12 of the Credit Agreement, all of the Banks at
all times prior to the time on which all Credit Document Obligations have been
paid in full or (y) the holders of at least a majority of the outstanding Other
Obligations at all times after the time on which all Credit Document Obligations
have been paid in full); provided, that any change, waiver, modification or
--------
variance affecting the rights and benefits of a single Class of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of Secured
Creditors. For the purpose of this Agreement the term "Class" shall mean each
class of Secured Creditors, i.e., whether (x) the Bank Creditors as holders of
----
the Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
--------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any Interest Rate Protection Agreement or Other Hedging Agreement; or (c) any
amendment to or modification of any Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement or any security for any of the
Obligations; whether or not any Assignor shall have notice or knowledge of any
of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon
----------------------
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns; provided, that no Assignor
--------
may transfer or assign any or all of its rights or obligations hereunder without
the prior written consent of the Collateral Agent. All agreements, statements,
representations and warranties made by each Assignor herein or in any
certificate or other instrument delivered by such Assignor or on its behalf
-27-
<PAGE>
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements or Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
or on their behalf.
10.5. Headings Descriptive. The headings of the several sections
--------------------
of this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein
-----------------
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of each Assignor under or with
respect to any Collateral.
10.8. Termination; Release. (a) Immediately after the Termination
--------------------
Date, this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Interest Rate Protection Agreements or Other Hedging
Agreements have been terminated, no Note or Letter of Credit is outstanding
(other than Letters of Credit, together with all Fees that have accrued and will
accrue thereon through the stated termination date of such Letters of Credit,
which have been supported in a manner satisfactory to the Letter of Credit
Issuer in its sole and absolute discretion) and all other Obligations (other
than any indemnities described in Section 8.1 hereof and in Section 12.13 of the
Credit Agreement which are not then due and payable) have been paid in full.
-28-
<PAGE>
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 8.02 of the Credit Agreement or is
otherwise released at the direction of the Required Banks (or all the Banks if
required by Section 12.12 of the Credit Agreement), the Collateral Agent, at the
request and expense of such Assignor, will duly release from the security
interest created hereby and assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such of the
Collateral as is then being (or has been) so sold or released and as may be in
the possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement.
(c) At any time that the respective Assignor desires that Collateral
be released as provided in the foregoing Section 10.8(a) or (b), it shall
deliver to the Collateral Agent a certificate signed by an Authorized Officer
stating that the release of the respective Collateral is permitted pursuant to
Section 10.8(a) or (b) hereof.
10.9. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Collateral Agent.
10.10. The Collateral Agent. The Collateral Agent will hold in
--------------------
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the
obligations of the Collateral Agent as holder of the Collateral and interests
therein and with respect to the disposition thereof, and otherwise under this
Agreement, are only those expressly set forth in this Agreement. The Collateral
Agent shall act hereunder on the terms and conditions set forth in Section 11 of
the Credit Agreement.
10.11. Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.12. Limited Obligations. It is the desire and intent of each
-------------------
Assignor and the Secured Creditors that this Agreement shall be enforced against
each Assignor to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Notwithstanding anything to the contrary contained herein, in furtherance of the
foregoing, it is noted that the obligations of each Subsidiary Guarantor
constituting an Assignor have been limited as provided in its respective
Guaranty.
-29-
<PAGE>
10.13. Additional Assignors. It is understood and agreed that any
--------------------
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become an Assignor hereunder by executing a counterpart hereof and
delivering the same to the Collateral Agent.
-30-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Address: CAMBRIDGE INDUSTRIES
HOLDINGS, INC.
c/o Cambridge Industries as an Assignor
555 Horace Brown Drive
Madison Heights, Michigan 48701
Attention: Richard S. Crawford By /signature appears here/
Telephone: (810) 616-0500 ---------------------------
Telecopy: (810) 616-0530 Title:
Address: CAMBRIDGE INDUSTRIES, INC.
as an Assignor
555 Horace Brown Drive
Madison Heights, Michigan 48701
Attention: Richard S. Crawford By /signature appears here/
Telephone: (810) 616-0500 -------------------------
Telecopy: (810) 616-0530 Title:
CE AUTOMOTIVE TRIM SYSTEMS,
INC.
as an Assignor
By /signature appears here/
--------------------------
Title:
BANKERS TRUST COMPANY,
as Collateral Agent
By /signature appears here/
--------------------------
Title:
<PAGE>
Exhibit 10.31
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
between
EAGLE-PICHER INDUSTRIES, INC.
and
CAMBRIDGE INDUSTRIES, INC.
Dated July 9, 1997
Effective June 30, 1997
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions...................................................................................-1-
-----------
Section 2. Purchase and Sale of Assets and Purchase Price...............................................-11-
----------------------------------------------
2.01 Purchase.....................................................................................-11-
--------
2.02 Purchase Price...............................................................................-12-
--------------
2.03 Adjustment to Purchase Price.................................................................-12-
----------------------------
2.04 Internal Revenue Form 8594...................................................................-15-
--------------------------
Section 3. Closing......................................................................................-15-
-------
3.01 Time and Place. ............................................................................-15-
--------------
3.02 Deliveries by Seller. ......................................................................-15-
--------------------
3.03 Deliveries by Buyer. .......................................................................-16-
-------------------
3.04 Non-Assignable Contracts or Permits. .......................................................-17-
-----------------------------------
3.05 Further Adjustments to Reflect Closing Delay.................................................-17-
--------------------------------------------
Section 4. Representations and Warranties of Seller.....................................................-17-
----------------------------------------
4.01 Organization; Good Standing; and Qualification...............................................-18-
----------------------------------------------
4.02 Seller Affiliates............................................................................-18-
-----------------
4.03 Corporate Authority. .......................................................................-18-
-------------------
4.04 No Violation.................................................................................-18-
------------
4.05 Consents.....................................................................................-19-
--------
4.06 Title to Properties; Absence of Liens, Etc...................................................-19-
-------------------------------------------
4.07 Condition of Tangible Personal Property......................................................-19-
---------------------------------------
4.08 Completeness of Assets Transferred...........................................................-19-
----------------------------------
4.09 Customers and Suppliers......................................................................-20-
-----------------------
4.10 Financial Statements.........................................................................-20-
--------------------
4.11 Undisclosed Liabilities. ...................................................................-20-
-----------------------
4.12 Litigation...................................................................................-20-
----------
4.13 Contracts and Commitments....................................................................-20-
-------------------------
4.14 Compliance with Law..........................................................................-21-
-------------------
4.15 Environmental Compliance.....................................................................-21-
------------------------
4.16 Employees....................................................................................-23-
---------
4.17 Employee Agreements and Benefit Plans. .....................................................-23-
-------------------------------------
4.18 Insurance....................................................................................-24-
---------
4.19 Absence of Certain Changes, Events or Conditions.............................................-24-
------------------------------------------------
4.20 Taxes........................................................................................-25-
-----
4.21 Intellectual Property........................................................................-25-
---------------------
4.22 Accounts Receivable..........................................................................-26-
-------------------
4.23 Inventory....................................................................................-26-
---------
4.24 Transfer of Assets...........................................................................-26-
------------------
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 5. Representations and Warranties of Buyer......................................................-27-
---------------------------------------
5.01 Organization and Standing....................................................................-27-
-------------------------
5.02 Corporate Authority..........................................................................-27-
-------------------
5.03 No Violation.................................................................................-27-
------------
5.04 Litigation...................................................................................-27-
----------
5.05 Consents.....................................................................................-28-
--------
5.06 Financing....................................................................................-28-
---------
5.07 No Known Misrepresentations..................................................................-28-
---------------------------
Section 6. Certain Covenants of Seller..................................................................-28-
---------------------------
6.01 Access and Information.......................................................................-28-
----------------------
6.02 Conduct of Business Prior to Closing.........................................................-29-
------------------------------------
6.03 Confidentiality..............................................................................-30-
---------------
6.04 Reimbursement of Certain Repair or Replacement Costs.........................................-30-
----------------------------------------------------
Section 7. Certain Covenants of Buyer...................................................................-30-
--------------------------
7.01 Personnel Required in Response to Litigation.................................................-30-
--------------------------------------------
7.02 Confidentiality..............................................................................-31-
---------------
7.03 Use of the Name "Eagle-Picher"...............................................................-31-
------------------------------
7.04 Employee Matters.............................................................................-31-
----------------
7.05 Use of Inkster Center........................................................................-33-
---------------------
Section 8. Certain Additional Agreements and Covenants
-------------------------------------------
of Buyer and Seller..........................................................................-33-
-------------------
8.01 Consummation of Transactions.................................................................-33-
----------------------------
8.02 Public Announcements.........................................................................-33-
--------------------
8.03 Bulk Sales Laws..............................................................................-33-
---------------
8.04 Items Received after Effective Time..........................................................-33-
-----------------------------------
8.05 Access to Records............................................................................-34-
-----------------
8.06 Further Assurances...........................................................................-34-
------------------
8.07 Expenses; Sales and Other Transfer Taxes.....................................................-34-
----------------------------------------
8.08 Proration of Taxes...........................................................................-34-
------------------
8.09 HSR Act Filing. ............................................................................-35-
--------------
8.10 Transitional Services........................................................................-35-
---------------------
8.11 Title Evidence...............................................................................-35-
--------------
8.12 Other Tax Matters............................................................................-36-
-----------------
8.13 Certain Environmental Matters................................................................-37-
-----------------------------
8.14 Certain Patent Claims........................................................................-41-
---------------------
8.15 Right to Audit Year-End Financial Statements.................................................-42-
--------------------------------------------
8.16 Adjustments Due to Delay in the Closing Date.................................................-42-
--------------------------------------------
Section 9. Conditions to Buyer's Obligations............................................................-43-
---------------------------------
9.01 Accuracy of Representations and Warranties...................................................-43-
------------------------------------------
9.02 Litigation. ................................................................................-43-
----------
9.03 Consents and Approvals.......................................................................-44-
----------------------
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
9.04 Status of Real Property Title..................................................................-44-
-----------------------------
9.05 Customer Interviews............................................................................-44-
-------------------
Section 10. Conditions to Seller's Obligations.............................................................-44-
----------------------------------
10.01 Accuracy of Representations and Warranties.....................................................-44-
------------------------------------------
10.02 Litigation.....................................................................................-44-
----------
10.03 Consents and Approvals.........................................................................-45-
----------------------
Section 11. Survival of Representations and Warranties.....................................................-45-
------------------------------------------
Section 12. Indemnity......................................................................................-45-
---------
12.01 Indemnity by Seller............................................................................-45-
-------------------
12.02 Indemnity by Buyer.............................................................................-46-
------------------
12.03 Limitations....................................................................................-46-
-----------
12.04 Indemnity Procedures...........................................................................-46-
--------------------
12.05 Exclusive Remedy...............................................................................-48-
----------------
Section 13. Termination, Amendment and Waiver..............................................................-48-
---------------------------------
13.01 Termination of Agreement.......................................................................-48-
------------------------
13.02 Effect of Termination..........................................................................-49-
---------------------
13.03 Amendment, Extension and Waiver................................................................-49-
-------------------------------
Section 14. Miscellaneous..................................................................................-49-
-------------
14.01 Assignment; No Third-Party Rights..............................................................-49-
---------------------------------
14.02 Entire Agreement...............................................................................-49-
----------------
14.03 Section and Other Headings; Number.............................................................-49-
----------------------------------
14.04 Notices........................................................................................-50-
-------
14.05 Law Governing..................................................................................-50-
-------------
14.06 Counterparts...................................................................................-50-
------------
14.07 Resolution of Disputes.........................................................................-51-
----------------------
</TABLE>
-iii-
<PAGE>
EXHIBITS
--------
A Allocation of Consideration
B Bill of Sale and Assignment and Assumption of Liabilities Agreement
C Non-Competition and Confidentiality Agreement
D Opinion of Special Counsel for Seller
D-1 Opinion of the General Counsel of Seller
E Opinion of Counsel for Buyer
F Form of Employment Agreement
G Korean Joint Venture Share Transfer Agreement
SCHEDULES
---------
1.02(c)-1 On-Site Tangible Personal Property
1.02(c)-2 Off-Site Tangible Personal Property
1.02(d)-1 On-Site Leased Personal Property
1.02(d)-2 Off-Site Leased Personal Property
1.02(ix) Other Excluded Assets
1.03(d) Excluded Liabilities
1.03(e) Other Assumed Liabilities
1.15 Certain Designated Clean-Up Standards
1.37 Key Employees
1.38 "Seller's Knowledge" Personnel
1.41 Modified Door Skins
1.54 Exceptions to GAAP
2.03(a)(v) "Vacation and holiday" entry
2.03(a)(vi) "Maintenance equalization" entry
2.03(f) Adjusted February 28, 1997 Balance Sheet
2.03(g) Sample Closing Statement
4.02 Seller Affiliates
4.05 Consents (Exceptions)
4.06(a)-1 Owned Real Property
4.06(a)-2 Leased Real Property
4.06(b) Exceptions to Title
4.07 Condition of Tangible Personal Property (Exceptions)
4.09 Customers and Suppliers
4.10 Financial Statements
4.11 Other Undisclosed Liabilities
4.12 Litigation
4.13 Certain Contracts
4.14 Compliance With Law and Permits
4.15 Compliance With Environmental Laws
-iv-
<PAGE>
4.17(a) Employee Agreements and Benefit Plans
4.17(c) Post-Retirement Medical Benefits
4.18 Insurance
4.19 Absence of Certain Changes, Events or Conditions
4.20 Tax Matters
4.21(a) Proprietary Property; Infringement Allegations; Licenses
4.21(b) Computer Software
4.21(c) Door Skin Technical Drawings
6.01 Additional Due Diligence
8.13(a) Known Source Areas
-v-
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT is made on July 9, 1997, effective as of June 30, 1997,
between EAGLE-PICHER INDUSTRIES, INC. an Ohio corporation ("Seller"), and
CAMBRIDGE INDUSTRIES, INC., a Delaware corporation ("Buyer"), under the
following circumstances:
A. The Plastics Division of Seller is engaged in compression molding,
assembling and painting of sheet molding compound.
B. Upon the terms and conditions of this Agreement, Seller desires to
sell to Buyer, and Buyer desires to purchase from Seller, the Assets and the
Business (both as hereinafter defined) of the Plastics Division of Seller;
NOW, THEREFORE, Seller and Buyer agree as follows:
Section 1. Definitions. For the purpose of this Agreement, any amendments
-----------
hereto and any Exhibit attached hereto or Schedule described herein, and in
addition to terms defined elsewhere herein, the following terms shall have the
following meanings, except as otherwise expressly provided:
1.01 "Ashley Plant" means the facility located at 320 South Wabash Street,
Ashley, Indiana that is operated by the Division.
1.02 "Assets" means all of the assets and properties (of every kind,
nature, character and description, whether real, personal or mixed and whether
tangible or intangible) as the same shall exist at the Effective Time owned or
leased by Seller (other than the Excluded Assets) which are used in the
Business, including, without limitation, the following:
(a) the Owned Real Property;
(b) the Leased Real Property;
(c) all machinery, equipment, tools, furniture, furnishings, vehicles and
other fixed assets owned by Seller which relate to or are used in the Business,
including all of the same which is generally located on the Owned Real Property
or the Leased Real Property and listed in Schedule 1.02(c)-1, and including all
------------------
of the same which is not generally located on the Owned Real Property or the
Leased Real Property and is listed on Schedule 1.02(c)-2, except for items
------------------
listed on either such schedule which have been disposed of by Seller in the
ordinary course of the Business during the period from May 9, 1997 to the
Effective Time;
<PAGE>
(d) all machinery, equipment, tools, furniture, furnishings, and vehicles
leased by Seller which are used in the Business, a true and correct list of
which is set forth in Schedule 1.02(d)-1 with regard to such leased property
------------------
generally located on the Owned Real Property or the Leased Real Property and on
Schedule 1.02(d)-2 with regard to such leased property that is not generally
- - ------------------
located on the Owned Real Property or the Leased Real Property.
(e) all right, title and interest of Seller in and to customer tooling
used by the Division or any subcontractor of the Division for the Business;
(f) the Inventory;
(g) all rights of Seller in, to, or under any patent, trademark, service
mark, trade name or copyright (or registrations or applications therefor) used
in the Business or listed in Schedule 4.21; all other intellectual property
-------------
rights, patent disclosures, inventions, know-how, confidential business
information, computer software, data and documents, trade secrets or proprietary
information, processes and formulae of Seller which are used in the Business;
and licenses or other agreements to or from third parties regarding the
foregoing ("Proprietary Information");
(h) all accounts and notes receivable arising out of the Business;
(i) the prepaid expenses of the Business which have continued benefit to
Buyer;
(j) all of Seller's rights in, to and under the Contracts which arise out
of or relate to the Business;
(k) all of Seller's rights in, to and under the Permits to the extent
transferable;
(l) the Records;
(m) the Korean Joint Venture Interest;
(n) all waste materials located at the Owned Real Property as of the
Effective Time;
(o) all of the assets reflected in the asset accounts on the Closing
Statement; and
(p) all of Seller's rights in, to and under any noncompetition or
confidentiality agreement or similar arrangement with any Key Employee who does
not accept an offer of employment from Buyer as of the Effective Date as
contemplated by Section
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<PAGE>
7.04(a), but only to the extent such rights are assignable without the consent
of such Key Employee;
provided, however, that notwithstanding anything to the contrary herein
contained, the term "Assets" shall not include any of the following assets of
the Business (which shall be retained by Seller and are hereinafter referred to
as the "Excluded Assets"):
(i) all cash and cash equivalents;
(ii) all rights of Seller with respect to any policies or contracts of
insurance, deposits thereunder, and all claims of Seller under such policies and
contracts (other than claims for damage to any of the Assets, which damage
occurs prior to the Closing to the extent such damage is not repaired prior to
the Closing);
(iii) litigation claims and benefits to the extent they arise therefrom
(other than product warranty claims against third parties which arise out of the
Business) listed in Schedule 4.12;
-------------
(iv) any books and records of the Business which are specifically
excluded from the Records at Section 1.51;
(v) all rights of Seller under this Agreement including the proceeds of
the sale contemplated herein and other payments to Seller contemplated herein;
(vi) all trademarks, service marks, trade names, logos or similar names
or symbols containing or depicting the name "Eagle-Picher," "EP," or derivations
thereof or which are used by Seller in connection with its operations or assets
other than the Business;
(vii) all right, title and interest of Seller in the Inkster Center;
(viii) all assets of the Employee Plans and any related trusts; and
(ix) any assets listed in Schedule 1.02(ix) as Excluded Assets.
-----------------
1.03 "Assumed Liabilities" means only the liabilities and obligations of
Seller existing as of the Effective Time which relate to, or arise out of, the
Business, and are described immediately below in clauses (a) through (f):
(a) all accounts payable and other current liabilities of the Business,
all liabilities to employees of the Business for accrued vacations and holidays,
and accrued payroll (other than bonus payments accrued prior to the Effective
Time), and all liabilities of the Business for accrued utilities, but in each
case only to the extent reflected on the Closing Statement, provided, however,
that the Assumed Liabilities shall not include any account payable listed on
Schedule 1.03(a);
- - ----------------
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<PAGE>
(b) all obligations of Seller under the Contracts and the Permits but
only to the extent that performance thereunder relates to a period after the
Effective Time;
(c) except as specifically provided in Section 6.04 of this Agreement,
all obligations and liabilities of Seller for repair or replacement of products
of the Business shipped prior to the Effective Time;
(d) all liabilities of Seller incurred in connection with the Business
or the Assets that are set forth on Schedule 1.03(d);
----------------
(e) all liabilities of Seller incurred in connection with the Business
or the Assets that are reflected on the Closing Statement; and
(f) any and all liabilities, obligations, and commitments specifically
undertaken by Buyer pursuant to other provisions of this Agreement;
and it is expressly acknowledged and agreed that Assumed Liabilities shall not
include, and Buyer shall not be liable for any liabilities and obligations of
Seller which are not described in clauses (a) through (f) of this Section 1.03,
including, without limitation, the following:
(i) any indebtedness of the Business for borrowed money owing to Seller,
any Seller Affiliate or any third parties;
(ii) any liabilities for federal, state or local income, franchise,
personal property and real estate taxes and assessments or other taxes which
arise out of the Business or the ownership of the Assets for any period prior to
the Effective Time (it being understood that property taxes and assessments will
be prorated as of the Effective Time in accordance with Section 8.08);
(iii) any liabilities arising out of the employment relationship between
Seller and any of its employees or former employees existing at any time,
whether asserted before or after the Closing Date which are not described in
Section 1.03(a), except as otherwise specifically provided in Section 7.04(e);
(iv) any liabilities based on any theory of product liability or for
personal injury or property damage caused by defective products sold at any time
by Seller, regardless of when the injury or property damage is alleged to have
occurred;
(v) any pending or threatened litigation listed in Schedule 4.12 and any
-------------
claims arising out of or related to the same;
(vi) any liabilities for bonus payments accrued prior to the Effective
Time and, except as otherwise provided in Section 1.03(a), any liabilities
associated with or related to the Employee Plans; and
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<PAGE>
(vii) any liabilities arising out of Off-Site Disposal; and
(viii) any liabilities associated with or related to unwritten contracts,
agreements, understandings, arrangements, commitments, sales orders, product
quotations and product orders not listed on Schedule 4.13.
-------------
1.04 "Business" means the business of the Division as such business has
been conducted by Seller at the Grabill Plant, the Ashley Plant and the
Huntington Plant immediately prior to the Effective Time.
1.05 "Closing" means the closing for which provision is made in Section 3.
1.06 "Closing Adjustment" shall have the meaning ascribed to it in Section
2.03(e).
1.07 "Closing Date" means the date of the Closing.
1.08 "Closing Statement" means a statement of Net Worth of the Division
immediately prior to the Effective Time prepared in accordance with Section
2.03.
1.09 "COBRA" shall have the meaning ascribed to it in Section 4.17(c).
1.10 "Code" means the Internal Revenue Code of 1986, as amended.
1.11 "Continued Employee" means any employee of Seller (including but not
limited to Key Employees), who is employed by Seller in the Division immediately
prior to the Closing Date and is employed by Buyer after the Closing.
1.12 "Contracts" means all contracts, agreements, understandings,
arrangements, commitments, sales orders, product quotations, purchase orders to
which Seller is a party or by which Seller is bound and that relate to the
Business or the Assets in each case as the same may exist as of the Effective
Time, including for example, the following: (a) any distribution, sales, agency,
manufacturer's representative or similar contract relating to the sale or
distribution of the products of the Business or the Assets; (b) any contract
involving the future purchase of materials, supplies, equipment, or services;
(c) any contract for the future sale of products; (d) any lease of machinery,
equipment, furniture, furnishings, vehicles or other assets entered into by
Seller which relate primarily to the Business or Assets; (e) any licensing
arrangement, joint venture, or partnership agreement; (f) any agreement which
restricts Seller from doing business of the type conducted by the Business
anywhere in the world; (g) any contract for the sale of any of the Assets
outside the ordinary course of the Business; and (h) any lease of the Assets
under which Seller is the lessor; (i) any agreement or arrangement relating to
any of the Proprietary Information; and (j) any and all unwritten contracts,
agreements, understandings, arrangements, commitments, sales orders, product
quotations and purchase orders listed on Schedule
--------
-5-
<PAGE>
4.13; provided, however, the term "Contract" shall not include any Employee
- - ----
Plan. A "Material Contract" is any Contract other than: (i) a contract or
commitment involving expenditures of less than $25,000 per fiscal year in the
aggregate; (ii) a customer quotation, contract or commitment made or entered
into in the ordinary course of the Business at prices consistent with the past
practices of the Business which does not involve more than $25,000 per fiscal
year in sales; (iii) any contract for the purchase of materials, supplies, or
equipment entered into in the ordinary course of the Business which does not
involve an expenditure per fiscal year in excess of $25,000; or (iv) any
contract or commitment the duration of which is less than three months.
1.13 "Control Person(s)" of a named party means all shareholders, equity
owners, directors, officers, partners, employees, agents and representatives of
such party and all corporate or noncorporate entities the majority of whose
ownership is owned directly or indirectly by such party.
1.14 "Damages" means demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, fines and penalties, costs and
expenses (including by way of example but not limitation reasonable fees and
expenses of counsel).
1.15 "Designated Clean-Up Standards" means concentrations of Hazardous
Substances consistent with such concentrations as are acceptable under the
Indiana Voluntary Remediation Program (Ind. Code Sections 13-11-2 and 13-25-5)
("VRP") with respect to industrial properties in effect at the applicable time.
Certain standards set forth in Schedule 1.15 are deemed to be the applicable
-------------
Designated Clean-Up Standards for the Hazardous Substances designated, provided
that, to the extent consistent with the methodology set forth in the VRP,
Schedule 1.15 may be revised by Seller in its reasonable discretion as
- - -------------
additional information is received by Seller, which Seller shall reasonably
promptly share with Buyer.
1.16 "Division" means the Plastics Division of Seller.
1.17 "Door Skins" means fiberglass skins for doors.
1.18 "Effective Date" means June 30, 1997. "Effective Time" means 11:59
p.m. on the Effective Date.
1.19 "Employee Plans" shall have the meaning ascribed to it at Section
4.17.
1.20 "Encumbrance" means any pledge, security interest, lien, charge,
encumbrance, option or restriction on transfer.
1.20-1 "Enforcement Agency Requirements" means remedial actions required by
a governmental agency with proper jurisdiction pursuant to an enforcement action
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<PAGE>
under the Environmental Laws as are accepted by Seller, or environmental
remedial actions which are imposed by an order of a court with proper
jurisdiction from which no further appeal may be taken.
1.21 "Environmental Conditions" means any and all conditions, activities or
circumstances at or affecting the Owned Real Property or the Leased Real
Property that affects or reasonably could affect the On-Site Damages or the
determination whether any Damages are properly classified as On-Site Damages.
1.22 "Environmental Laws" mean any federal, state or local law, statute,
ordinance, rule, regulation or code, and any license, permit, authorization or
court order, judgment, decree or injunction to which the Business or the Assets
is subject, related to (i) the protection, preservation or restoration of the
environment, or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances. The term "Environmental Laws" includes, by way of
example but not limitation: the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et seq.; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, et
seq.; the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, et
seq.; the Toxic Substances Control Act, as amended, 125 U.S.C. Section 1251, et
seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. Section
11001, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq.;
all comparable state and local laws; and any common law (including by way of
example but not limitation any common law that may impose strict liability) that
may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence or exposure to any Hazardous Substance.
1.23 "Environmental Reports" means written reports, surveys or analyses
regarding compliance with Environmental Laws by the Division in the operation of
the Business or the condition of the Owned Real Property or the Leased Real
Property with respect to potential liabilities under the Environmental Laws but
does not include any reports on, work papers from or analyses of compliance
assessments that are protected from third party discovery by any applicable
attorney-client privilege or attorney work-product privilege.
1.24 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.25 "Exhibit" means any of the exhibits attached to and made a part of
this Agreement.
1.26 "Financial Statements" shall have the meaning ascribed to it at
Section 4.10.
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<PAGE>
1.27 "February 28, 1997 Balance Sheet" means the balance sheet of the
Division as at February 28, 1997 included in Schedule 4.10. "Adjusted February
-------------
28, 1997 Balance Sheet" shall have the meaning ascribed to it in Section
2.03(f).
1.28 "540 Patent" means U.S. Patent No. 4,550,540 directed toward a
Comprehensive Molded Door Assembly, and any continuation, divisional or reissue
patent based thereon or based on its parent application USSN 456,400 filed
January 7, 1983.
1.29 "540 Patent Damages" means Damages (including treble or punitive
damages) decreed in a final judgment by a court of law from which no appeal may
be made, suffered by Buyer as a result of actual or alleged infringement,
willful infringement, contributory infringement or inducement to infringement
(or other related claims stated by the same facts as state any of the foregoing
claims) of the 540 Patent arising out of: (a) the sale or manufacture of Prior
Door Skins by Seller on or before the Effective Time, or (b) the sale or
manufacture of Prior Door Skins by Buyer for or to Pease Industries, Inc. during
the period from the Effective Time until the earlier of the close of business on
October 31, 1997 or the date that the tooling or molds for the Modified Door
Skins are used in Buyer's manufacturing in the Business; provided, however, that
such 540 Patent Damages do not include (i) lost revenues or profits of Buyer;
(ii) research, development, tooling, and other costs arising from the redesign,
development and re-tooling to manufacture Door Skins different from the Prior
Door Skins; (iii) labor costs; (iv) marketing and sales costs; and (v) license
or royalty fees except where attributable to sales described in the foregoing
clauses (a) and (b). If during any appeal process with regard to Damages which
would be 540 Patent Damages but for the fact that additional appeals are
available Buyer is required to and does pay any such Damages, Seller shall
reimburse Buyer for such amounts, and if any such amount or portion thereof paid
by Buyer is returned to Buyer, Buyer shall promptly pay such returned amount to
Seller. Buyer shall use all commercially reasonable efforts to assist Seller to
obtain payment or return of all such amounts.
1.30 "Grabill Plant" means the facility located at 14123 Roth Road,
Grabill, Indiana that is operated by the Division.
1.31 "Hazardous Substances" shall mean any material presently listed,
defined, designated or classified as hazardous, toxic or radioactive, under any
Environmental Laws, whether by type or by quantity, and petroleum or any
derivative or by-product thereof.
1.32 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.33 "Huntington Plant" means the facility located at 1890 Riverfork Drive,
Huntington, Indiana that is operated by the Division.
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<PAGE>
1.34 "Identified Remedial Actions" shall have the meaning set forth in
Section 8.13(a).
1.35 "Inkster Center" means the Automotive Sales and Marketing Center in
Inkster, Michigan, now used by the Eagle-Picher Automotive Group.
1.36 "Inventory" means all finished products, work-in-process, raw
materials, spare parts and supplies which are used in the Business.
1.37 "Key Employees" means certain key employees of the Division who are
listed on Schedule 1.37 attached hereto.
-------------
1.37-1 "Known Source Area" shall have the meaning ascribed to it in Section
8.13(a).
1.38 "Known to Seller" or "to Seller's Knowledge" means any information
known (without any duty of independent inquiry) to any person (such knowledge to
be actual and not imputed) who is listed by name and position on Schedule 1.38.
-------------
1.39 "Korean Joint Venture Interest" means all of Seller's right, title and
interest in and to Dong Yang Eagle-Picher Limited, a corporation organized under
the laws of the Republic of Korea.
1.40 "Leased Real Property" means real property leased by Seller as lessee
that is used in the Business.
1.41 "Modified Door Skins" means Door Skins to be manufactured
substantially in accordance with the technical drawings attached as Schedule
--------
1.41 for sale to or at the direction of Pease Industries, Inc.
- - ----
1.42 "Net Worth" means an amount equal to the total assets less the total
liabilities of the Division on the Closing Statement or the Adjusted February
28, 1997 Balance Sheet, as the case may be.
1.43 "Off-Site Disposal" means the removal of Hazardous Substances or solid
wastes from the Owned Real Property or Leased Real Property, the transportation
of Hazardous Substances or solid wastes after removal from the Owned Real
Property or Leased Real Property, or the disposal of Hazardous Substances or
solid wastes after removal from the Owned Real Property or Leased Real Property,
together in any such case, with all arrangements therefor, and prior, in any
such case, to the Effective Time.
1.44 "On-Site Damages" means Damages arising out of:
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<PAGE>
(a) a breach of any representation or warranty of Seller contained in or
made pursuant to Section 4.15(b) of this Agreement; or
(b) all liabilities or obligations under the Environmental Laws arising out
of one or more violations of applicable regulatory requirements under the
Environmental Laws or arising out of Enforcement Agency Requirements, in each
case as are due to:
(i) Seller's operations on, or Seller's use or ownership of, the
Owned Real Property prior to the Effective Time;
(ii) Seller's operations on or Seller's use of the Leased Real
Property prior to the Effective Time; or
(iii) the condition on, at, under or of the Owned Real Property or the
Leased Real Property prior to the Effective Time; or
(c) the costs and expenses incurred by Seller and Seller's Affiliates for
remediation or clean-up actions described in Section 8.13(f) and the monitoring
and assessment actions described in Section 8.13(g); or
(d) environmental remediation expenses, environmental removal expenses or
environmental consultant or laboratory expenses arising out of clauses (a), (b)
or (c) of this Section 1.44;
provided that, the On-Site Damages do not include any Damages arising out of
Off-Site Disposal by Seller; and provided further, that On-Site Damages do not
include (i) Damages arising out of any releases or actions by Buyer or occurring
after the Effective Time, (ii) lost profits or revenues, or (iii) Damages
arising out of interference with or interruption in the Business or the
operation of the Assets.
1.45 [Intentionally Left Blank]
1.46 "Owned Real Property" means the real property at which the Ashley
Plant, the Grabill Plant or the Huntington Plant is located, other real property
used or managed by the Division, and all improvements thereon.
1.47 "Permits" means the federal, state, local and other governmental and
regulatory licenses, permits, orders, approvals and authorizations which relate
to, or are necessary to conduct the Business, or to own the Assets.
1.48 "Prior Door Skins" means Door Skins of the type manufactured by the
Division prior to the Effective Time, but does not include Modified Door Skins.
1.49 "Proprietary Information" shall have the meaning ascribed to it at
Section 1.02(g).
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<PAGE>
1.50 "Purchase Price" shall have the meaning ascribed to it at Section
2.02.
1.51 "Records" means a copy of the general ledger of the Business and
originals or copies of all property and equipment records, production records,
engineering records, purchasing and sales records, personnel and payroll
records, accounting records, magnetic copies of computer files and
documentation, customer and vendor lists, and other records and files used in
the Business or which relate to or are material to the Business or the Assets;
provided, however, "Records" shall not include the original of the general
ledger of the Business, tax returns of Seller and policies or contracts of
insurance, but Buyer shall be permitted to examine and make copies of such
documents provided Buyer certifies to Seller that it needs access to such
information for a bona fide business purpose reasonably satisfactory to Seller.
1.51-1 "Revised Designated Clean-Up Standards" means any one or more of the
Designated Clean-Up Standards if and as materially changed by regulations,
guidelines or similar statements promulgated by the State of Indiana under the
Environmental Laws of the State of Indiana in effect as of the Effective Date,
but does not include any standards changed due to new statutes or statutory
amendments or modifications that come into effect after the Effective Date.
1.52 "Schedule" means any of the Schedules listed in the Table of Contents
to this Agreement.
1.53 "Seller Affiliate(s)" means any entity in control of, controlled by or
under common control with Seller.
1.54 "Seller's Accounting Practices" means Seller's past accounting
practices, which are in material conformity with generally accepted accounting
principles (except as listed on Schedule 1.54 attached hereto) consistently
-------------
applied.
1.55 "Title Evidence" means the most recent version of the title
commitments and the surveys obtained or to be obtained by Buyer prior to Closing
as described in Section 8.11 of this Agreement.
1.56 "Year-end Financial Statements" shall have the meaning ascribed to it
in Section 4.10.
Section 2. Purchase and Sale of Assets and Purchase Price.
----------------------------------------------
2.01 Purchase. Subject to the terms and conditions of this Agreement,
--------
Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase and acquire from Seller, the Assets at the Closing, and Buyer
shall assume the Assumed Liabilities at the Closing.
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<PAGE>
2.02 Purchase Price. Subject to the adjustments provided for in Section
--------------
2.03, the purchase price of the Assets shall be Thirty-Two Million Five Hundred
Thousand Dollars ($32,500,000) (the "Purchase Price") and shall be allocated
among the Assets in accordance with Section 2.04.
2.03 Adjustment to Purchase Price. The Purchase Price shall be subject to
----------------------------
adjustment as provided in this Section 2.03.
(a) Preparation of the Closing Statement. Within 30 days after the
------------------------------------
Effective Time, Seller shall deliver to Buyer a proposed Closing Statement that
has been audited by Deloitte & Touche LLP (together with a signed statement by
such accounting firm verifying such audit). The Closing Statement shall be
prepared in accordance with Seller's Accounting Practices, as applied in
connection with the preparation of the February 28, 1997 Balance Sheet,
adjusted, however, to give effect to the following:
(i) the assets included on the Closing Statement shall not include
Excluded Assets;
(ii) the liabilities on the Closing Statement shall be only the
Assumed Liabilities and no other;
(iii) no deduction shall be made for depreciation after February 28,
1997;
(iv) no accrual shall be made for taxes to be paid by Seller pursuant
to Section 8.08 of this Agreement or otherwise;
(v) the amount accrued for "Vacation and holiday" shall be in
material conformity with generally accepted accounting principles,
consistently applied, and (subject to adjustment, if any, as is required so
that such amount is in material conformity with generally accepted
accounting principles, consistently applied, and subject to further
adjustment, if any, as is required so that such amount does not include an
amount for employee bonuses accrued prior to the Effective Time) shall be
as set forth on Schedule 2.03(a)(v) attached hereto; and
-------------------
(vi) the amount accrued for "Maintenance equalization" shall be in
material conformity with generally accepted accounting principles,
consistently applied, and (subject to adjustment as is required so that
such amount is in material conformity with generally accepted accounting
principles, consistently applied) shall be as set forth on Schedule
--------
2.03(a)(vi) attached hereto.
-----------
(b) Physical Inventory. Buyer and Seller agree that a physical inventory of
------------------
the Assets shall be taken by Seller as of the Closing Date and Buyer shall have
a right to observe the taking of the physical inventory.
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<PAGE>
(c) Access to Books and Records. After the Closing, Buyer shall permit
---------------------------
Seller and its respective representatives, during normal business hours, to have
reasonable access to, and to examine and make copies of the books and records of
Buyer, for purposes of preparing the Closing Statement. After the Closing,
Seller shall permit Buyer and its representatives, during normal business hours,
to have reasonable access to the records of Seller which are in the possession
of Seller and are necessary for Buyer and its representatives to review the
Closing Statement. In addition, Seller and Buyer shall each permit the other and
its representatives to review the work papers, if any, prepared or used by any
independent auditor retained by Seller or Buyer, as the case may be, to prepare
or review the Closing Statement.
(d) Objections to the Closing Statement.
-----------------------------------
(i) Buyer may object to any of the information contained in the
Closing Statement which could affect the Closing Adjustment if such
objection is based on a claim that the Closing Statement was not prepared
in accordance with Section 2.03(a). Any such objection must be made by
delivery of a written statement of objections (stating the basis of the
objections with reasonable specificity) to Seller within 30 days following
delivery of the Closing Statement. If Buyer makes such objection, Seller
and Buyer shall seek in good faith to resolve such differences within 30
days following the delivery of such objections. During such time, if Seller
disagrees with Buyer's objections, it shall state the basis of such
disagreement with reasonable specificity. If Buyer does not so object to
the Closing Statement within such 30-day period, the Closing Statement
shall be considered final and binding upon the parties.
(ii) In the event Buyer and Seller are unable to resolve a dispute or
disagreement set forth in a written objection pursuant to this Section
2.03(d), either party may elect, by written notice to the other party, to
have all such disputes or disagreements resolved by an accounting firm of
recognized national standing acceptable to Buyer and Seller and not then
employed by Seller or Buyer (the "Selected Accounting Firm"). If Buyer and
Seller cannot agree upon the accounting firm to serve as the Selected
Accounting Firm, then the Cincinnati, Ohio office of Coopers & Lybrand
L.L.P. shall serve as the Selected Accounting Firm. The Selected Accounting
Firm shall make a final and binding resolution of the disputes or
disagreements, and the Closing Statement as finally determined by the
Selected Accounting Firm shall be deemed acceptable to Buyer and Seller for
all purposes of this Agreement. No appeal from such determination shall be
permitted. The Selected Accounting Firm shall be instructed to use every
reasonable effort to perform its services within 30 days after submission
of the Closing Statement to it, and in any case, as soon as practicable
after such submission. The costs and expenses for the services of the
Selected Accounting Firm shall be borne in equal
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<PAGE>
proportion by Seller and Buyer. Judgment upon any award or decision by
the Selected Accounting Firm may be enforced by any court having
jurisdiction thereof.
(iii) In order to permit the selection in Section 2.03(d)(ii) of
Coopers & Lybrand L.L.P. as the Selected Accounting Firm if the parties
cannot otherwise agree: (A) Buyer represents that neither Buyer nor any
current shareholder or majority-owned subsidiary of Buyer currently uses
(and none of them within the last three years has used) the accounting
services of Coopers & Lybrand L.L.P., and (B) Seller represents that
neither Seller nor any current shareholder or majority-owned subsidiary of
Seller currently uses (and none of them within the last three years has
used) the accounting services of Coopers & Lybrand L.L.P.
(e) Payment of Closing Adjustment. The amount of the Closing Adjustment, if
-----------------------------
any, shall be determined as follows:
(i) if the Net Worth on the Closing Statement exceeds $30,351,363.04
(the Net Worth on the Adjusted February 28, 1997 Balance Sheet), then the
Closing Adjustment shall be an amount equal to such excess and shall be
paid to Seller by Buyer within five days after the Closing Adjustment is
finally determined; or
(ii) if the Net Worth on the Closing Statement is less than
$30,351,363.04 (the Net Worth on the Adjusted February 28, 1997 Balance
Sheet),then the Closing Adjustment shall be an amount equal to the
difference between the Net Worth on the Closing Statement and such
$30,351,363.04 and shall be paid to Buyer by Seller within five days after
the Closing Adjustment is finally determined.
The Closing Adjustment will be paid in cash by wire transfer of immediately
available funds to such bank account of payee as payee may specify.
(f) For purposes of this Agreement, the term "Adjusted February 28, 1997
Balance Sheet" shall mean the February 28, 1997 Balance Sheet with the following
adjustments:
(i) the assets included on the Adjusted February 28, 1997 Balance
Sheet shall not include Excluded Assets;
(ii) the liabilities on the Adjusted February 28, 1997 Balance Sheet
shall be only the liabilities and obligations of Seller that would be
Assumed Liabilities if in existence as of the Effective Time and no other;
and
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<PAGE>
(iii) no accrual shall be made for taxes to be paid by Seller pursuant
to Section 8.08 of this Agreement or otherwise.
Set forth as Schedule 2.03(f) is a copy of the Adjusted February 28, 1997
----------------
Balance Sheet.
(g) Sample Closing Statement Determination. Set forth as Schedule 2.03 (g)
-------------------------------------- -----------------
is a sample, hypothetical Closing Statement demonstrating how the Closing
Statement is to be determined in accordance with this Agreement.
2.04 Internal Revenue Form 8594. Seller and Buyer agree that the
--------------------------
consideration payable for the Assets, Business and Seller's covenant not to
compete is set forth on Exhibit A and is consistent with their negotiations and
---------
agreement; and Seller and Buyer shall each act in a manner consistent with
Exhibit A in (i) filing Internal Revenue Form 8594, captioned "Asset Acquisition
Statement under Section 1060"; and (ii) paying sales and other transfer taxes in
connection with the purchase and sale of the Assets pursuant to this Agreement.
Section 3. Closing.
-------
3.01 Time and Place. The Closing under this Agreement shall take place at
--------------
the offices of Thompson Hine & Flory LLP, 312 Walnut Street, Cincinnati, Ohio
45202, at 10:00 a.m., local time, on or before July 10, 1997, and shall be
effective as of the Effective Time.
3.02 Deliveries by Seller. At the Closing, Seller shall, subject to the
--------------------
fulfillment to its reasonable satisfaction of the conditions set forth in
Section 10 or its waiver thereof, deliver to Buyer:
(a) limited warranty deeds for the Owned Real Property in form and
substance reasonably satisfactory to Buyer;
(b) the Bill of Sale and Assignment and Assumption of Liabilities
Agreement in the form of Exhibit B, dated the Closing Date and duly executed by
---------
an authorized officer of Seller;
(c) assignments (in form reasonably satisfactory to Buyer) of all rights
of Seller under all patents, copyrights, trademarks, trade names, and
applications therefor and license rights with respect to any of the foregoing
(together with goodwill pertaining thereto) included in the Assets (the
"Assignments");
(d) a certificate, dated the Closing Date and executed by a duly authorized
officer of Seller, certifying that the conditions set forth in Section 9.01 have
been satisfied;
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<PAGE>
(e) the Non-Competition and Confidentiality Agreement in the form attached
hereto as Exhibit C, dated the Closing Date and duly executed by an authorized
---------
officer of Seller;
(f) an opinion, dated the Closing Date, of Thompson Hine & Flory LLP,
special counsel to Seller, in the form attached hereto as Exhibit D, and an
---------
opinion letter of James A. Ralston, Vice President, General Counsel and
Secretary of the Seller, in the form attached hereto as Schedule D-1;
------------
(g) copies of all resolutions of Seller's Board of Directors authorizing
the transactions contemplated hereby or otherwise relating to this Agreement and
the transactions contemplated hereby, certified by the Secretary (or an
Assistant Secretary) of Seller as being in full force and effect on the Closing
Date;
(h) releases and UCC Termination Statements from any third party having a
security interest in all or a portion of the Assets or such other evidence of
termination of such security interests as is reasonably acceptable to Buyer;
(i) a share transfer agreement for the Korean Joint Venture Interest
substantially in the form attached hereto as Exhibit G duly executed by an
---------
officer of Seller and such other documents as may be reasonably required by
counsel to the Buyer to cause the transfer to Buyer of the Korean Joint Venture
Interest at the Effective Time (or as promptly thereafter as possible, with such
transfer being treated by the parties as effective as of the Effective Time);
and
(j) such other documents and instruments as are required to be delivered to
Buyer by Seller pursuant to this Agreement at or prior to the Closing, including
vehicle titles to any certificated vehicles included among the Assets.
3.03 Deliveries by Buyer. At the Closing, Buyer shall, subject to the
-------------------
fulfillment to its reasonable satisfaction of the conditions set forth in
Section 9 or its waiver thereof, deliver to Seller the following:
(a) an amount equal to the Purchase Price, payable in cash by wire transfer
of immediately available funds to such bank account of Seller as Seller may
specify;
(b) the Bill of Sale and Assignment and Assumption of Liabilities Agreement
substantially in the form attached hereto as Exhibit B, dated the Closing Date
---------
and duly executed by an authorized officer of Buyer;
(c) a certificate, dated the Closing Date and executed by a duly authorized
officer of Buyer, certifying that the conditions set forth in Section 10.01 have
been satisfied;
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<PAGE>
(d) an opinion, dated the Closing Date, of Jaffe, Raitt, Heuer & Weiss,
counsel for Buyer, in the form attached hereto as Exhibit E;
---------
(e) copies of all resolutions of Buyer's Board of Directors authorizing the
transactions contemplated hereby or otherwise relating to this Agreement and the
transactions contemplated hereby, certified by the Secretary (or an Assistant
Secretary) of Buyer as being in full force and effect on the Closing Date;
(f) sales tax exemption certificate for the sale of inventories of Seller
and any other certificate for exemption available for other types of property;
(g) the share transfer agreement for the Korean Joint Venture Interest
substantially in the form attached hereto as Exhibit G duly executed by an
officer of Buyer; and
(h) such other documents and instruments as are required to be delivered to
Seller by Buyer pursuant to this Agreement at or prior to the Closing.
3.04 Non-Assignable Contracts or Permits. Notwithstanding anything
-----------------------------------
contained in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any right, title or interest in, to or under any Contract
or Permit or any claim or right of any benefit arising thereunder or resulting
therefrom if an attempted assignment or transfer thereof, without the consent of
a third party, would constitute a breach thereof or in any way adversely affect
the rights of Buyer or Seller thereunder, unless any such required consent is
obtained. Seller shall use its reasonable commercial efforts to obtain, and
Buyer agrees to cooperate with Seller in its efforts to obtain (including,
without limitation, the submission of reasonable financial and other information
concerning Buyer and the execution and delivery of any assumption agreements or
similar documents reasonably requested by a third party), the consent of any
such third party to the assignment or transfer thereof to Buyer in all cases in
which such consent is required for assignment or transfer. To the extent that
any of the Contracts are not assigned to Buyer at Closing and until such
Contracts have been assigned the performance obligations of Seller shall, as
between Seller and Buyer, be deemed to be subleased or subcontracted to Buyer.
The Purchase Price shall not be reduced or increased by reason of the
non-assignability or subcontracting of any of the Contracts.
3.05 Further Adjustments to Reflect Closing Delay. At the Closing, the
--------------------------------------------
parties shall make such further payments and take such further actions as are
required under Section 8.16.
Section 4. Representations and Warranties of Seller. Seller hereby
----------------------------------------
represents and warrants the following to Buyer as of the date of this Agreement:
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<PAGE>
4.01 Organization; Good Standing; and Qualification. Seller is a
----------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio with the corporate power and authority to conduct its
business and to own and lease its properties and assets and is duly qualified or
licensed to do business and is in good standing as a foreign corporation in the
State of Indiana.
4.02 Seller Affiliates. Except as set forth in Schedule 4.02, no part of
----------------- -------------
the Business or any substantially similar business is conducted through any
Seller Affiliate.
4.03 Corporate Authority. Seller has the corporate power and authority to
-------------------
execute, deliver and carry out the terms of this Agreement and the other
agreements and instruments to be executed and delivered by it in connection with
the transactions contemplated hereby and thereby and has taken all necessary
corporate action to authorize the execution and delivery of this Agreement and
such other agreements and instruments and the consummation of the transactions
contemplated hereby and thereby. This Agreement is, and the other agreements and
instruments to be executed and delivered by Seller in connection with the
transactions contemplated hereby and thereby will be, the legal, valid and
binding obligations of Seller, enforceable in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights generally and except that
the enforceability of Seller's obligations is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
4.04 No Violation. Neither the execution and delivery of this Agreement or
------------
the other documents and instruments to be executed and delivered by Seller
pursuant hereto, nor the consummation by Seller of the transactions contemplated
hereby or thereby (a) will violate any provision of the Articles of
Incorporation or Code of Regulations of Seller, (b) will, to Seller's Knowledge,
violate or be in conflict with any applicable law or any judgment, decree,
injunction or order of any court or governmental agency or authority, or (c)
subject to the provisions of Section 4.05 and to obtaining the consents set
forth in Schedule 4.05, will on the Closing Date violate or conflict with or
-------------
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under or will result in the termination of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the Assets under, any term
or provision of the Articles of Incorporation or Code of Regulations of Seller
or of any contract, commitment, understanding, arrangement, agreement, order,
arbitration award, judgment, decree or restriction of any kind or character to
which Seller is a party or by which it or any of its assets or properties may be
bound or affected, other than violations or conflicts which would not have a
material adverse effect on the Business or the Assets or the transactions
contemplated by this Agreement.
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<PAGE>
4.05 Consents. Except as set forth in Schedule 4.05, no authorization,
-------- -------------
consent, approval, order or filing with or notice to any court, governmental
agency, instrumentality or authority, or another entity or person, is necessary
for the execution and delivery of this Agreement or any other agreement or
document to be delivered by Seller or the consummation by Seller of the
transactions contemplated hereby or thereby.
4.06 Title to Properties; Absence of Liens, Etc.
------------------------------------------
(a) Real Property Schedule. Set forth in Schedule 4.06(a)-1 is a complete
---------------------- ------------------
list of all Owned Real Property identified by street address and legal
description. Set forth in Schedule 4.06(a)-2 is a complete list of all Leased
------------------
Real Property identified by street address and each lease, sublease or other
agreement under which Seller has rights with respect to the Leased Real
Property. None of the Owned Real Property or Leased Real Property is leased by
Seller to another person.
(b) Title to Real Property and Tangible Assets. Except as set forth in
------------------------------------------
Schedule 4.06(b), the Seller has good and marketable title to all of the Owned
- - ----------------
Real Property and all of its other tangible properties and assets, including
without limitation, those assets and properties reflected in the February 28,
1997 Balance Sheet and the Closing Statement, free and clear of all
Encumbrances, except (i) liens for current Taxes not yet delinquent; (ii)
properties and assets disposed of since the date of the February 28, 1997
Balance Sheet in the ordinary course of business; (iii) Encumbrances which do
not individually or in the aggregate materially detract from the value, or
impair the use, of the properties as currently used; (iv) Encumbrances disclosed
on any Title Evidence; (v) inchoate mechanics and materialmens' liens for
construction in progress described in Schedule 4.06(b); and (vi) liens of
----------------
workmen, repairmen, warehousemen and carriers arising in the ordinary course of
business which are not material in amount.
4.07 Condition of Tangible Personal Property. Except as disclosed in
---------------------------------------
Schedule 4.07 and except for inventories of the Business, to Seller's Knowledge,
- - -------------
each item of tangible personal property having a book value in excess of $10,000
included among the Assets is in operating condition or repair adequate for its
present use, reasonable wear and tear and scheduled maintenance excepted, and is
suitable for the conduct of the Business, and the Seller has not received any
notice that any such item of tangible personal property is in violation of any
applicable building, zoning, health or safety ordinance, code or regulation
except for notices relating to matters which have been cured or waived to the
satisfaction of the party on whose behalf any such notice was given.
4.08 Completeness of Assets Transferred. Upon the consummation of the
----------------------------------
transactions contemplated by this Agreement, Buyer will own, lease or have
access to all assets and rights reasonably required for the continued operation
of the Business on a basis consistent with the past practices of the Business
immediately prior to the
-19-
<PAGE>
Effective Time and all technological information so required will be available
to Buyer in usable and accessible form.
4.09 Customers and Suppliers. Schedule 4.09 is a list of the ten largest
----------------------- -------------
customers and suppliers (measured by dollar volume in each case) of the Business
during the fiscal year ended November 30, 1996.
4.10 Financial Statements. Attached to Schedule 4.10 are copies of the
-------------------- -------------
statements of income of the Business for the fiscal years ended November 30,
1994, November 30, 1995 and November 30, 1996 (the "Year-end Financial
Statements"). Also attached to Schedule 4.10 is a copy of the February 28, 1997
-------------
Balance Sheet of the Business (collectively with the Year-end Financial
Statements, the "Financial Statements"). Except as set forth in Schedule 4.10,
-------------
the Financial Statements have been prepared in conformity with Seller's
Accounting Practices and fairly present, in all material respects, the financial
position of the Business and the results of its operations as of the respective
dates thereof and for the periods then ended.
4.11 Undisclosed Liabilities. Seller has no material liabilities or
-----------------------
obligations arising out of the Business or in respect of the Assets whether
accrued, absolute, or contingent except for such liabilities or obligations
which are accrued or reserved against in the Financial Statements or are
disclosed in this Agreement or a Schedule or Exhibit hereto or arose in the
ordinary course of business of the Business after February 28, 1997 or are
liabilities or obligations under the Environmental Laws (which are the subject
matter of other provisions of this Agreement) or except as set forth in Schedule
--------
4.11.
- - ----
4.12 Litigation. Schedule 4.12 sets forth every investigation, action, suit
---------- -------------
or other legal proceeding, which involves the Business or the Assets and which
is presently pending (except such actions, suits or proceedings as have not been
served on Seller and which are not Known to Seller), or, to Seller's Knowledge,
is threatened against Seller in respect of the Business or Assets. To Seller's
Knowledge, it is not in violation of, and no party has asserted that it is
currently in violation of, any judgment, decree, injunction or order outstanding
against it and applicable to the Business or the Assets.
4.13 Contracts and Commitments. Schedule 4.13 is a true and complete list
------------------------- -------------
of all Material Contracts in effect on the date of this Agreement. Seller has
delivered to Buyer true and complete copies of each Material Contract listed in
Schedule 4.13. To Seller's Knowledge, Schedule 4.13 also contains a true and
- - ------------- -------------
complete list of all other Contracts (that is, other than Material Contracts) in
effect on the date of this Agreement, other than any purchase order entered into
by Seller (as purchaser) in the ordinary course of business requiring payment of
a total price of less than $25,000. Except as set forth in Schedule 4.13, Seller
-------------
is not in default in any material respect under any Material Contract and no
condition or state of facts exists which, with notice or the passage of time, or
both, would constitute such a default, except for any
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<PAGE>
requirement that consent be obtained in order for Seller to assign such
agreements to Buyer pursuant to this Agreement, except for such instances of
default which do not, either alone or in the aggregate, materially and adversely
affect the financial condition or operations of the Business, or except as
otherwise expressly disclosed in this Agreement or any Schedule.
4.14 Compliance with Law.
-------------------
(a) Except as set forth in Schedule 4.14 or Schedule 4.15 and except with
------------- -------------
regard to Environmental Laws (which are covered in Section 4.15(c)), to Seller's
Knowledge, Seller is operating the Business in compliance with all applicable
laws, rules, regulations, ordinances, and standards of all governmental
authorities (federal, state, local and otherwise), except for such instances of
noncompliance which do not, either alone or in the aggregate, materially and
adversely affect the financial condition or operations of the Business.
(b) Except as set forth in Schedule 4.14, Seller has all Permits, except
-------------
for such permits, licenses, orders and approvals, the absence of which does not
have a material adverse effect on the Business or the Assets. To Seller's
Knowledge, all of the Permits are in full force and effect, and to Seller's
Knowledge, no suspension or cancellation of any of them is being threatened, nor
will any of the Permits be affected by the consummation of the transactions
contemplated by this Agreement, except to the extent any such Permits are not
transferable or are transferable only with the consent of the respective
governmental or regulatory body. Except for those Permits identified on Schedule
--------
4.14, to Seller's Knowledge, all such Permits are transferable to Buyer, subject
- - ----
to the consent of the applicable governmental or regulatory bodies.
4.15 Environmental Compliance.
------------------------
(a) Environmental Reports. In accordance with the provisions of Section
---------------------
6.01 of this Agreement, Seller has made available to Buyer for Buyer's
inspection and copying all Environmental Reports which are in its possession.
(b) Condition of Property. Except as set forth in Schedule 4.15, to
--------------------- -------------
Seller's Knowledge, no Environmental Conditions have existed on the Owned Real
Property or the Leased Real Property while owned or leased by Seller, and no
Environmental Conditions currently exist on the Owned Real Property or the
Leased Real Property that violated or currently violate any Environmental Law,
where such Environmental Conditions will result in Buyer incurring any costs or
expenses for damages, fines, penalties, environmental remediation expenses or
environmental removal expenses as a result of actions or proceedings by any
federal, state or local environmental protection agency or department or by any
third party.
(c) Compliance with Law. Except as set forth in Schedule 4.15, to Seller's
------------------- -------------
Knowledge since January 7, 1991, the Business has been operated while managed
-21-
<PAGE>
by Seller, and is now being operated, in compliance with all applicable
Environmental Laws, except for such instances of noncompliance which do not,
either alone or in the aggregate, materially adversely affect the financial
condition or operations of the Business.
(d) Permits and Licenses. Except as set forth in Schedule 4.15, to Seller's
-------------------- -------------
Knowledge, since January 7, 1991 the Business has obtained all permits, licenses
and other authorizations which are required with respect to the properties and
operations of the Business under applicable Environmental Laws. Except as set
forth in Schedule 4.15, to Seller's Knowledge, since January 7, 1991 the
-------------
Business has been and is now in compliance with all terms and conditions of the
required permits, licenses and authorizations, and with any order, decree, or
judgment of any governmental entity which since January 7, 1991 affected or is
now affecting the Business or its properties, except for such instances of
noncompliance which do not, either alone or in the aggregate, materially
adversely affect the financial condition or operations of the Business.
(e) Legal Proceedings. Except as set forth in Schedule 4.15, to Seller's
----------------- -------------
Knowledge there are no actions, suits, demands, notices, claims, investigations
or proceedings under any Environmental Law pending or threatened against the
Business or relating to the Owned Real Property or Leased Real Property or
pending or threatened requests for information from any governmental entity
making inquiries in regard to the Owned Real Property or Leased Real Property or
the Business relating to any Environmental Law or any notice of a pending or
threatened claim that the Business is or may be a potentially responsible party
under any Environmental Law or any pending or threatened third party subpoena in
regard to the Owned Real Property or Leased Real Property or the Business
relating to any Environmental Law.
(f) Use or Storage of Hazardous Substances. Except as set forth in Schedule
-------------------------------------- --------
4.15, there are no Hazardous Substances currently utilized at or, to Seller's
- - ----
Knowledge, currently stored at the Owned Real Property except for those for
which permits have been obtained and are in effect or are present in a manner or
in quantities which do not require issuance of permits under the Environmental
Laws.
(g) Releases of Hazardous Substances. To Seller's Knowledge, except as set
--------------------------------
forth in Schedule 4.15, there has not been any unpermitted release of any
-------------
Hazardous Substances on, under, at or from the Owned Real Property or the Leased
Real Property during the time any such property was owned, leased, or operated
by the Business except for such releases which do not, either alone or in the
aggregate, materially and adversely affect the financial condition or operations
of the Business. The term "release" shall have the meaning given to such term in
Section 101(22) of CERCLA.
(h) Limitations. Nothing in this Section 4.15 shall be construed as a
-----------
representation or warranty regarding activities, practices or conditions on the
Owned Real Property, the Leased Real Property or any other real property
currently or
-22-
<PAGE>
previously owned or operated by the Business, prior to Seller's operation of the
Business, ownership or use of the Owned Real Property or use of the Leased Real
Property to which such representation or warranty is applied.
4.16 Employees. Seller has previously furnished Buyer with a list of the
---------
names, titles, and rates of compensation of all employees of the Business. Since
March 28, 1997, there has not been any increase in compensation payable to or to
become payable to any employees of the Business, except regular increases
granted in the ordinary course of the Business and consistent with past practice
of the Business. Except as disclosed in Schedule 4.12, there are no material
-------------
controversies, grievances or claims pending, or to Seller's Knowledge
threatened, by any of the employees, former employees or beneficiaries of
employees of the Business with respect to their employment or benefits incident
thereto. There is no union representation of employees of the Business, and to
Seller's Knowledge, there has been no attempt to organize a union in the last
twelve months.
4.17 Employee Agreements and Benefit Plans.
-------------------------------------
(a) Schedule 4.17(a) contains a complete list of all written employment
----------------
agreements, all pension, retirement, profit sharing and bonus plans, and all
deferred compensation, health, welfare, all severance arrangements, and other
similar plans for the benefit of any of the employees of the Business including
employee plans subject to ERISA (the "Employee Plans"). Seller has made
available to Buyer a true and complete copy of each such Employee Plan. None of
the Employee Plans is a multi-employer plan within the meaning of Section 3(37)
of ERISA; Seller is not required, nor has it ever been required, to contribute
with respect to any of its employees of the Business to any multiemployer plan;
neither Seller nor any Seller Affiliate has or will incur any withdrawal
liability to a multiemployer plan as a result of the transactions contemplated
by this Agreement; and Buyer will not incur any withdrawal liability to a
multiemployer plan based on Seller's participation therein as a result of the
transactions contemplated by this Agreement.
(b) Each of the Employee Plans is properly funded in accordance with the
Code and ERISA and has been administered in accordance with its terms, and each
of the Employee Plans which is subject to ERISA is in substantial compliance
with ERISA; each of the Employee Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified; no plan has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Code; Seller has not incurred, directly or indirectly, any liability
(including any material contingent liability) to or on account of an Employee
Plan which is subject to ERISA pursuant to Title IV of ERISA; no "reportable
event," as such term is defined in Section 4043(c) of ERISA or prohibited
transaction within the meaning of Section 406 of ERISA has occurred with respect
to any Employee Plan which is subject to ERISA and no tax has been imposed
pursuant to Section 4975 or 4976 of the Code; and no condition exists which
presents a material risk to Seller of incurring a liability to or on account of
an Employee
-23-
<PAGE>
Plan which is subject to ERISA pursuant to Title IV of ERISA; provided, however,
that the documents relating to the Employee Plans which are subject to the Code
and ERISA may not have yet been amended to reflect requirements imposed by the
Tax Reform Act of 1986 and other statutes and regulations if the period in which
such amendments must be adopted has not yet expired.
(c) There are no pending, or, to the Knowledge of Seller, threatened claims
(other than routine claims for benefits) by, on behalf of or against any of the
Employee Plans or any trusts related thereto. Except as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), or
as set forth in Schedule 4.17(c), no Employee Plan provides current or former
----------------
employees of the Business with post-retirement medical benefits. Each of the
employee plans which is subject to COBRA has been, and through the Effective
Time will be, administered in substantial compliance with COBRA.
4.18 Insurance. Schedule 4.18 sets forth a list and description of the
--------- -------------
insurance policies obtained by Seller with respect to the Business or Assets.
Seller shall maintain such policies in effect through the Effective Time. No
notice of suspension or cancellation of any such policies has been received by
Seller or to the Knowledge of Seller, is threatened. To Seller's Knowledge,
except as otherwise disclosed in this Agreement or any Schedule to this
Agreement, there is no state of facts and no event has occurred forming the
basis for any present property, general or products liability claim against
Seller, with respect to the Business or Division which, subject to applicable
deductibles, is not covered by such insurance. Set forth in Schedule 4.18 is a
-------------
description of loss claims (other than workers' compensation claims) made under
the policies listed on Schedule 4.18 since January 1,1992 with respect to the
-------------
Business. Seller has heretofore delivered to Buyer a list of workers'
compensation claims made with respect to the Business during the period of
January 1, 1992 until April 23, 1997.
4.19 Absence of Certain Changes, Events or Conditions. Since February 28,
------------------------------------------------
1997, and except as set forth in Schedule 4.19, (a) the Business has been
-------------
conducted in the ordinary course on a basis consistent with past practice; (b)
Seller has paid all creditors of the Business within the time agreed unless the
existence or amount of indebtedness is being contested in good faith; (c) there
has not been any material adverse change in the financial position, results of
operations, assets, liabilities, net worth or business of the Business; (d)
employees of the Business have continued to solicit and encourage contracts for
business in the usual and ordinary course and consistent with past practices;
(e) in respect of the Business, Seller has made no other payments or entered
into any transactions except in the ordinary course of business, consistent with
past practices; (f) Seller has not entered into, adopted or amended, or altered
the contribution policies under any Employee Plan (other than as are applicable
generally to the employees of Seller); (g) Seller has not increased the salaries
or compensation of any employees of the Business or paid any bonuses or similar
compensation to any of the employees of the Business, except as provided in
-24-
<PAGE>
Employee Plans in effect on February 28, 1997; (h) Seller has not attempted to
accelerate or delay the collection of accounts receivable or the payment of
accounts payable; and (i) subject to Section 6.02 of this Agreement, Seller has
not made any capital expenditures (or entered into commitments therefor) with
respect to the Business which are individually in excess of $100,000 or which in
the aggregate exceed $250,000; provided, however, that Seller shall continue any
existing capital expenditure projects or programs in a manner consistent with
the performance of such projects or programs prior to February 28, 1997.
4.20 Taxes. All federal, state, county, local and foreign tax returns and
-----
reports of Seller required by law to be filed as of the date hereof which relate
to or affect the Business or the Assets have been duly filed. Any and all such
returns and reports which are not yet due and payable which relate to the
Business or the Assets prior to the Effective Time will be filed by Seller as
and when required by law. All federal, state, local, foreign and any other taxes
(including all withholding and employment taxes), assessments (including
interest and penalties), fees and other governmental charges with respect to the
employees, properties, assets, income or franchises of Seller relating to or
affecting the Business or the Assets which have become due and payable have been
paid, except for any of the same which Seller is contesting in good faith by
appropriate proceedings or which are described on Schedule 4.20. Any and all
-------------
such taxes which are not yet due which relate to the Business or the Assets
prior to the Effective Time will be paid by Seller as and when required by law.
To Seller's Knowledge there is no tax deficiency which could result in liens or
claims on any of the Assets or on Buyer's title thereto or use thereof, or which
could result in any claim against Buyer.
4.21 Intellectual Property.
---------------------
(a) To Seller's Knowledge, except for allegations described on Schedule
--------
4.12 or Schedule 4.21(a), Seller has not infringed, misappropriated or misused
- - ---- ----------------
any patent, trademark, trade name, copyright (or application for any of the
foregoing), trade secret, know-how or confidential information or data of
another in connection with the operation of the Business and the manufacture of
the products of the Business. Schedule 4.21(a), lists all of Seller's patents,
----------------
trademarks, service marks, trade names and registered copyrights and all
applications for any of the foregoing which relate exclusively to the Business.
Subject to the licenses listed in Schedule 4.21(a), Seller has good and
----------------
marketable title to the registered patents and trademarks in the listed
jurisdictions and, to Seller's Knowledge, good title to all of the other
Proprietary Information. To Seller's Knowledge, Seller has valid, binding,
enforceable and assignable rights to use all of the Proprietary Information.
Buyer acknowledges that Seller makes no representation or warranty hereunder
that third parties cannot and do not lawfully possess and use in their business
trade secrets, know-how, patents, trademarks, service marks, trade names,
copyrights, applications for any of the foregoing and other similar proprietary
or intellectual property rights or interests which are similar to the
Proprietary Information. To Seller's Knowledge, the Proprietary
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Information is the only proprietary property used or necessary in connection
with the Business as presently conducted. To Seller's Knowledge, there has been
no infringement, misappropriation or misuse of any of the Proprietary
Information.
(b) Schedule 4.21(b) sets forth a list of all computer software owned,
----------------
licensed or used in the conduct of the Business which is material to the
operation of the Business. Seller holds good and valid title (free of all liens
and encumbrances) to, or has valid licenses to use, all of the computer software
listed in Schedule 4.21(b). Seller is not in material breach of the terms of any
----------------
computer software license listed on Schedule 4.21(b) and, to Seller's Knowledge,
----------------
none of the computer software listed in Schedule 4.21(b) infringes any
----------------
proprietary right of a third party.
(c) All Door Skins manufactured or to be manufactured pursuant to purchase
orders of the Business existing as of the Effective Time for sale after the
Effective Time to Caradon Doors and Windows, Inc. or to Premdor Inc. : (i) if
manufactured prior to the Closing Date, will be substantially in accordance with
the applicable technical drawings attached as Schedule 4.21(c), or, (ii) if to
----------------
be manufactured after the Closing Date, are subject to purchase orders for Door
Skins which provide or contemplate that such Door Skins shall be manufactured
substantially in accordance with the applicable technical drawings attached as
Schedule 4.21(c).
- - ----------------
4.22 Accounts Receivable. All accounts receivable arising out of the
-------------------
Business that are reflected on the Closing Statement will represent bona fide
obligations of the respective account debtors arising in the ordinary course of
the Business and, except as reflected in a reserve account included in the
Closing Statement, shall not be subject to any counterclaim or right of offset.
Except as reflected in a reserve account on the Closing Statement, to Seller's
Knowledge, all such accounts receivable are collectible in full within 180 days
after the Effective Time.
4.23 Inventory. The Inventory will, on the Closing Date, consist of items
---------
that are usable or saleable in the ordinary course of its business, except to
the extent of any reserve established by Seller in the Closing Statement in
regard to obsolete or slow-moving inventory and except for those items of
obsolete or slow-moving Inventory which have been written down in the Closing
Statement in accordance with Seller's Accounting Practices.
4.24 Transfer of Assets. THE ASSETS SHALL BE TRANSFERRED AND ASSIGNED BY
------------------
SELLER TO BUYER ON AN "AS IS, WHERE IS" BASIS WITHOUT REPRESENTATION OR WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED (INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE), EXCEPT FOR
SUCH REPRESENTATIONS AND WARRANTIES AS ARE EXPRESSLY SET FORTH IN THIS
AGREEMENT, AND EXCEPT SUCH WARRANTIES OF TITLE AS ARE SET FORTH IN THE
INSTRUMENTS OF TRANSFER, CONVEYANCE, AND ASSIGNMENT TO BE DELIVERED TO BUYER
PURSUANT TO SECTION 3.02.
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Section 5. Representations and Warranties of Buyer. Buyer hereby represents
---------------------------------------
and warrants the following to Seller as of the date of this Agreement:
5.01 Organization and Standing. Buyer is a corporation duly organized,
-------------------------
validly existing and in good standing under the laws of the State of Delaware
with the corporate power and authority to conduct its business and to own and
lease its properties and assets and is (or will be on the Closing Date) duly
qualified or licensed to do business and in good standing as a foreign
corporation in the State of Indiana.
5.02 Corporate Authority. Buyer has the corporate power and authority to
-------------------
execute, deliver and carry out the terms of this Agreement and the other
agreements and instruments to be executed and delivered by it in connection with
the transactions contemplated hereby and thereby and has taken all necessary
corporate action to authorize the execution and delivery of this Agreement and
such other agreements and instruments and the consummation of the transactions
contemplated hereby and thereby. This Agreement is, and the other agreements and
instruments to be executed and delivered by Buyer in connection with the
transactions contemplated hereby and thereby will be, the legal, valid and
binding obligations of Buyer, enforceable in accordance with their respective
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditor's rights generally and except that the
enforceability of Buyer's obligations is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.03 No Violation. Neither the execution or delivery of this Agreement or
------------
the other documents or instruments to be executed and delivered by Buyer
pursuant hereto, nor the consummation by Buyer of the transactions contemplated
hereby or thereby (a) will to Buyer's knowledge violate any provision of the
certificate of incorporation or by-laws of Buyer; (b) will, to Buyer's
knowledge, violate or be in conflict with any applicable law or any judgment,
decree, injunction or order of any court or governmental agency or authority; or
(c) subject to the provisions of Section 5.05, will on the Closing Date violate
or be in conflict with or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under or will result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
assets or properties of Buyer under, any term or provision of the certificate of
incorporation or by-laws of Buyer or of any contract, commitment, understanding,
arrangement or agreement of any kind or character to which Buyer is a party or
by which Buyer or any of its properties or assets may be bound or affected,
other than violations or conflicts which would not have a material adverse
effect on transactions contemplated by this Agreement.
5.04 Litigation. There is no action, suit, proceeding or investigation at
----------
law or in equity or by or before any governmental instrumentality or other
agency now
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<PAGE>
pending or, to the knowledge of Buyer threatened, against Buyer which would
materially adversely affect the business or financial condition of Buyer, taken
as a whole, or the ability of Buyer to consummate the transactions contemplated
hereby.
5.05 Consents. Except for the HSR Act filing and waiting period expiration
--------
described in Section 8.09, no authorization, consent, approval, order of or
filing with or notice to any court, governmental agency, instrumentality, or
authority or other entity or person, is necessary for the execution and delivery
of this Agreement or any other agreement or document to be delivered by Buyer or
the consummation by Buyer of the transactions contemplated hereby.
5.06 Financing. Buyer has secured, and has delivered to Seller a true and
---------
correct copy of, a written commitment from Bankers Trust Company to finance the
transactions contemplated by this Agreement.
5.07 No Known Misrepresentations. Buyer, together with its consultants,
---------------------------
representatives and agents, has no actual knowledge (without any duty of
independent inquiry) of any misrepresentation or breach of warranty by Seller in
regard to the representations and warranties set forth in Section 4.15 and
environmental matters under Section 4.14(b), or as updated as the Closing Date
pursuant to Section 9.01.
Section 6. Certain Covenants of Seller.
---------------------------
6.01 Access and Information; Customer Interviews.
-------------------------------------------
(a) Seller has heretofore provided to Buyer and Buyer's authorized
representatives reasonable access during normal business hours to the books and
records of the Division and to the Owned Real Property, and has caused the
Division to furnish Buyer with such information with respect to the Business and
Assets as Buyer or its authorized representatives from time to time requested.
Buyer has substantially completed its due diligence review of the Business, the
Assets and the financial statements of the Division, except as described on
Schedule 6.01. During the period from the date of the Agreement to the Closing
- - -------------
Date, Seller shall provide to Buyer and Buyer's authorized representatives
reasonable access during normal business hours to the books and records of the
Division and the Owned Real Property, but only insofar as such access is
reasonably required with regard to Buyer's due diligence listed in
Schedule 6.01. Buyer shall indemnify and hold Seller and its employees and
agents, and each of them, harmless from and against any and all losses, claims,
damages and liabilities (including by way of example, but not limitation,
reasonable attorneys' fees incurred in connection therewith) arising out of or
resulting from Buyer's due diligence review as described in this Section 6.01 or
Buyer's exercise of its rights under this Section 6.01 whether occurring prior
to or after the date of this Agreement.
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<PAGE>
(b) Buyer may, in its discretion, interview prior to the Closing Date the
following customers of the Business: (i) John Deere; (ii) Pease Industries,
Inc.; (iii) Volvo; (iv) Caradon Doors and Windows, Inc.; and (v) Premdor Inc;
provided that Buyer shall give Seller adequate notice of each such interview and
Seller may, in its discretion, have a representative of Seller in attendance at
each such interview.
6.02 Conduct of Business Prior to Closing. Unless the prior written consent
------------------------------------
of Buyer is otherwise obtained, which consent shall not be unreasonably withheld
(and Buyer shall at all times designate one or more persons to be available
during normal business hours, which persons(s) shall have the authority to
provide such consent), between the date hereof and the Closing Date, the
Business will be conducted in the ordinary course that is substantially in the
same manner as it previously has been carried on by Seller, using the same
methods of manufacture, purchase, sale, lease, accounting and operating,
provided that without Buyer's consent (which consent shall not be unreasonably
withheld), Seller with respect to the Business and Assets:
(a) will not enter into, adopt or amend, or alter the contribution
policies under, any Employee Plan (other than as are applicable generally to the
employees of Seller);
(b) enter into or amend any Employee Plan (other than as are applicable
generally to the employees of Seller), increase the salaries or compensation of
any employees of the Business or pay any bonuses or similar compensation to any
of the employees of the Business, except as provided in Employee Plans in effect
on the date of this Agreement;
(c) will use its reasonable commercial efforts to preserve the Business
intact, keeping available the service of its employees and preserving the
goodwill of suppliers, customers and others doing business with the Business;
(d) will not enter into any agreement for the purchase, sale or other
disposition of, or purchase, sell or otherwise dispose of, any equipment,
supplies, inventory, investments or other assets (other than sales of inventory,
purchases of parts, materials and supplies, in each case in the ordinary course
of the Business);
(e) will not compromise or write-off any material account receivable;
(f) will not attempt to accelerate or delay or cause any other party to
accelerate or delay the collection of accounts receivable or the payment of
accounts payable; and
(g) will not make any capital expenditure (or enter into commitments
therefor) with respect to the Business which is individually in excess of
$100,000 or which in the aggregate exceed $250,000 (except as disclosed in
Schedule 4.19); provided, however, that Seller shall continue any existing
capital expenditure projects or
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<PAGE>
programs in a manner consistent with the performance of such projects or
programs prior to the date of this Agreement.
6.03 Confidentiality. After the Closing Date, Seller shall keep
---------------
confidential, except as to directors and officers of Buyer and Control Persons,
all information concerning the Business which was considered confidential by
Seller prior to the Closing Date, unless such information is required to be
disclosed by law (in which case Seller shall promptly notify Buyer of any such
pending disclosures) or is readily ascertainable from public or published
information or trade sources.
6.04 Reimbursement of Certain Repair or Replacement Costs. Seller shall
----------------------------------------------------
reimburse Buyer for any and all amounts of payments made or "direct costs"
incurred by Buyer prior to the date eighteen months after the Closing Date for
obligations and liabilities of Seller for repair or replacement of products of
the Business shipped prior to the Effective Time, but only to the extent such
amounts exceed the reserve therefor on the Closing Statement, only to the extent
such payments were made or costs incurred in a commercially reasonable manner
with due regard for reasonable minimization of such payments and costs and only
for amounts for which Buyer has given notice to Seller within nineteen months
after the Effective Time. The term "direct costs" as used in the previous
sentence refers to direct costs borne by Buyer for raw materials, labor and
out-of-pocket expenses (such as freight) for such reimbursable repairs or
replacements calculated in accordance with Buyer's standard accounting practices
and does not include other costs such as (by way of example but not limitation)
fixed costs, overhead costs or selling, general or administrative costs. The
provisions of this Section 6.04 do not apply to any claims by third parties for
property damage, physical injury or death, regardless of whether such claims
arise out of allegations of breach of contract, tort, strict liability, products
liability or otherwise; to the extent the responsibility for such other claims
is allocated under this Agreement, other provisions shall govern.
Section 7. Certain Covenants of Buyer.
--------------------------
7.01 Personnel Required in Response to Litigation. Buyer agrees to make
--------------------------------------------
former employees of the Business available to Seller as reasonably required by
Seller after the Closing Date in the event that any litigation which Seller is
required to defend is commenced or previously was commenced against Seller with
regard to the Business. Seller agrees to reimburse Buyer for: (a) actual and
reasonable out-of-pocket expenses, such as travel costs incurred by Buyer in
connection with requests by Seller pursuant to this Section 7.01, and (b) base
salaries, base wages and overtime wages paid by Buyer to those of its employees
who were formerly employed by Seller in the Business with respect to the hours
spent by such employees on such matters at Seller's request, but such
reimbursement will be applicable only for activities initiated by Seller (e.g.,
in helping Seller prepare for litigation but not for activities such as
discovery initiated by another party) in proceedings in which Seller
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<PAGE>
is a party or a potential indemnitor and then only to the extent the aggregate
amount of such base salaries, base wages and overtime wages exceeds $15,000.
7.02 Confidentiality. Buyer agrees that any information contained in any
---------------
Schedule or Exhibit to this Agreement or otherwise provided to Buyer pursuant to
this Agreement shall be held by Buyer as confidential information in accordance
with, and shall be subject to the terms of, that certain letter confidentiality
agreement dated December 5, 1996, executed by on behalf of Buyer and Bain
Capital and by McDonald & Company Securities, Inc. on behalf of itself and
Seller and entered into in connection with the transactions contemplated hereby
(the "Confidentiality Agreement"). The terms of the Confidentiality Agreement
are hereby incorporated by reference herein and shall continue in full force and
effect, and if this Agreement is terminated or if the Closing shall not have
occurred for any reason whatsoever, the Confidentiality Agreement shall
thereafter remain in full force and effect in accordance with its terms.
7.03 Use of the Name "Eagle-Picher". After the Effective Time, Buyer may
------------------------------
continue to use existing supplies of sales literature, stationery, signs and
other materials which identify Seller provided (i) that with respect to products
shipped to customers of Buyer after the Effective Time, Buyer shall remove or
block out the name "Eagle-Picher" or any derivation thereof and (ii) that with
respect to all other materials, Buyer shall also block out such identifying
names.
7.04 Employee Matters.
----------------
(a) Buyer will offer employment as of the Effective Date to each of the Key
Employees pursuant to employment agreements substantially in the form of Exhibit
-------
F attached hereto at total compensation levels (remuneration and benefits) for
- - -
each Key Employee equal to or greater than that currently received from the
Seller. Buyer, in its sole discretion, may offer employment to any or all other
employees of the Division.
(b) Except for the Assumed Liabilities and except for Buyer's obligations
under such employment agreements with Key Employees, Buyer does not assume and
shall not be responsible for, any liability, commitment or obligation of Seller
for any employment responsibilities or obligations of Seller including, by way
of example, but not limitation, any obligations and liabilities of Seller for
salaries, bonuses or other compensation, for any severance pay under any
severance or separation plan, policy or agreement or similar obligation arising
out of or in connection with any termination or change of employment (including
in connection with consummation of the transactions contemplated in this
Agreement), for any obligation or liability under any collective bargaining or
labor agreements, or for any obligation or liability of Seller arising out of
the sponsorship or administration of, or contribution to, any Employee Plan or
contributions to any multiemployer pension plan, as defined in Section 3(37) of
ERISA (whether or not these contributions were made for the benefit of employees
of the Business).
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<PAGE>
(c) Notwithstanding the provisions of Section 7.04(b), Buyer shall make
available to each Continued Employee medical benefits the same as those
generally provided to other employees of Buyer, provided, however, that: (i) the
medical benefits made available by Buyer shall not include any provision by
which Buyer shall pay premiums for such employees for coverage under a medical
benefit plan provided by Seller to its employees, (ii) no provision of this
Section 7.04 shall require Buyer to pay COBRA premiums for any of its employees
who become eligible for COBRA benefits as a result of termination of their
employment by Seller, and (iii) such medical benefits shall not apply to
dependents of Continued Employees who, on the Closing Date, are confined to a
hospital, but shall apply to each such dependent on the earliest of the
following dates applicable to such dependent (as long as the Continued Employee
on whom such dependent's coverage is based is still employed by Buyer as of such
date): (A) the date on which the condition on which such hospital confinement is
based ends, (B) the date on which such dependent is able to resume his normal
activities, and (C) the date on which such dependent becomes eligible for such
medical benefits as a result of any change in the policies and practices of
Buyer. Such medical benefits provided by Buyer shall be offered by Buyer from
the Closing Date until at least 18 months thereafter, shall not have preexisting
condition exclusions (other than as specifically provided in clause (iii) of the
preceding sentence) longer than the exclusions in Seller's plans and shall
credit coverage with the Seller against any preexisting condition exclusion
period. Buyer shall recognize or cause to be recognized the dollar amount of all
expenses incurred by employees during the 1997 calendar year up to the Closing
Date for purposes of satisfying the 1997 calendar year deductibles and
co-payment limitations under relevant benefit plans of Buyer. Seller shall
furnish, in a form reasonably acceptable to Buyer, sufficient data concerning
deductibles and co-payments satisfied while covered under Seller's plans. Seller
shall comply with its obligations under COBRA with respect to its employees
employed in the Business prior to the Closing Date.
(d) If the Closing occurs, Seller will amend, effective as of the Effective
Time, the Eagle-Picher Salaried Plan and the Eagle-Picher Hourly Plan to provide
that, solely for the purpose of determining eligibility for early retirement
(but not benefit accrual), employees of the Business will receive vesting
service credit for employment with the Buyer after the Closing Date. This
amendment will not affect any employee's accrued benefit under the Seller's
plans, nor change the early retirement reduction factor which will be applied to
that accrued benefit if the employee elects to retire early under Seller's
plan(s). This amendment will not cause an employee to become vested in his
accrued benefit if he would not have been vested in his accrued benefit as of
the Closing Date without the amendment contemplated by this Section 7.04(d).
(e) Buyer shall be responsible for ensuring that all requirements of the
Worker Adjustment and Retraining Notification Act are met in connection with
this Agreement and the transactions contemplated by this Agreement, including
but not limited to, providing proper notices to employees of Seller and to
others.
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<PAGE>
7.05 Use of Inkster Center. Buyer agrees that even though Division
---------------------
personnel now use the Inkster Center, the Inkster Center will not be available
for use by Buyer's employees or representatives after the Closing.
Section 8. Certain Additional Agreements and Covenants of Buyer and Seller.
---------------------------------------------------------------
8.01 Consummation of Transactions. Upon the terms and subject to the
----------------------------
conditions of this Agreement, each of the parties hereto agrees to use its best
efforts (a) to take, or cause to be taken, all such actions and to do, or cause
to be done, all other things necessary to carry out its obligations hereunder;
(b) to cause the conditions to the obligations of the other party hereto to be
satisfied prior to or at the Closing; and (c) to consummate and make effective,
as soon as reasonably practicable, the transactions contemplated by this
Agreement, including obtaining all waivers, permits, consents and approvals and
effecting all registrations, filings and notices with or to third parties or
governmental or public bodies or authorities which are necessary in connection
with the transactions contemplated by this Agreement; provided, however, that
this Section 8.01 shall not require either party to waive any condition for its
benefit or any performance hereunder by the other party or to make any payment
to any third party, whether private or governmental, or to expend any funds or
incur any economic burden in connection with obtaining the consent of any third
party, whether private or governmental; and provided, further, that this Section
8.01 shall not require such party to take any action the result of which, in its
reasonable judgment, would be to impose material limitations on its ability to
consummate and retain the full benefits of the transactions contemplated hereby.
8.02 Public Announcements. Prior to the Closing Date, Buyer, Seller or any
--------------------
Control Person of either of them will mutually agree on any announcement or
correspondence with or to the public or customers, suppliers, or employees of
Seller about the terms and conditions of this Agreement or the transactions
contemplated hereby unless such announcement is required by law in the good
faith opinion of counsel and in such a case, the announcing or corresponding
party will notify the other party and provide it in advance with a copy of the
public disclosure and an opportunity to comment on such proposed disclosure. On
or after the Closing Date, Seller and Buyer will not disclose the amount of the
Purchase Price without the consent of the other or unless required to do so by
law.
8.03 Bulk Sales Laws. Seller and Buyer hereby waive compliance with the
---------------
provisions of any applicable bulk sales or other similar laws.
8.04 Items Received after Effective Time. Seller shall promptly pay or
-----------------------------------
transfer to Buyer, if and when received, any amounts or other items which shall
be received by Seller after the Effective Time in respect of any receivables or
other Assets transferred and assigned to Buyer. Buyer shall promptly pay to
Seller, if and when received, any amounts or other items which shall be received
by Buyer after the Effective Time which are not transferred to Buyer pursuant to
this Agreement.
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8.05 Access to Records. Buyer agrees that on and after the Closing it will
-----------------
permit Seller and its representatives during normal business hours to have
access to and examine and make copies of all of the Records which are delivered
to Buyer pursuant hereto provided that Seller states that it requires such
information in connection with the preparation of tax returns or another bona
fide business purpose reasonably satisfactory to Buyer. Buyer also agrees that
it will cooperate with Seller and make information available to Seller as
reasonably requested by Seller in connection with litigation involving the
Business or Assets for which Seller has retained liability under this Agreement.
Seller agrees that it will use all commercial efforts to prevent the disclosure
to any person or use by any person of any confidential information which is
delivered to Seller pursuant to this Section 8.05 other than pursuant to a court
order or subpoena or with respect to tax returns and other reports required by
law. All Records which are delivered to Buyer hereunder will be preserved by
Buyer and all Records which are not delivered to Buyer hereunder will be
preserved by Seller, in each case, for a period of seven years following the
Closing.
8.06 Further Assurances. Each party shall at the request of the other party
------------------
do and perform or cause to be done and performed all such further acts and
furnish, execute and deliver such other documents, instruments, certificates,
notices or other further assurances as counsel for the requesting party may
reasonably request, from time to time, to consummate more effectively the
transactions contemplated by this Agreement or to vest in Buyer all of Seller's
right, title and interest in the Assets.
8.07 Expenses; Sales and Other Transfer Taxes. Except as otherwise provided
----------------------------------------
in this Agreement, each party will pay all fees and expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby;
provided, however, that all sales, transfer and similar taxes and fees incurred
in connection with this Agreement and the transactions contemplated hereby, if
any, shall be borne by Buyer, and Buyer shall file all necessary documentation
with respect to such taxes.
8.08 Proration of Taxes.
------------------
(a) All real property, personal property and similar taxes and installments
of general and special assessments, if any, with respect to the Assets shall be
prorated as of the Effective Time. Such prorations shall, initially, be based on
the most recent tax and assessment statements, received by Seller as of the
Closing Date. Seller shall be responsible for all such taxes allocable to all
times prior to the Effective Time and Buyer shall be responsible for all such
taxes and assessments allocable to all times after the Effective Time. Following
the Effective Time, each party shall, upon request of the other party,
immediately reimburse the other party for any such taxes, assessments or other
expenses for which said party is responsible but have been paid by the other
party.
(b) If the amount of any real property, personal property or similar tax
changes after the Effective Time for any reason whatsoever (for instance, as a
result
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<PAGE>
of an audit, appeal, revaluation or the use of an incorrect estimate by the
parties), whether such change is the result of any action of or by Seller, Buyer
or the tax authorities, the parties shall promptly adjust the prorations of such
taxes hereunder. Seller shall be responsible for and shall make an adjustment
payment to Buyer for any increase in such taxes, prorated as of the Effective
Time, and Seller shall benefit from and Buyer shall make an adjustment payment
to Seller for any decrease in such taxes, prorated as of the Effective Time,
provided that all changes in taxes which affect only post-Effective Time periods
of time shall be the sole obligation of, or shall inure solely to the benefit
of, Buyer.
(c) To facilitate the adjustments described in Section 8.08(b) above,
Buyer shall promptly provide Seller with a copy of any real property, personal
property or similar tax bill or statement received by Buyer which affects any
tax which was prorated hereunder, even if the tax bill or statement does not
reflect a subsequent amendment or change. If either Buyer or Seller determine
that a prorated tax has changed, the parties shall immediately meet to resolve
the amount of any adjustment payment. If both parties cannot agree as to the
proper amount of adjustment, the issue shall be submitted for resolution under
the procedure outlined in Section 2.03(d) of this Agreement.
8.09 HSR Act Filing. Seller and Buyer acknowledge that the transactions
--------------
contemplated by this Agreement require filings with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") under the HSR Act. Seller and Buyer have
filed with the FTC and the Antitrust Division the notifications and reports
required to be filed pursuant to the HSR Act, which notifications and reports
comply in all material respects with the requirements of such Act. Buyer shall
be solely responsible for payment of the filing fees under the HSR Act.
8.10 Transitional Services. Seller will cooperate with Buyer to undertake
---------------------
to allow Buyer to make use from the Effective Time until August 31, 1997 of the
lock-box used by Seller immediately prior to the Effective Time for the
collection by Buyer of accounts receivable included in the Assets or generated
after the Effective Time by the Business being acquired. The parties agree that
Seller will not have any further obligation to, and will not, provide any other
services to Buyer in regard to the transition of the ownership of the Assets and
the Businesses as contemplated by this Agreement.
8.11 Title Evidence. Buyer shall, at its sole cost and expense, obtain
--------------
prior to June 16, 1997: (a) a commitment for owner's policies of title insurance
for each of the parcels of Owned Real Property pursuant to which the title
company issuing the same commits to issue an ALTA form owner's policy of title
insurance, and (b) an "as-built" survey of each of the parcels of Owned Real
Property, either of which may be modified pursuant to Section 9.04. Buyer shall
deliver copies of such commitments and surveys to Seller prior to June 16, 1997.
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<PAGE>
8.12 Other Tax Matters.
-----------------
(a) Whenever any taxing authority sends a notice of an audit, initiates an
examination of Seller with regard to the Business, the Assets or the Division,
or otherwise asserts a claim, makes an assessment or disputes the amount of
taxes with regard to the Business, the Assets or the Division: (i) for any
taxable period for which Seller is or may be liable; or (ii) for any taxable
period that involves an issue that could potentially affect a taxable period for
which Seller is or may be liable, Buyer, when informed thereof, shall promptly
inform Seller, and Seller shall have the right to control any resulting
proceedings and to determine whether and when to settle any such claim,
assessment or dispute to the extent such proceedings or determinations affect
the amount of taxes for which Seller is liable under this Agreement. Whenever
any taxing authority sends a notice of an audit, initiates an examination of
Buyer with regard to the Business or the Assets or otherwise asserts a claim,
makes an assessment or disputes the amount of taxes with regard to the Business
or the Assets; (i) for any taxable period for which Buyer is liable; or (ii) for
any taxable period that involves an issue that could potentially affect a
taxable period for which Buyer is or may be liable, Seller, when informed
thereof, shall promptly inform Buyer, and Buyer shall have the right to control
any resulting proceedings and to determine whether and when to settle any such
claim, assessment or dispute, except to the extent such proceedings affect the
amount of taxes for which Seller is liable under this Agreement.
(b) Buyer and Seller will provide the other with such assistance as may
reasonably be requested by either of them in connection with the preparation of
any tax return, any audit or other examination by any taxing authority, judicial
or administration proceedings relating to liability for taxes in connection with
the Business, the Assets or the Division, and each will retain and provide the
other with any records or information which may be relevant to such return,
audit or examination, proceedings or determination. Such assistance shall
include making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder, and
shall include providing copies of any relevant tax return and supporting work
schedules. The party requesting assistance hereunder shall reimburse the other
for reasonable expenses incurred in providing such assistance.
(c) Without limiting in any way the foregoing provisions of this Section
8.12, Buyer hereby agrees that it will retain copies of all Records or
information which may be relevant to the tax returns or obligations of Seller
with regard to the Business, the Assets or the Division for all taxable periods
which include the Effective Time, and that such Records and information shall be
maintained for a period of seven years. During said seven year period, Buyer
will not destroy or otherwise dispose of such Records or information without
first providing Seller with a reasonable opportunity to review and copy the
same.
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<PAGE>
8.13 Certain Environmental Matters
-----------------------------
(a) Set forth in Schedule 8.13(a) is a list of certain areas at the Owned
----------------
Real Property that have been identified by the parties as known source areas
(the "Known Source Areas").
(i) After the Closing Date, Seller will diligently and in a commercially
reasonable manner undertake the following work reasonably necessary to address
certain Known Source Areas identified on Schedule 8.13(a) (the "Identified
----------------
Remedial Actions"): (A) delineate the extent of contamination to the extent such
-
contamination exceeds the Designated Clean-Up Standards sufficient to identify
necessary remedial actions, if any; (B) undertake appropriate and reasonable
-
remedial actions, if any, to meet the Designated Clean-Up Standards; and (C)
-
perform sampling, as reasonably necessary, to demonstrate that the Designated
Clean-Up Standards have been met. The parties have agreed that the Identified
Remedial Actions will be undertaken pursuant to this Section 8.13(a) only at the
certain Known Source Areas identified on Schedule 8.13(a) and not on others,
----------------
provided that remedial actions may be required at such other Known Source Areas
under Section 8.13(b) of this Agreement under the circumstances set forth in
Section 8.13(b).
(ii) Buyer may, at its sole discretion and expense, take split or duplicate
samples of any samples taken by Seller in performance of the Identified Remedial
Actions or perform reasonable and appropriate additional testing to verify
Seller's performance of the Identified Remedial Actions or the Environmental
Conditions of the remediated Known Source Areas following completion of the
Identified Remedial Actions. Seller shall notify Buyer when it has completed the
Identified Remedial Actions (or any portion thereof that Seller deems
appropriate). If Buyer believes that any Identified Remedial Action so notified
is not complete, it may notify Seller within 30 days after it receives such
notice of such completion. Such notice from Buyer shall state (with reasonable
specificity) the basis on which Buyer claims that the Identified Remedial Action
is not complete and a list and description of what specific further actions
Buyer believes are required. If Buyer gives such notice, Seller and Buyer shall
seek in good faith to resolve such differences within 30 days following the
delivery of such objections. During such time, if Seller disagrees with Buyer's
objections, it shall state the basis of such disagreement with reasonable
specificity. If Buyer does not so object to Seller's notice that Identified
Remedial Actions are complete within such 30-day period, the Seller's
determination that they are complete shall be considered final and binding upon
the parties for purposes of this Section 8.13(a), but such determination shall
not relieve Seller from any other obligation it may have under this Section 8.13
or Section 12.01. If Buyer and Seller are unable to resolve a dispute or
disagreement set forth in a written objection pursuant to this Section 8.13(a),
either party may elect, by written notice to the other party, to have all such
disputes or disagreements resolved pursuant to Section 14.07.
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<PAGE>
(iii) The parties shall cooperate with regard to the Identified Remedial
Actions in order to minimize (to the extent reasonable) the costs of such
Identified Remedial Actions, to allow Seller all reasonable or necessary access
to the Owned Real Property to perform and monitor such Identified Remedial
Actions and to minimize (to the extent reasonable) any interference with the
ongoing operations at the Owned Real Property.
(b) If, at any time prior to June 30, 2003, additional actions are required
in any of the Known Source Areas to meet a Revised Designated Clean-Up Standard
or as a result of an Enforcement Agency Requirement, Seller will undertake such
additional actions provided that the cost of such additional actions shall not
exceed $500,000; and provided further that, to the extent the cost of such
additional actions exceeds $500,000, Seller shall nevertheless undertake such
additional actions to the extent that the cost of such additional actions in
excess of such $500,000 shall be subject to a maximum of the portion of the
$3,250,000 set forth in Section 8.13(d)(iv) which remains unused for claims
under Section 8.13(d). The parties shall cooperate with regard to such
additional actions in order to minimize (to the extent reasonable) the costs of
such additional actions, to allow Seller all reasonable or necessary access to
the Owned Real Property to perform and monitor such additional actions and to
minimize (to the extent reasonable) any interference with the ongoing operations
at the Owned Real Property. Buyer may, at its sole discretion and expense, take
split or duplicate samples of any samples taken by Seller in performance of the
additional actions contemplated by this Section 8.13(b) or perform reasonable
and appropriate additional testing to verify Seller's performance of such
additional actions or the Environmental Conditions of the remediated Known
Sources Areas following completion of such additional actions.
(c) Subject to the terms and conditions of this Section 8.13, Seller hereby
agrees to indemnify, defend and hold harmless Buyer after the Closing, from and
against all On-Site Damages asserted against, resulting to, imposed upon, or
incurred by Buyer, directly or indirectly. Seller further agrees to indemnify
Buyer from and against any fines or penalties arising from the items set forth
in Schedule 4.15, at subpart (c), designated as "Environmental Compliance
Exceptions", to the extent such fines or penalties arise out of Seller's action
or any failure to act prior to the Closing Date.
(d) Notwithstanding anything contained in this Agreement to the contrary:
(i) Seller shall not be liable to indemnify Buyer for On-Site Damages until the
aggregate amount of all such On-Site Damages exceed $25,000 and then Seller
shall be liable only to the extent all such Damages exceed $25,000 and only up
to the maximum described in the following Section 8.13(d)(iv); (ii) Seller shall
not be liable to indemnify Buyer for any On-Site Damages except where Seller has
received notice from Buyer on or prior to June 30, 2001 (except as provided in
Section 8.13(b) above) of its claim for indemnity for the On-Site Damage
specified in such notice; (iii) Seller shall not be liable to indemnify Buyer
for any On-Site Damages that would not have been incurred prior to June 30, 2001
but for Buyer's breach of Section 8.13(e); and (iv) Seller shall
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<PAGE>
have no obligation to incur or pay more than $3,250,000 in the aggregate for (A)
-
Costs and expenses incurred by Seller for additional actions pursuant to Section
8.13(b) and (B) On-Site Damages paid or incurred under Section 8.13(c).
-
(e) After the Closing Date and until June 30, 2003, Buyer will conduct its
operations at, and manage, the Owned Real Property and the Leased Real Property
with due regard to minimizing the On-Site Damages, including but not limited to:
(i) Buyer will not conduct or have a third party conduct environmental
inspections, assessments, surveys or audits with regard to the Owned Real
Property or the Leased Real Property, except that Buyer may, at its sole
expense: (A) conduct the testing contemplated by Section 8.13(a)(ii), (B)
- -
conduct, after reasonable prior written notice to Seller, testing as required by
Bankers Trust Company pursuant to a credit agreement with Buyer dated on or
about July 10, 1997, as it may be amended, supplemented or replaced, but only
insofar as Buyer has used all commercially reasonable efforts to minimize the
scope and amount of such testing, (C) conduct, after reasonable prior written
-
notice to Seller, testing as necessary to obtain financing or to comply with
legally required disclosure requirements, but only insofar as Buyer has used all
commercially reasonable efforts to minimize the scope and amount of such
testing, (D) conduct non-invasive environmental audits or compliance
-
assessments, or (E) conduct testing, after prior consultation with Seller, as
-
necessary to protect public health and safety; (ii) Buyer will not notify
environmental regulatory agencies or third parties about the Environmental
Conditions at the Owned Real Property or the Leased Real Property or about other
information that could affect On-Site Damages except when specifically required
by applicable Environmental Laws to do so or in connection with financing
arrangements, sale of the Owned Real Property or sale of all or substantially
all of the stock of Buyer after obtaining Seller's prior written consent, which
consent will not be unreasonably withheld; and (iii) Buyer will materially
comply with all applicable Environmental Laws with regard to the Owned Real
Property, the Leased Real Property, and the Business. Buyer will provide to
Seller a copy of the relevant portion of any documents requiring testing or
other actions to be taken pursuant to Sections 8.13(e)(i)(B) or (C) reasonably
- -
prior to taking such actions.
(f) After the Effective Time, the parties will cooperate to minimize, to
the extent reasonable, the On-Site Damages. To the extent that the On-Site
Damages include the obligation to remediate any of the Owned Real Property or
the Leased Real Property or Seller, in its reasonable discretion, determines
that remedial action at the Owned Real Property or the Leased Real Property
should be undertaken to minimize or lessen On-Site Damages, such remediation
shall be managed and conducted by Seller in accordance with methods and
processes determined by Seller in its reasonable discretion, and, subject to
Section 8.13(d)(iv), shall be at Seller's expense. Seller's obligation to
remediate any Owned Real Property or Leased Real Property shall be limited to
taking such remedial actions as are reasonably necessary to meet Enforcement
Agency Requirements, if any, and, in the case of a Known Source Area, to take
such actions as provided in Section 8.13(a) and (b) above, whichever is
applicable. Buyer will not intervene in or interfere with Seller's negotiations
or
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<PAGE>
discussions with any environmental agency with regard to the establishment of
Designated Clean-Up Standards, Revised Designated Clean-Up Standards or
Enforcement Agency Requirements. Buyer, upon request to Seller, may attend such
negotiations or discussions. Buyer will accept (and shall not oppose at such
negotiations or discussions) any such Designated Clean-Up Standards, Revised
Designated Clean-Up Standards or Enforcement Agency Requirements negotiated by
Seller in good faith with the applicable environmental agency.
(g) During the time period from the Closing Date until the latest of: (i)
June 30, 2001, (ii) the completion of all remediation actions on the Owned Real
Property or Leased Real Property for which Seller is responsible under this
Section 8.13, and (iii) the resolution and satisfaction of any obligations
Seller may have under this Section 8.13, Seller will be allowed to take such
actions as it may deem reasonably necessary to monitor and assess the
Environmental Conditions, all remedial actions undertaken with regard to the
Environmental Conditions, the operations and processes at the Owned Real
Property and the Leased Real Property as it may affect the Environmental
Conditions and such other facts and circumstances as may affect the On-Site
Damages. Subject to the limitations set forth in Section 8.13(g)(A) below, such
monitoring and assessment may include, by way of example but not limitation,
interviewing Buyer's employees and consultants, environmental testing, review of
relevant documents and auditing of operations at the Owned Real Property and the
Leased Real Property. Buyer shall take all reasonable actions to cooperate with
such monitoring and assessment activities, including but not limited to:
(A) Promptly providing to Seller access to Buyer's employees and
-
consultants, and all information and documents reasonably requested by
Seller, provided that Buyer shall have no obligation to give Seller
access to any opinions, reports, work papers or analyses that are
protected from third party discovery by the attorney-client privilege
or attorney work-product privilege. The parties agree that data and
other factual information related to Environmental Conditions are not
covered by such privileges, or, if covered, such privileges are
waived.
(B) Promptly notifying Seller of any notice, request or other
-
written communication seeking any remedial or clean-up activities on
or related to the Owned Real Property or the Leased Real Property.
(C) Notifying Seller within 24 hours after discovery of any spill
-
or release of a Hazardous Substance (other than a de minimus quantity)
at, on or under the Owned Real Property or the Leased Real Property.
Seller shall enter into one or more reasonable confidentiality agreements with
Buyer as may be reasonably requested by Buyer to protect any confidential
information that is disclosed to Seller pursuant to the monitoring and
assessment activities permitted by this Section 8.13(g).
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<PAGE>
(h) The parties will cooperate with regard to the remedial and clean up
actions contemplated by Sections 8.13(b) and 8.13(f) and the monitoring and
assessment actions contemplated by Section 8.13(g) in order to minimize to the
extent reasonable the costs and expenses incurred by Seller and Seller's
Affiliates for remediation, monitoring and assessment actions under Section
8.13, to allow Seller all reasonable or necessary access to the Owned Real
Property and the Leased Real Property, as the case may be, to perform such
remedial, monitoring and assessment actions and to minimize to the extent
reasonable any interference with the ongoing operations at the Owned Real
Property and Leased Real Property. A copy of any remediation plan created by
Seller under this Section 8.13 will be promptly provided to Buyer for
information and comment.
(i) Subject to the limitations and provisions set forth in this Section
8.13 (including but not limited to the provisions of Section 8.13(f) allowing
Seller to undertake remediation action in lieu of, or to lessen or minimize,
On-Site Damages, the provisions of Section 12.04 will apply to any claims by
Buyer for indemnity under this Section 8.13.
(j) The right of Buyer to demand and receive indemnification pursuant to
Section 8.13 shall be the sole remedy exercisable to Buyer with respect to a
breach of any warranty or representation set forth in Section 4.15(b) or any
On-Site Damages.
8.14 Certain Patent Claims.
---------------------
(a) Subject to the terms and conditions of this Section 8.14, Seller hereby
agrees to indemnify, defend and hold harmless Buyer at any time after the
Closing, from and against all 540 Patent Damages. Buyer hereby agrees to
indemnify, defend and hold harmless Seller at any time after the Closing from
and against any claims for infringement, willful infringement, contributory
infringement or inducement to infringement arising out of the sale or
manufacture of Door Skins after the Effective Time other than 540 Patent
Damages.
(b) Buyer will implement the changes to the Door Skins to be manufactured
and sold to or at the direction of Pease Industries, Inc. from Prior Door Skins
to Modified Door Skins as promptly as commercially reasonable.
(c) Subject to the limitations and provisions set forth in this Section
8.14, the provisions of Section 12.04 will apply to any claims by Buyer for
indemnity against third party claims under this Section 8.14.
(d) The right of Buyer to demand and receive indemnification pursuant to
Section 8.14 shall be the sole remedy exercisable by Buyer with respect to any
540 Patent Damages.
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<PAGE>
8.15 Right to Audit Year-End Financial Statements. Buyer shall have the
--------------------------------------------
right to audit all or any of the Year-End Financial Statements, as well as the
Business's financial statements for the period beginning December 1, 1996, and
ending on the Closing Date, if such an audit or audits is or are required by any
governmental or regulatory agency or organization, or any securities exchange,
stock market or similar organization. Seller shall cooperate with Buyer in
respect of such audits and shall provide Buyer and its employees, independent
accountants, attorneys and other advisors (collectively, "Buyer's
Representatives") with such information as is necessary or proper, in order to
complete such audits or for Buyer to prepare and audit its financial statements
covering or including all or any part of the period between December 1, 1996,
and the Closing Date. In furtherance of this obligation, Seller agrees that at
Buyer's reasonable request, Seller will make its employees, independent
accountants, attorneys, books, records and other financial information available
to Buyer and Buyer's Representatives, but only to the extent necessary, or
proper, in order to complete such audits or to prepare and audit such additional
financial statements. Buyer shall reimburse Seller for: (a) all actual and
reasonable out-of-pocket expenses incurred by Seller in connection with the
performance of its obligations under this Section 8.15, and (b) base salaries,
base wages and overtime wages paid by Seller to its employees with respect to
the hours spent by such employees on such matters at Buyer's request, but only
to the extent the aggregate amount of such base salaries, base wages and
overtime wages exceed $15,000. Seller agrees that it will perform, and that it
will cause its employees, independent accountants and attorneys to perform, its
obligations under this Section in a commercially reasonable prompt manner after
Buyer's request. No provision of this Section 8.15 shall require, or be
construed so as to require, Seller to waive any attorney-client or attorney work
product privileges to which it is lawfully entitled. Such audits and the
information obtained pursuant to such audits may not be used as a basis for, to
support or in pursuit of a Claim under Section 12.01.
8.16 Adjustments Due to Delay in the Closing Date.
--------------------------------------------
(a) At the Closing or as soon thereafter as possible, Buyer or Seller will
make payment to the other as necessary to reflect Buyer receiving the benefits
and incurring the obligations of the Business and the Assets from the Effective
Date to the Closing Date, as well as after the Closing Date. The payment will
reflect the netting of the reimbursement payments Buyer is obligated to make to
Seller and the reimbursement payments Seller is obligated to make to Buyer under
the following provisions (i) and (ii):
(i) The reimbursement obligations of Buyer to Seller shall be for
all payments made by Seller on or prior to the Closing Date for or in
respect of Assumed Liabilities of the Business existing at the Effective
Time and for all payments made by Seller on or prior to the Closing Date
for or in respect of any liabilities or expenses of the Business incurred
after the Effective Time that
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<PAGE>
would have been Assumed Liabilities if in existence and unpaid at the
Effective Time.
(ii) The reimbursement obligations of Seller to Buyer shall be for
all cash and cash equivalents received by Seller (and not transferred to
Buyer) with respect to any sale or account receivable of the Business that
is received by Seller between the Effective Date and the Closing Date,
inclusive.
(b) The amount of payment to be made pursuant to Section 8.16(a) shall be
estimated by agreement of the parties in good faith and one party shall pay the
other the net amount due on the Closing Date or as soon thereafter as possible.
Within sixty (60) days after the Closing Date, Seller or Buyer may notify the
other that it believes that the amount of such reimbursement payment should be
corrected and the party receiving such notice shall within 15 days of such
receipt, notify the party sending such notice that it agrees or disagrees with
such proposed correction and the amount, if any, of such disagreement. Seller
and Buyer each agree that it will make such payment to the other as is necessary
to reflect the correction to such reimbursement payment within 10 days after
such response is received, but only to the extent of the amount of the
corrections on which the parties have agreed. If Seller and Buyer cannot agree
on such correction within 30 days after the initial notice requesting such
correction is received, at the request of Seller or Buyer, the disagreement
shall be resolved pursuant to Section 14.07 of this Agreement. Within 10 days
after such disagreement is resolved, Seller or Buyer shall pay the other any
further correcting payment required as a result of such resolution.
Section 9. Conditions to Buyer's Obligations. The obligations of Buyer are
---------------------------------
subject to satisfaction, prior to or at the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Buyer):
9.01 Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties of Seller contained in this Agreement, and the statements contained
in the Schedules, shall have been true and correct in all material respects when
made and, except as contemplated or permitted herein or therein or except as
consented to by Buyer in writing, shall continue to be true and correct in all
material respects as of the Effective Time and as of the Closing Date with the
same effect as though made at the Effective Time or as of the Closing Date, as
the case may be, and Seller shall have performed and complied with, in all
material respects, all agreements, obligations and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
9.02 Litigation. No action, suit, or proceeding relating to the
----------
transactions contemplated hereby shall be instituted by any party and remain
pending, in which there is, or is likely to be, sought a temporary, preliminary
or permanent judgment, order or decree restraining or enjoining consummation of
the transactions contemplated
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<PAGE>
hereby or requiring any holding separate or divestiture of any substantial
portion of the Assets by Buyer.
9.03 Consents and Approvals. All government approvals, and agreements and
----------------------
consents of any parties necessary to consummation by Seller of the transactions
contemplated by this Agreement shall have been obtained and delivered to Buyer,
and all waiting periods under the HSR Act with regard to the transactions
contemplated by this Agreement shall have expired or terminated.
9.04 Status of Real Property Title. Buyer shall be reasonably satisfied
-----------------------------
with the condition of the title to the Owned Real Property. If Buyer is not
reasonably satisfied with the condition of such title, it shall so notify the
Seller of such dissatisfaction. Seller shall be afforded the opportunity to cure
the conditions which are grounds for such dissatisfaction within 15 days (or
such other time as the parties may agree) after its receipt of such written
notice (provided that Seller shall have no obligation to cure the same), and,
upon the completion of such cure, this condition shall be deemed to have been
satisfied. For purposes of this Section 9.04, any Encumbrances listed in
Schedule 4.06(b), disclosed in the Title Evidence received by Seller on or prior
- - ----------------
to the date of this Agreement or described in clauses (i), (iii), (v) or (vi) of
Section 4.06(b) may not serve as grounds for dissatisfaction with the condition
of the title.
9.05 Customer Interviews. The customer interviews described in Section
-------------------
6.01(b) shall not have demonstrated that Seller is in material breach of this
Agreement or that the Business will incur a material loss of business as a
result of the closing of transactions contemplated by this Agreement.
Section 10. Conditions to Seller's Obligations. The obligations of Seller
----------------------------------
under this Agreement are subject to satisfaction, prior to or at the Closing, of
each of the following conditions (all or any of which may be waived in whole or
in part by Seller):
10.01 Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties of Buyer contained herein shall have been true and correct in all
material respects when made and, except as otherwise provided or permitted
herein or except as consented to by Seller in writing, shall continue to be true
and correct in all material respects on and as of the Effective Time and as of
the Closing Date with the same effect as though made at the Effective Time or as
of the Closing Date, as the case may be, and Buyer shall have performed and
complied with, in all material respects, all agreements, obligations and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
10.02 Litigation. No action, suit or proceeding relating to the
----------
transactions contemplated hereby shall be instituted by any party and remain
pending, in which there is, or is likely to be sought, a temporary, preliminary
or permanent judgment, order or decree restraining or enjoining consummation of
the transactions contemplated hereby.
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<PAGE>
10.03 Consents and Approvals. All approvals, agreements and consents of any
----------------------
parties, necessary to Buyer's consummation of the transactions contemplated by
this Agreement shall have been obtained by Buyer and delivered to Seller, and
all waiting periods under the HSR Act with regard to the transactions
contemplated by this Agreement shall have expired or terminated.
Section 11. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made by either party to this Agreement in Sections 4 and 5 shall
survive the Closing and shall fully expire and terminate 18 months after the
Effective Time, except that the representations and warranties set forth in
Section 4.15 shall survive the Closing and fully expire and terminate 36 months
after the Effective Time and except that the representations and warranties set
forth in Sections 4.01, 4.03, 4.20, 5.01 and 5.03 shall survive the Closing and
shall not expire until the running of the applicable statutes of limitations,
provided that, notwithstanding the foregoing, in each case, all such
representations and warranties shall fully expire and terminate upon the
termination of this Agreement pursuant to Section 13 of this Agreement or
otherwise.
Section 12. Indemnity.
---------
12.01 Indemnity by Seller. Subject to the terms and conditions of this
-------------------
Section 12, Seller hereby agrees to indemnify, defend and hold harmless Buyer at
any time after the Closing, from and against all Damages, asserted against,
resulting to, imposed upon or incurred by Buyer, directly or indirectly, by
reason of or resulting from (a) any liabilities or obligations of Seller or a
Control Person of Seller which are not Assumed Liabilities; (b) a breach of any
representation or warranty of Seller contained in or made pursuant to this
Agreement (but not including any breach "known to Buyer" (as defined below) as
of the Effective Time or the Closing Date and Buyer hereby expressly agrees to
waive any claim against Seller with respect to any such breach known to Buyer);
(c) the breach by Seller of any covenant or agreement of Seller contained in or
made pursuant to this Agreement; (d) any liability for brokerage or finders'
fees or other commissions based on agreements, arrangements or understandings
made by Seller for services rendered for or on behalf of Seller in connection
with the transactions contemplated hereby; or (e) any failure (other than with
regard to Assumed Liabilities) to comply with any "bulk sales" or similar laws
applicable to the transactions contemplated hereby; provided, however, that this
Section 12.01 shall not apply to On-Site Damages (which are the subject of
Section 8.13) or 540 Patent Damages (which are the subject of Section 8.14). For
purposes of this Section 12.01, "known to Buyer" means any information known
(without any duty of independent inquiry) to any of the following persons (such
knowledge to be actual and not imputed): Richard S. Crawford, Kevin J. Alder,
John Colaianne, Alan M. Swiech, Bob Bailey, Neil Simpkins, Larry Petzing, John
Henderson, Belinda Eichel, Catherine Weissenborn and Paul Elie.
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<PAGE>
12.02 Indemnity by Buyer. Subject to the terms and conditions of this
------------------
Section 12, Buyer hereby agrees to indemnify, defend and hold harmless Seller at
any time after the Closing, from and against all Damages asserted against,
resulting to, imposed upon or incurred by the Seller, directly or indirectly, by
reason of or resulting from (a) any obligations or liabilities of Buyer or a
Control Person of Buyer; (b) the breach by Buyer of its obligations with respect
to the Assumed Liabilities; (c) any liabilities, obligations or claims which
arise out of the operations of the Business or ownership of the Assets by Buyer
after the Effective Time, to the extent such liabilities, obligations or claims
are not the subject of any indemnifiable claim under Section 12.01 hereof; (d) a
breach of any representation or warranty of Buyer contained in or made pursuant
to this Agreement; (e) the breach by Buyer of any covenant or agreement of
Buyer, contained in or made pursuant to this Agreement; or (f) any liability for
brokerage or finders' fees or other commissions based on agreements,
arrangements or understandings made by Buyer for services rendered for or on
behalf of Buyer in connection with the transactions contemplated hereby.
12.03 Limitations. Notwithstanding anything contained in this Agreement to
-----------
the contrary, Seller shall not be liable to indemnify Buyer:
(a) for Damages pursuant to Section 12.01, until the aggregate amount of
all such Damages exceeds $325,000 and then Seller shall be liable only to the
extent such Damages exceed $325,000; provided however, that the provisions of
this Section 12.03 shall not apply to any claims made pursuant to Section 6.04
(with regard to reimbursement of certain repair or replacement costs), Section
12.01(a) or Section 12.01(e); or
(b) for any Damages claimed pursuant to Section 12.01 in excess of
$3,250,000 in the aggregate; provided however, that this maximum shall not apply
to claims made pursuant to Section 6.04 or to Damages established pursuant to
Section 12.01(a).
12.04 Indemnity Procedures. The following terms and conditions shall
--------------------
govern: (1) the obligations and liabilities of either party to indemnify the
other under Section 12.01 or 12.02 with respect to Claims relating to third
parties, subject to the limitations set forth in Section 12.03, and (2) the
obligations and liabilities of Seller to indemnify Buyer under Sections 8.13(c)
and 8.14(a), subject to the limitations set forth in Sections 8.13 and 8.14,
respectively:
(a) as used in this Section 12.04, the following terms shall have the
following meanings:
(i) "Claims" shall mean any and all indemnity claims by Buyer under
Sections 8.13(c), 8.14(a) and 12.01 and any and all indemnity claims by
Seller under Section 12.02.
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(ii) "Indemnified Party" shall mean the party to be indemnified under
Section 8.13(c), 8.14(a), 12.01 or 12.02.
(iii) "Indemnifying Party" shall mean the party with the
indemnification obligation under Section 8.13(c), 8.14(a), 12.01 or 12.02.
(b) The Indemnified Party will give the Indemnifying Party prompt notice
and a reasonably detailed description of any such Claim (including but not
limited to the assertion of any such Claim) and, subject to the provisions of
Section 12.04(c), the Indemnifying Party will undertake the defense thereof by
counsel chosen by it. The failure to promptly notify the Indemnifying Party
shall not relieve such party of its obligations hereunder, except to the extent
the failure to so notify prejudices the Indemnifying Party's ability to defend
such Claim.
(c) Following notice by the Indemnified Party to the Indemnifying Party of
a Claim and provided that the Indemnifying Party notifies the Indemnified Party
in writing that the Indemnified Party is entitled to indemnification hereunder
with respect to such Claim or portion thereof, the Indemnifying Party shall be
entitled at its cost and expense to contest and defend by all appropriate legal
proceedings such Claim or identified portion thereof; provided, however, further
that notice of the intention so to contest shall be delivered by the
Indemnifying Party to the Indemnified Party within 30 days from the date of
receipt by the Indemnifying Party of notice from the Indemnified Party of the
assertion of such Claim. Any such contest may be conducted in the name and on
behalf of the Indemnifying Party or the Indemnified Party, as may be
appropriate. Subject to compliance by the Indemnifying Party with the other
requirements of this Section 12.04(c), such contest shall be conducted
diligently by reputable counsel employed by the Indemnifying Party, but the
Indemnifying Party shall keep the Indemnified Party fully informed with respect
to such Claim and the contest thereof. Subject to compliance by the Indemnifying
Party with the other requirements of this Section 12.04(c), if the Indemnified
Party joins in any such contest, the Indemnifying Party shall have full
authority, in consultation with the Indemnified Party, to determine all action
to be taken with respect thereto, provided, that in no event shall the
Indemnifying Party have authority to agree to any relief other than the payment
of money damages by the Indemnifying Party unless agreed to by the Indemnified
Party. Each party shall bear its own expenses of such representation. If any
Claim is asserted and the Indemnifying Party fails to contest and defend such
Claim within a reasonable period of time, the Indemnified Party may take such
action in connection therewith as the Indemnified Party deems necessary or
desirable, including retention of counsel, and the Indemnified Party shall be
entitled to indemnification for costs incurred in connection with such defense.
In connection with any indemnification claims under Section 8.13(c), the
provisions of this Section 12.04(c) shall be subject to the provisions of
Section 8.13 in regard to, among other things, Seller's rights to undertake
remediation and clean-up actions in lieu of or to lessen or minimize On-Site
Damages.
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(d) If requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate with the Indemnifying Party and its counsel, including permitting
reasonable access to books and records, in contesting any Claim which the
Indemnifying Party elects to contest or, if appropriate, in making any
counterclaim against the person asserting the Claim, or any cross-complaint
against any person, but the Indemnifying Party will reimburse the Indemnified
Party for reasonable out-of-pocket costs (but not the cost of employee time
expended) incurred by the Indemnified Party in so cooperating.
(e) Each party agrees to use its best efforts to afford the other party and
its counsel the opportunity to be present at, and to participate in, conferences
with all persons, including governmental authorities, asserting any Claim
against the Indemnified Party or conferences with representatives of or counsel
for such persons, and, subject to the provisions of Section 12.04(c), the
Indemnifying Party shall have the authority to direct any action taken or
response made at any such conference on behalf of itself or the Indemnified
Party with respect to any Claim which it is contesting pursuant to Section
12.04(c). Unless the Indemnifying Party approves in writing the settlement of a
Claim effected by the Indemnified Party, no conclusive right to indemnification
under Sections 8.13(c), 8.14(a), 12.01 or 12.02 shall be established by such
settlement.
12.05 Exclusive Remedy. The right of the parties hereto to demand and
----------------
receive indemnification pursuant to Section 12.01(b) or 12.02(d) shall be the
sole remedy exercisable by a party with respect to a breach of any warranty or
representation set forth herein other than a breach related to the termination
of this Agreement pursuant to Section 13.
Section 13. Termination, Amendment and Waiver.
---------------------------------
13.01 Termination of Agreement. This Agreement may be terminated at any
------------------------
time prior to the Closing:
(a) by mutual agreement of Seller and Buyer;
(b) by Buyer, if there has been a material violation or breach by Seller
of any of the agreements, representations or warranties contained in this
Agreement, unless Seller has informed Buyer that such violation or breach will
be cured on or before the Effective Time;
(c) by Seller, if there has been a material violation or breach by Buyer
of any of the agreements, representations or warranties contained in this
Agreement, unless Buyer has informed Seller that it will be cured on or before
the Effective Time; and
(d) as provided in Section 8.09.
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13.02 Effect of Termination. In the event of termination of this Agreement
---------------------
by either Buyer or Seller as provided in Section 13.01, this Agreement shall
forthwith be of no further force and effect (except that the provisions of
Sections 7.02, 8.02 and 8.07 shall continue in full force and effect) and there
shall be no liability on the part of Buyer or Seller, except based upon: (a) a
material and willful breach by a party of any of its obligations under this
Agreement; or (b) the obligations set forth in Sections 7.02, 8.02 or 8.07.
13.03 Amendment, Extension and Waiver. At any time prior to the Effective
-------------------------------
Time, Buyer and Seller may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of the parties hereto, (c)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto; or (d) waive compliance with any of
the agreements or conditions contained herein; provided, however, that any such
amendment must be in writing and must be signed by each of the parties hereto
and the agreement with respect to any such extension or waiver must be in
writing and must be signed by the party or parties agreeing to such extension or
waiver.
Section 14. Miscellaneous.
-------------
14.01 Assignment; No Third-Party Rights. This Agreement shall be binding
---------------------------------
upon and shall inure to the benefit of, and be enforceable by, the parties
hereto and their permitted successors and assigns. This Agreement may not be
assigned by either party without the prior written consent of the other, except
(a) that Seller may, without the prior consent of Buyer, assign this Agreement
and the rights of Seller hereunder to any Seller Affiliate; and (b) Buyer may,
without the prior written consent of Seller, assign this Agreement and the
rights of Buyer hereunder to any majority owned subsidiary of Buyer. No
assignment of this Agreement shall relieve the assigning party of responsibility
for the performance of any of its obligations hereunder. Nothing herein is
intended to, nor shall it, create any rights in any person other than the
parties hereto and their respective successors and assigns.
14.02 Entire Agreement. This Agreement and the agreements to be executed in
----------------
connection herewith set forth the entire agreement and understanding of the
parties in respect of the transactions contemplated hereby and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof. All Schedules and Exhibits and any documents and instruments delivered
pursuant to any provisions hereof are expressly made a part of this Agreement as
fully as though completely set forth herein.
14.03 Section and Other Headings; Number. The section and other
----------------------------------
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Words
used in this Agreement in the singular number shall be held to include the
plural, and vice versa, unless the context requires otherwise.
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<PAGE>
14.04 Notices. All notices, requests, demands and other communications
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) on the date of service if served personally on the party to whom
notice is to be given, (b) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, (c) on the day
after delivery to Federal Express or similar overnight courier or the Express
Mail service maintained by the United States Postal Service; or (d) on the fifth
day after mailing, if mailed to the party to whom notice is to be given, by
registered or certified mail, postage prepaid and properly addressed, to the
party as follows:
If to Seller: Eagle-Picher Industries, Inc.
580 Walnut Street, Suite 1300
Cincinnati, OH 45202
Attention: General Counsel
With a copy to: Thompson Hine & Flory LLP
312 Walnut Street
Suite 1400
Cincinnati, Ohio 45202
Attention: William H. Cordes, Esq.
If to Buyer: Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
Attention: President
With a copy to: Robin H. Krueger, Esq.
Jaffe, Raitt, Heuer & Weiss
Suite 2400, One Woodward Avenue
Detroit, MI 48226
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
14.05 Law Governing. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with, the laws of the State of Ohio without regard to its
conflict of law rules.
14.06 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
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14.07 Resolution of Disputes.
----------------------
(a) In the event a dispute between the parties arises under the terms of
this Agreement other than pursuant to Sections 2.03(d) or 8.08(c), either party
may send to the other a letter of dispute setting forth in particular the
subject matter of the dispute ("Disputed Matter"). The parties shall meet at the
offices of Thompson Hine & Flory LLP in Cincinnati, Ohio, or such other place as
may be mutually agreeable to them, not later than twenty days after the date of
the receipt of the letter of dispute for the purposes of negotiating a
settlement of the Disputed Matter.
(b) In the event that either party determines after compliance with Section
14.07(a) that the Disputed Matter cannot be resolved by the parties, the
Disputed Matter shall be submitted to binding arbitration before a panel of
three arbitrators (or before one arbitrator if the parties agree) in Cincinnati,
Ohio in accordance with the standard arbitration procedures of the Center for
Resolution of Disputes, Cincinnati, Ohio; provided, however, that (i) the
parties may engage in prehearing discovery to the full extent provided in the
Federal Rules of Civil Procedure, (ii) evidentiary rules contained in the
Federal Rules of Civil Procedure shall govern the submission of evidence at the
arbitration hearings, and (iii) if the dispute arises under Section 8.13, the
arbitrators will be required to be knowledgeable in relevant environmental
science, environmental law or other environmental knowledge. The decision of the
arbitrators shall be final and binding on all parties hereto and not subject to
appeal. Judgment upon the award by the arbitrators may be entered in any court
having jurisdiction thereof. As part of such award the arbitrators may establish
their fees and expenses in connection therewith. The fees and expenses of the
arbitrators shall be apportioned between the parties by the arbitrators in
accordance with the findings and results of the arbitration.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed by its respective officers thereunto duly authorized as of the
date first above written.
"Seller"
Attest: EAGLE-PICHER INDUSTRIES, INC.
By: /s/ David N. Hall
- - ---------------------------------- --------------------------------
Name: David N. Hall
Title: Senior Vice President - Finance
"Buyer"
Attest: CAMBRIDGE INDUSTRIES, INC.
By: /s/ Dale Freel
- - ---------------------------------- ----------------------------------
Name: Dale Freel
Title: Vice President - Purchasing
and Tooling
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<PAGE>
EXHIBIT 10.32
AGREEMENT
AGREEMENT made and entered into in Akron, Ohio this 8/th/ day of July,
1997, by and between Cambridge Industries, Inc., a Delaware corporation
(hereafter "Buyer"), and The Goodyear Tire & Rubber Company, an Ohio corporation
(hereafter "Seller").
WHEREAS, the Seller is engaged in the line of business hereafter described;
and
WHEREAS, the Seller desires to sell to the Buyer and the Buyer desires to
purchase from the Seller certain of the assets, business, properties and rights
of the Seller.
NOW, THEREFORE, in consideration of the recitals and of the mutual
covenants and agreements set forth in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree that:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, certain words, terms and phrases shall
have the following meanings:
1.1 Business. "Business" shall mean Seller's business consisting of the
--------
production and sale of compression and injection molded, thermoset, sheet molded
compound and reinforced thermoplastic products for original equipment
manufacturers of passenger cars, light trucks, and heavy duty trucks as such
business is presently conducted by Seller at the Plant (as defined in Section
1.7).
1.2 Closing; Closing Date. "Closing" shall mean the time and occasion
---------------------
when the purchase and sale contemplated by this Agreement shall take place and
the day Closing takes place shall be the "Closing Date."
1.3 December 31, 1996 Balance Sheet. "December 31, 1996 Balance Sheet"
-------------------------------
means the balance sheet of the Business as of December 31, 1996.
1.4 Effective Date. "Effective Date" means June 30, 1997.
--------------
1.5 Effective Date Balance Sheet. "Effective Date Balance Sheet has the
----------------------------
meaning set forth in Section 2.6(b).
1.6 Permitted Liens. "Permitted Liens" shall include liens for current
---------------
taxes or assessments not delinquent; builder, mechanic, warehousemen,
materialmen, contractor, workmen, repairmen, or carrier liens, or other similar
liens arising and continuing in the ordinary course of business for obligations
which are not delinquent; and other similar common law or
<PAGE>
statutory liens which do not materially affect the value, or interfere with the
use or marketability, of an asset.
1.7 Plant. "Plant" shall mean the Jackson, Ohio plant, including the
-----
leased property on which it is operated.
1.8 Purchased Assets. "Purchased Assets" shall mean all of the tangible
----------------
and intangible assets, whether real, personal or mixed and whether owned or
leased, including rights under contracts, leases and other agreements, whether
accrued, contingent or otherwise, of every kind, character and description and
wherever located, which are used in or principally related to the Business,
including but not limited to:
(a) all interest in real property both owned and leased by Seller,
including land, land improvements, buildings, fixtures, leasehold improvements
and options;
(b) all inventories, including raw materials, engineering stores, work
in process (including components and parts), finished products, goods and
supplies;
(c) all production machinery and equipment, presses, hoists, lifts,
cranes and any tools, dies, jigs, molds, tooling spares, and patterns in
Seller's possession, and whatever interest Seller may have in that tooling which
is owned by its customers (it being acknowledged that there is tooling which is
located at the Plant but is owned by Seller's Green facility, ownership of which
shall remain with Seller);
(d) all office equipment, furnishings and supplies including all
interest in computers, computer support equipment and software, telephone and
communication systems and security systems located at the Plant, except for
Seller-owned software expressly retained pursuant to Section 1.10(b);
(e) all interest in vehicles, tractors, trailers, tows and lifts;
(f) all technical, manufacturing and engineering information,
including new developments, inventions or ideas, know how and trade secrets and
documentation thereof to encompass related papers, parts, drawings, tool
drawings, chemical compositions, formulae, diaries, notebooks, specifications,
methods of manufacture, data processing cards, discs and tapes and all data
contained therein and thereon;
(g) all patents, and all applications and registrations therefore, and
interest in patent and technology licenses, except as specifically retained
under Section 1.10(d);
(h) all accounts and notes receivable (including receivables referred
to by Seller as "Recoverable Tooling", whether billed or unbilled) and cash and
cash equivalents which arose in the course of the Business subject to adjustment
pursuant to Section 6.7(c);
(i) all rights under contracts, including sales contracts, purchasing
contracts, customer orders, purchase orders, maintenance, repair and service
agreements and construction contracts;
2
<PAGE>
(j) all rights under leases for personal property and warehouse
storage;
(k) all prepaid rent, advances and other prepaid expenses and
deposits; and
(l) all operating data, documents and business records particular to
the operations of the Business including current accounting records, customer
and supplier files, sales, pricing and cost data, audit information, forecasts,
development and business plans.
1.9 Real Property. "Real Property" shall mean the real property owned or
-------------
leased by Seller described in Schedule 1.9 hereto, all buildings and other
improvements thereon, and all of Seller's right, title and interest in and to
all right of ways, roads, alleys, ways, waters, privileges and easements and
appurtenances thereunto belonging or in anyway appertaining.
1.10 Retained Assets. "Retained Assets" shall mean the following assets
---------------
which, although they relate to the Business, are to be retained by the Seller
and are not to be sold, conveyed, assigned, or transferred to Buyer:
(a) the trade names, trademarks and/or service marks Goodyear,
Goodyear (& Winged Foot Design), Wingfoot, Winged Food (Design), Blimp (Design)
and any and all derivatives, like or similar names and marks;
(b) software developed by and proprietary to Seller as set forth in
Schedule 1.10(b); provided, however, that Seller shall license such software,
but not subsequent improvements, upon Buyer executing a suitable royalty free
licensing agreement;
(c) financial data and information and other types of data and
information to the extent such is commingled and cannot be separated from other
confidential information relative to Seller's other businesses and business in
general; provided, however, Seller shall extrapolate such information related to
the Business from its records and provide it to Buyer insofar as it is
reasonably practical to do so;
(d) non-exclusive, perpetual, royalty free license under the patent
identified on Schedule 4.11;
(e) assets of employee pension, benefit and savings plans and other
employee plans, except any such assets which may be transferred pursuant to
Section 6.6;
(f) insurance policies, claims, causes of action, bad debts, post-
Closing allowances, refunds and reimbursements which are related to pre-Closing
transactions and which are not reflected as assets on the Effective Date Balance
Sheet, other than any claims relating to goods or services the obligations for
which Buyer assumes pursuant to Section 2.2, and other than claims for damage to
the Purchased Assets which occurs prior to the Closing to the extent such damage
is not repaired prior to the Closing;
(g) gas wells not located on the real property on which the Plant is
located; and
3
<PAGE>
(h) assets, facilities, services, processing, support and space the
Seller shares in common with the Business and Seller's other businesses or
provide to assist in management and operation of the Business.
ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF LIABILITIES; PRICE
2.1 Purchase and Sale. Subject to the terms and conditions of this
-----------------
Agreement, in reliance upon the representations, warranties, covenants and
agreements and subject to the conditions herein, at the Closing, but effective
as of 11:59 p.m. on the Effective Date, in consideration of the payment by the
Buyer of the Purchase Price and assumption of certain liabilities of the Seller
and the acquisition of the Business and its assets by the Buyer, Seller agrees
to sell, assign, transfer, convey and deliver to Buyer, and Buyer agrees to
purchase, acquire and accept from the Seller the Purchased Assets.
2.2 Assumption of Liabilities. At the Closing, but effective as of 11:59
-------------------------
on the Effective Date, Buyer shall assume (the "Assumed Liabilities") by
transfer and assignment and thereby undertake to perform, satisfy, fulfill and
discharge all obligations and liabilities of Seller set forth on the Effective
Date Balance Sheet, other than the Excluded Liabilities (defined below).
Assumed Liabilities include, without limitation, accounts payable and accrued
expenses which arose in the ordinary course of business, consistent with
Seller's past practices, and contractual obligations of Seller specifically
relating to the Business, then remaining, as follows:
(a) all obligations for the purchase of goods or services made in the
ordinary course of business, consistent with the Seller's past practices;
(b) all obligations for the sale and delivery of goods or services
made in the course of business, consistent with past practices which are not to
be supplied or provided on or prior to the Closing;
(c) all obligations arising under contracts, agreements or leases for
the use, lease or rental of products, equipment, vehicles, or other personal
property, space or real property in effect as of the Effective Date; and
(d) all obligations arising under the Collective Bargaining Agreement
as described in Section 4.20, except as specifically excluded pursuant to
Section 6.6.
2.3 Excluded Liabilities; No Other Liabilities Assumed. Except to the
--------------------------------------------------
extent otherwise expressly provided in this Agreement, Buyer has not agreed to
pay and shall not assume, nor have any liability or obligation, direct or
indirect, absolute or contingent for, any of the following liabilities or
obligations of the Seller ("Excluded Liabilities"): (a) any liability not
reflected on the Effective Date Balance Sheet and not otherwise expressly
included in the definition of Assumed Liabilities; (b) any liability or
obligation in respect of any litigation arising out of the conduct of the
Business by Seller prior to the Closing; including claims arising out of
4
<PAGE>
products produced prior to the Closing, (c) any liability or obligation of
Seller under the Environmental Laws (as defined in Section 4.24) in respect of
solid waste or Hazardous Materials which have been transported by or on behalf
of Seller for offsite disposal, and all arrangements therefor; (d) any liability
or obligation of Seller for any violation of the Environmental Laws to the
extent arising from the operation of the Business prior to the Closing Date,
including, without limitation, in respect of any fine or penalty arising from
any permit violation, or failure to file reports or other filings (subject to
the provision of Section 9.1); (e) claims for workers' compensation benefits
(whether or not reflected on the Effective Date Balance Sheet) in which the
injury or onset of occupational disease is alleged to have occurred before the
Effective Date, and such claim is properly filed prior to the Effective Date or
within twelve (12) months after the Effective Date (unless the insurer or
appropriate government agency determines that such injury or onset actually
occurred after the Closing Date); (f) liabilities or obligations of Seller
relating to any employee pension, savings, severance, separation, bonus or other
employee plan, program or arrangement (except as specifically set forth in
Section 6.6); and (g) any federal or state income tax liability (or adjustments
thereto) relating to the Business prior to the Closing.
2.4 Purchase Price. In consideration for the Purchased Assets and the
--------------
Business, Buyer shall pay Seller the purchase price of $43 Million ("Purchase
Price") plus or minus the amount by which the Final Net Worth (as defined below)
is greater or lesser than $33,230,000.
2.5 Payment at Closing. At the Closing, Buyer will pay to Seller, by wire
------------------
transfer of immediately available funds, the sum of $43 Million plus or minus
the amount by which the Initial Net Worth (defined below) is greater or lesser
than $33,230,000.
2.6 Initial Net Worth. The "Initial Net Worth" shall be an amount equal
-----------------
to the net worth (total assets less total liabilities) of the Business as of the
Effective Date based upon an estimated balance sheet prepared in accordance with
Seller's Accounting Procedures (as defined in Section 4.5) consistently applied,
but (a) excluding (i) workers' compensation liabilities, and (ii) receivables
retained by Seller pursuant to Section 6.7(c), and (b) including the estimated
liability associated with certain post-retirement medical benefits assumed by
Buyer pursuant to Section 6.6(d).
2.7 Final Price Adjustment.
----------------------
(a) "Final Net Worth" shall be an amount equal to the Purchased Assets
less the Assumed Liabilities based on the Effective Date Balance Sheet.
(b) Seller shall prepare and deliver to Buyer, within sixty (60) days
following the Closing Date, a balance sheet as of the Effective Date (the
"Effective Date Balance Sheet") setting forth the Final Net Worth of the
Business as of such date which shall have been audited by the Cleveland, Ohio
office of Price Waterhouse LLP. The Effective Date Balance Sheet shall be
prepared in accordance with Seller's Accounting Procedures consistently applied,
except that it shall not reflect any Retained Assets or any liabilities other
than the Assumed Liabilities.
(c) The "Final Price Adjustment" shall be the amount by which the
Final Net Worth of the Business as of the Effective Date differs from the
Initial Net Worth. If the Final Net
5
<PAGE>
Worth is greater than the Initial Net Worth, then Buyer shall pay Seller the
Final Price Adjustment; if the Final Net Worth is less than the Initial Net
Worth, then Seller shall pay Buyer the Final Price Adjustment
(d) Buyer may object to the Price Adjustment or to any of the
information contained in the Effective Date Balance Sheet which could affect the
Price Adjustment if such objection is based on a claim that the Effective Date
Balance Sheet was not prepared in accordance with Section 2.7(a) or (b). Any
such objection must be made by delivery of a written statement of objections
(stating the basis of the objections with reasonable specificity) to Seller
within 30 days following delivery of the Effective Date Balance Sheet. In
connection with Buyer's review of the Effective Date Balance Sheet, Buyer and
its accountants shall have reasonable access to the records of the Business and
any work papers, including work papers prepared in connection with the audit of
the Effective Date Balance Sheet or the Price Adjustment. If Buyer makes such
objection, the chief financial officers (or their designees) of Seller and Buyer
shall seek in good faith to resolve such differences within 20 days following
the delivery of such objections. During such time, if Seller disagrees with
Buyer's objections, it shall state the basis of such disagreement with
reasonable specificity. If Buyer does not so object to the Effective Date
Balance Sheet within such 30-day period, the Effective Date Balance Sheet shall
be considered final and binding upon the parties. If Buyer and Seller are
unable to mutually resolve any disputes with respect to any aspect of the price
differential within the periods described above, the parties shall, within ten
(10) days following the expiration of such periods, engage the Cleveland, Ohio
office of Arthur Andersen, L.L.P. (the "Mediator") to act as a Mediator and
determine, in accordance with the provisions of Section 2.7 the appropriate
Price Adjustment.
2.8 Submission to Arbitrator. If the Mediator is engaged pursuant to
------------------------
Section 2.7(d), then, within ten (10) days of the engagement, the Mediator shall
be furnished with a copy of this Agreement, a letter from Buyer describing
Buyer's position on the disputed amount and a letter from Seller describing
Seller's position on the disputed amount. Neither party shall make any
additional submission except pursuant to the Mediator's written request. The
Mediator shall have thirty (30) days to review such documents and such other
information as the Mediator deems appropriate. Within such thirty-day period,
the Mediator will furnish both parties with its written determination with
respect to each of the unresolved price differentials in dispute. In arriving
at its determination, the Mediator may select either the adjustment as proposed
by Buyer or Seller's position, or its own determination (provided such
determination is between the Buyer's and Seller's position) with respect to such
differential. The determination of the Mediator with respect to each such
adjustment will be final and binding upon the parties and a judgment, based on
the Mediator's determination, may be entered into a court of competent
jurisdiction. The fee of the Mediator shall be borne equally by Seller and
Buyer unless the Mediator determines that some other proportion is equitable
based, for example, on the proportion that the dollar amount of the disputed
items lost by a party bears to the total dollar amount in dispute in the
mediation. In the process of preparing and reviewing the price differential and
conducting of review by either party or the Mediator, each party will grant the
other party all reasonable access to the records of the Business and any
workpapers, including auditor's workpapers, prepared with respect to the price
differential.
6
<PAGE>
ARTICLE III
CLOSING
3.1 Closing. The purchase and sale of the Purchased Assets shall be at a
-------
Closing to be held at the offices of Seller located in Akron, Ohio on July 15,
1997, but effective as of 11:59 p.m. on the Effective Date, or at such other
place or date as may be agreed by the parties, provided that the Closing must be
held no later than the close of business on July 15, 1997, time being of the
essence.
3.2 Deliveries by Seller. At the Closing, Seller shall execute and
--------------------
deliver to Buyer the following items:
(a) valid and binding general assignment and bill of sale in form and
substance acceptable to counsel for Buyer and Seller;
(b) Consents and Estoppel Certificates with respect to all leased real
property and with respect to the enterprise zone agreement between Seller and
the City of Jackson, Ohio, satisfactory to Buyer;
(c) valid and binding general patent assignments in a form
satisfactory to Buyer;
(d) an assignment of lease for all leased real and personal property
in a form satisfactory to Buyer's counsel;
(e) an assignment of the enterprise zone agreement between Seller and
the City of Jackson, Ohio, in form satisfactory to Buyer's counsel, together
with all appropriate consents;
(f) an assignment of certain purchase orders ("Seller Purchase
Orders") to the Plant from Seller's Green, Ohio facility, including Purchase
Order No. 13510, and certain purchase orders to the Plant from Seller's Logan,
Ohio facility, including Purchaser Orders No. P49503, P34472, P90913, P50812 and
P34471;
(g) a transition agreement (the "Transition Agreement") in the form
attached as Exhibit B, and a Tax Withholding Agreement in the form attached as
Exhibit C;
(h) the consulting agreement contemplated in Section 6.6(h);
(i) an opinion of Seller's counsel dated as of the Closing Date in
form and content reasonably satisfactory to Purchaser's counsel;
(j) a certificate executed by an officer of Seller dated the Closing
Date, to the effect that (i) the warranties and representations of Seller
contained in this Agreement are true on the Closing Date and were true on the
Effective Date with the same effect as though made on and as of such dates, (ii)
Seller has performed and complied with all obligations imposed upon it under
this Agreement, including the performances of all covenants, (iii) there has
been no material
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adverse change in the Business or the Purchased Assets from the date of this
Agreement to the Closing Date, and (iv) Seller has operated the Business only in
the ordinary course;
(k) certified resolutions of Seller's Board of Directors pursuant to
Section 7.3;
(l) agreements to transfer those of Seller's environmental permits
(e.g. air and NPDES permits) relating to the Business which are transferable and
a license to operate under those permits until the transfer is effected or new
permits and licenses are issued to Buyer; and
(m) such other documents and instruments reasonably necessary to
carryout the transactions contemplated by this Agreement.
3.3 Deliveries by Buyer. At the Closing, Buyer will deliver to seller the
-------------------
following:
(a) the portion of the Purchase Price required to be paid at Closing
pursuant to Section 2.5, by transfer to Seller's bank account;
(b) valid and binding acceptances of assignments and transfers, and
assumption of liabilities in a form satisfactory to Seller;
(c) an opinion of Buyer's counsel dated as of the Closing Date in form
and content reasonably satisfactory to Seller's counsel;
(d) a certificate executed by an officer of Buyer dated the Closing
Date, to the effect that (i) the warranties and representations of Buyer
contained in this Agreement are true on the Closing Date and were true on the
Effective Date with the same effect as though made on and as of such dates; and
(ii) Buyer has performed and complied with all obligations imposed upon it under
this Agreement, including the performances of all covenants;
(e) certified resolutions of Buyer's Board of Directors pursuant to
Section 8.3; and
(f) such other documents and instruments reasonably necessary to carry
out the transfers contemplated by this Agreement.
3.4 Non-Assignable Contracts and Leases. To the extent that the
-----------------------------------
assignment or transfer of any contract or lease to the Buyer pursuant to this
Agreement requires the consent of another party, this Agreement shall not
constitute a commitment by Seller to assign or transfer such, nor a commitment
by Buyer to assume such if despite reasonable efforts and mutual cooperation of
Buyer and Seller, consent to assignment or transfer cannot be obtained.
3.5 Further Actions. If at any time after the Closing, Buyer shall
---------------
determine that any deed, bill of sale, assignment, assurance or other action is
necessary to vest, perfect or confirm of record or otherwise in Buyer its
right, title or interest in or to any of the Purchased Assets, or to otherwise
carryout this Agreement, the officers of Seller shall execute and deliver all
such deeds, transfers, bills of sale, assignments and assurances and take and do
all such other actions and things as may be necessary to vest, perfect or
confirm any and all right, title or interest in and to
8
<PAGE>
the Purchased Assets or otherwise to carry out this Agreement; provided that
Buyer shall prepare such additional documents and instruments and shall handle
all necessary submittals, applications, processing, recording and registrations.
If at any time after the Closing, it is necessary for Buyer to do or take any
action to carry out the transactions contemplated by this Agreement, then, at
the request of Seller, officers of Buyer will reciprocate on the same basis.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer that:
4.1 Organization. The Seller is a corporation duly and validly organized
------------
and existing and in good standing under the laws of the State of Ohio and has
full corporate power and authority to enter into and comply with its obligations
under this Agreement and to convey the Purchased Assets and the Business to the
Buyer pursuant to this Agreement. With respect to the conduct of the Business,
Seller is qualified to do business as a foreign corporation in each jurisdiction
in which the failure to so qualify would have a material adverse effect on the
Purchased Assets or the Business.
4.2 Authorization; Enforceability. The execution, delivery and
-----------------------------
performance of this Agreement and all of the documents and instruments required
hereby are within the corporate power of Seller and have been duly authorized by
all necessary corporate action of the Seller. This Agreement is, and the other
documents and instruments required hereby will be, when executed and delivered
by the Seller, valid and binding obligations of the Seller, enforceable against
the Seller in accordance with their respective terms, except to the extent that
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
creditors' rights generally and application of general principles of equity.
4.3 No Violation or Conflict. The execution, delivery and performance of
------------------------
this Agreement by the Seller does not and will not conflict with or violate the
articles of incorporation or bylaws of the Seller or conflict with, violate or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any law, order, rule, regulation, judgment, order, decree, or any
material agreement, document or instrument to which Seller is a party or by
which Seller is bound.
4.4 Title to Assets. The Seller has good and marketable title to all
---------------
receivables, chattel paper, inventory and all other tangible personal property
included in the Purchased Assets, free and clear of any mortgage, pledge, lien
charge or other encumbrance, except for assets to be assigned or transferred to
Buyer by assumption of contracts and leases and Permitted Liens.
4.5 Financials. Seller has provided Buyer with the December 31, 1996
----------
Balance Sheet, the unaudited balance sheet as of May 31, 1997, and income
statements as of December 31, 1996 and for the five-month period ended May 31,
1997, all with respect to the Business, which are set
9
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forth as Schedule 4.5. Such financial statements are true and correct and
represent the financial position of the Business and the results of its
operations for the periods ended on their respective dates in accordance with
figures extrapolated from financial records of Seller which were and are
maintained according to Seller's Accounting Procedures consistently applied
during the periods involved. For purposes of this Agreement, the term "Seller's
Accounting Procedures" shall mean generally accepted accounting principles
("GAAP") other than those deviations from GAAP set forth on Schedule 4.5(i).
4.6 Liabilities. Except to the extent reflected in or reserved against or
-----------
otherwise disclosed in the December 31, 1996 Balance Sheet, the Business did not
have any material liabilities, debts or obligations of the type or nature
accounted for in the regular and ordinary course of business on such balance
sheet according to Seller's Accounting Procedures, whether absolute, accrued,
contingent or otherwise and whether due or to be come due including, without
limitation, any liabilities resulting from failure to comply with any law or any
tax liabilities due or to become due whether incurred in respect of or measured
by income for any periods prior to close of business on December 31, 1996,
arising out of transactions entered into or any state of facts existing prior
thereto. Subsequent to then, the Seller has not incurred any such material
liabilities, debts or obligations other than in the ordinary course of business,
and the Seller has properly recorded in its books of account all items of income
and expense and all other proper charges and accruals required to be made in
accordance with Seller's Accounting Procedures, applied consistently with those
applied prior thereto.
4.7 Adverse Changes. In the conduct of the Business since December 31,
---------------
1996, there have been:
(a) no material adverse changes in the financial condition, business,
results of operation and condition of assets of the Seller;
(b) no losses which have materially and adversely affected the
business of the Seller or the value of its assets; and
(c) no transactions by Seller outside the ordinary course of business
of the Seller's Business.
4.8 Taxes. The Seller has paid or made provision for all federal, state,
-----
local and any other taxes that are due with respect to the Purchased Assets and
the conduct of the Business or that could constitute a lien on the Purchased
Assets and has duly filed all required returns or reports with regard to such
taxes and other governmental charges. There are no tax sharing arrangements in
effect which would affect the Assets or the Business subsequent to the Effective
Date.
4.9 Contracts. Except as specified in Schedule 4.9, in the conduct of the
---------
Business, Seller is not a party or otherwise subject to any material long term
contract, lease or other agreement. Except as specified in the Schedule and
except for agreements subsequently made in the ordinary course of business, the
Seller is not and will not be a party to, or bound by, any material contract of
any kind to be performed after the Effective Date. The Seller has no
10
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knowledge of any default and no knowledge of any reason why any default will
occur hereafter in any obligation to be performed by the Seller under any
contract or lease referred to in the Schedules, which default or defaults in the
aggregate would have material and adverse effect upon the Business.
4.10 Required Consents. Except as set forth in Schedule 4.9, no consent
-----------------
or waiver by any third party is required to transfer any material contract,
lease, sublease, license or other agreement which is necessary in order for
Buyer to operate the Business after the Closing in substantially the same manner
as Seller operated the Business prior to the Closing.
4.11 Patents. Schedule 4.11 is a listing of all United States and foreign
-------
patents and patent applications owned or controlled by Seller (in the sense of
having the right to license others) relating to the Seller's Business. Seller
makes no warranty or representation that such patents and patent applications
are valid or that anything made, used or sold or otherwise disposed of pursuant
to use of such patents and patent applications are free of infringement of
patents of third parties. However, Seller knows of no such infringement, and no
claim of any such infringement has been made to Seller. None of the patents
and patent applications in Schedule 4.11 is involved in any interference,
conflict or opposition proceeding, and there has been no threat or other
indication made or known to Seller that any such proceeding will hereafter be
commenced.
4.12 Trademarks. To the best of Seller's knowledge and belief, there are
----------
not applications or registrations for United States or foreign trade names,
trademarks or service marks owned, controlled or licensed by Seller relating to
and/or used in the Business, except those that are identified as Retained Assets
in Section 1.10(a).
4.13 Accounts Receivable. All accounts receivable included in the
-------------------
Purchased Assets represent sales actually made in the ordinary course of
business, are legal, valid and binding obligations of the obligors and have been
booked in accordance with Seller's Accounting Procedures consistently applied.
There are no write-offs, claims or set-offs against any account receivable and,
to the knowledge of the Seller, no such write-offs, claims or set-offs are
pending or threatened. All accounts receivable relating to reimbursable tooling
are supported by proper customer sign-off's and notifications. Ford's "PSW"
forms and similar forms used by other customers are deemed to be proper customer
sign-offs.
4.14 Inventory. All inventory included in the Purchase Assets is properly
---------
valued on its books and records at the lower of cost or market (calculated on a
FIFO basis), finished goods were produced to satisfy existing contracts, and raw
materials and work in process are useable in current or anticipated production.
With respect to all inventory which Seller holds on consignment, (i) all such
inventory is saleable in the ordinary course of business and (ii) there are no
disputes between Seller and the consignors of such inventory.
4.15 Recoverable Tooling. The items listed on Schedule 4.15 represent the
-------------------
accounts receivable (both billed and unbilled) for the Business for customer
tooling (the "Recoverable Tooling"), which have been booked in accordance with
Seller's Accounting Procedures. There are no write-off, claims or set-offs
against any such Recoverable Tooling and, to the knowledge
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<PAGE>
of the Seller, no such write-offs, claims or set-offs are pending or threatened.
Schedule 4.15 sets forth (i) Seller's good faith estimate of the future receipts
and future payables with respect to the customer tooling for programs which are
part of the Business as of the Closing Date, and (ii) Seller's reserves for Ford
Supplier Practice 35 for Ford Motor Company programs which are part of the
Business as of the Closing Date, which Seller represents and warrants are
adequate reserves with respect to such programs.
4.16 Capital Assets. With respect to the condition of the Plant,
--------------
buildings and equipment and warranties relative thereto, Seller represents only
that there has been no material deterioration since inspection by Buyer's
representatives and that such plants, buildings and equipment are useable and
operational, and will be delivered to Buyer at time of Closing in the same
condition as when inspected, reasonable wear and tear excepted.
4.17 No Violation of Law. The Plant, buildings and equipment and their
-------------------
use and operation conform in all material respects with applicable laws,
including but not limited to those relating to environmental and occupational
safety and health, and no notice has been received and, to the best knowledge of
Seller, no investigation or review is pending or has been threatened by any
governmental entity with respect to any alleged violation by the Business or
Plant of any law, ordinance, code, regulation or standard of any governmental
entity, within the past 24 months.
4.18 Actions, Suits and Judgments. There are no actions, suits,
----------------------------
proceedings or, to Seller's knowledge, investigations now pending or threatened
against Seller which would affect the Purchased Assets or Buyer's ability to
conduct the Business. The Seller is not operating under or subject to default
with respect to any adjudicatory order, writ, injunction, decree or cease and
desist order which is material to the Business or Purchase Assets.
4.19 Employee Benefit Plans: Schedule 4.19 lists all bonus, deferred
----------------------
compensation, pension, retirement, profit sharing, savings, stock option, stock
purchase, health and medical benefit plans, life insurance plans, disability
insurance plans, cafeteria plans, and all other material employee benefit plans
or arrangements which now cover, or at any time prior to Closing, will cover
employees of the Business, including, but not limited to, "Employee Benefit
Plans" within the meaning of Section 3(3) of ERISA, all of such plans being
hereinafter referred to as the "Benefit Plans". True and complete copies of the
following documents relating to the Employee Benefit Plans and copies of
documents describing the other benefits, as available, have been provided by the
Seller to the Buyer: (i) plan documents; (ii) summary plan description; (iii)
the Collective Bargaining Agreement described in Section 4.20 below; and (iv)
the most recent annual report.
With regard to The Goodyear Tire & Rubber Company Employee Savings Plan for
Salaried Employees and The Goodyear Tire & Rubber Company Employee Savings Plan
for Bargaining Unit Employees (Seller's "401(k) Plans"), Seller warrants and
represents that: (i) each 401(k) Plan is, and through the transfer date
described in Section 6.6(k) (the "Transfer Date") will be, a qualified plan
pursuant to Section 401(a) of the Code and the trust under each such 401(k) Plan
is exempt from taxation pursuant to Section 501(a) of the Code; (ii) each such
401(k) Plan has been, and through the Transfer Date will be, administered in
material compliance with ERISA and the Code, and any applicable collective
bargaining agreement; and (iii) Seller has materially
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<PAGE>
performed, and through the Transfer Date shall materially perform, all of its
duties and obligations under each 401(k) Plan and shall make all contributions
through the Effective Date.
4.20 Labor Matters. Except as set forth below in this Section 4.20,
-------------
Seller is not bound by, or party to, any collective bargaining agreement or
other like union contract relating to the Business. Seller is a party to a
certain collective bargaining agreement, dated effective April 20, 1996, between
itself and International United Steelworkers of America A.F.L.-C.I.O-CLC and its
Local 820-L, including incorporated plans and agreements and related
understandings referenced therein (altogether the "Collective Bargaining
Agreement"). Within the last two years, Seller has not experienced any material
work stoppage due to any labor disagreement with respect to the Business. With
respect to the Business, there is no unfair labor practice charge or complaint
against Seller pending or threatened, before the National Labor Relations Board
or any other similar local tribunal; there is no labor strike, request for
representation, slowdown or stoppage actually pending or threatened against or
affecting the Seller; no question concerning representation as defined in the
National Labor Relations Act has been raised with the Seller or is threatened;
and no grievance pursuant to any collective bargaining or other labor union
agreement, the settlement of which would have a material adverse effect on the
conduct of the Business, nor any arbitration proceeding arising out of or under
any collective bargaining or other labor union agreement is pending or
threatened against the Seller which could have a material adverse impact on the
Business.
4.21 Real Property. The Real Property:
-------------
(a) constitutes all real property and improvements owned, leased or
used by the Seller in conducting the Business;
(b) except as described in Schedule 1.9 hereto, is not subject to any
leases or tenancies of any kind;
(c) is not in the possession of any adverse possessors;
(d) has direct access to and from a public road or street for traffic
consistent with the conduct of the Business;
(e) is used in a manner which is permitted under applicable zoning
ordinances and other similar laws;
(f) is, and has been since the date of Seller's acquisition or lease
thereof, in the peaceful possession of the Seller; and
(g) is not subject to any interests of any person under an easement,
contract, opinion, mineral right, zoning restriction, encumbrance or other
agreement except Permitted Liens and encumbrances, conditions, restrictions and
reservations of record; private, public and utility rights of way and easements
of record; roads and highways, if any; and applicable zoning restrictions. To
the best of Seller's knowledge, there are no changes in any zoning ordinances or
other similar applicable laws or any zoning classification which would be caused
by the transfer of the Real Property or which are otherwise proposed or pending,
which would restrict or prevent
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Buyer's use of the Real Property to conduct the Business and there are presently
adequate and usable public sanitary and storm sewers, public water facilities
and electrical facilities necessary to the current operation and continued
conduct of the Business as normal and customary charges of public utility
companies and there are no pending or proposed changes thereto.
4.22 Broker. The Seller has not employed any broker or finder nor
------
incurred any liability for any brokerage fee, commission or finder fee in
connection with the transactions contemplated herein, except Key Capital
Markets, Inc., the fees and expenses of which shall be paid by Seller.
4.23 Insurance; Workers Compensation; Product Liability. Goodyear agrees
--------------------------------------------------
to maintain all current insurance coverage relating to the Business in full
force and effect through the Closing Date. Attached as Schedule 4.23 is a loss
run summary for the last three (3) year's injuries, setting forth all workers
compensation claim activity against the Business, including amounts incurred,
paid, and outstanding, and whether the claim is open or closed. Seller shall be
entitled to retain all medical records and all records relating to claim
activity occurring prior to the Closing Date. There have been no product
liability claims against the Business for the last five (5) years.
4.24 Environmental, Health and Safety Matters.
(a) Definitions.
-----------
"Environmental Laws" shall mean all applicable international, federal,
state and local statutes, laws, regulations, ordinances, orders, common law, and
similar provisions having the force or effect of law, concerning public health
or safety, worker health or safety or pollution or protection of the
environment, including but not limited to, the Clean Air Act, 42 U.S.C. (S)7401
et seq., the Clean Water Act, 33 U.S.C. (S)1251 et seq., the Resource
- - -- ---- -- ----
Conservation Recovery Act ("RCRA"), 42 U.S.C. (S)6901 et seq., the Toxic
-- ----
Substances Control Act, 15 U.S.C. (S)2601 et seq., and the Comprehensive
-- ----
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
(S)9601 et seq. whether currently in existence or hereafter enacted (unless
-------
otherwise noted) or which govern: (i) the existence, cleanup removal and/or
remedy of contamination or threat of contamination on or about the Real
Property; (ii) the emission or discharge of Hazardous Materials into the
environment; (iii) the use, generation, transport, treatment, storage, disposal,
removal, recycling, handling or recovery of Hazardous Materials, including
building materials.
"Existing Ohio Requirements" means the least stringent applicable clean up
standards under Ohio's voluntary clean up program in O.R.C. Chapter 3746 and
regulations issued thereunder, or any applicable requirements under Ohio or
federal environmental statutes and regulations existing as of the Closing Date
if and to the extent such statutes or regulations preclude reference to or
adoption of the voluntary action standards, provided that in all cases the
standards will be determined assuming permanent industrial use of the Real
Property unless precluded by applicable law or the applicable regulatory agency.
"Hazardous Materials" shall mean any material or substance: (i) which is or
becomes defined as a "hazardous substance", "pollutant" or "contaminant"
pursuant to CERCLA and amendments thereto and regulations promulgated
thereunder; (ii) containing gasoline, oil, diesel
14
<PAGE>
fuel or other petroleum products, or fractions thereof; (iii) which is or
becomes defined as a "hazardous waste" pursuant to RCRA and amendments thereto
and regulations promulgated thereunder; (iv) containing polychlorinated
biphenyls (PCBs); (v) containing asbestos; (vi) which is radioactive; (vii)
which is biologically hazardous; (viii) the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation or ordinance; (ix) which is or becomes defined as a "hazardous
waste", "hazardous substance", "pollutant" or "contaminant" or other such terms
used to define a substance having an adverse effect on the environment under any
federal, state or local statute, regulation or ordinance; (x) any toxic,
explosive, dangerous, corrosive or otherwise hazardous substance, material or
waste which is or becomes regulated by any federal, state or local governmental
authority or (xi) which causes a nuisance upon or waste to the Real Property.
"Environmental Reports" shall mean the Environmental Reports obtained from
Clayton Environmental Consultants with respect to the environmental condition of
the Real Property previously delivered to Buyer and Seller.
"Known Contamination" means contamination identified in the Environmental
Reports in excess of Existing Ohio Requirements.
(b) To the actual knowledge after due inquiry of Seller's Manager of
Environmental Services, the Plant Manager or the Plant Manager of Environmental
Affairs, and except as identified in the Environmental Reports, materials
previously supplied by Seller to Buyer or the Environmental Reports, and except
for such matters as would not have a reasonable likelihood, singularly or in the
aggregate, of materially adversely affecting the financial condition,
operations, assets, business or properties of the Business:
(i) Seller has not received notice of proceedings, claims or losses
relating to alleged violations by the Seller of any Environmental Laws relating
to the Business, or relating to the presence, discharge, release or disposal of
Hazardous Materials on the Real Property;
(ii) Seller has not received notice as a potentially responsible
party ("PRP") for any facility, site or location pursuant to CERCLA or other
similar Environmental Law relating to the Business;
(iii) Seller is in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and obligations
established under the requirements of Environmental Laws relating to the
Business;
(iv) With respect to the Business, Seller has timely filed all
notices, reports and other submissions required under all Environmental Laws;
(v) All Real Property owned, operated or leased in connection with
the Business are owned and operated by Seller in compliance with all
Environmental Laws;
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(vi) The Business has been issued all permits, certificates,
approvals, licenses and other authorizations required under all Environmental
Laws, have timely applied therefore and are and continue to be in compliance
therewith;
(vii) Neither the Business, nor any other person has released or
disposed of any Hazardous Materials on, at, under or about the Real Property in
violation of Environmental Laws or in amounts which would give rise to material
liabilities under Environmental Laws;
(viii) There have not been and are no underground storage tanks,
active or abandoned, on or under the Real Property or other property now or
previously owned or leased by the Business which have not been removed in
accordance with applicable requirements of Environmental Laws;
(ix) The Business has not arranged for the transportation, treatment
or disposal of any waste that was disposed of or treated at any site listed on
any federal CERCLA or state list of hazardous substances sites, other than the
Granville Solvents, Granville, Ohio site;
(x) There are no liens under Environmental Laws on any of the Real
Property or other assets owned, leased or operated by the Business and no
governmental actions have been taken or are in process which could subject any
of such properties or assets to such liens;
(xi) Seller has provided to Buyer copies of any environmental
investigations, audits, reviews, reports or assessments relating to the Real
Property (it being agreed that Buyer will maintain all such information as
confidential and, to the extent applicable, subject to the attorney-client
privilege or joint defense privilege); and
(xii) Without limiting the generality of the foregoing, there are no
other facts, events or conditions relating to the past or present operations,
properties or facilities of the Business which would give rise to any material
liabilities or material obligation under any Environmental Laws.
(c) Notwithstanding anything to the contrary in this Agreement, any
claim relating to a breach of a specific representation or warranty against
Seller that is also covered by a specific indemnity, shall be exclusively
governed by the specific indemnity.
ARTICLE V
REPRESENTATIONS AND WARRANTIES BY BUYER
The Buyer hereby represents and warrants to Seller that:
5.1 Organization. Buyer is a corporation duly and validly organized and
------------
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to enter into and comply with its obligations
under this Agreement and purchase the Purchased Assets pursuant to this
Agreement.
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5.2 Authorization: Enforceability. The execution, delivery and
-----------------------------
performance of this Agreement and all of the documents and instruments required
hereby are within the corporate power of Buyer and have been duly authorized by
all necessary corporate action of the Buyer. This Agreement is and the other
documents and instruments required hereby will be, when executed and delivered
by the Buyer, valid and binding obligations of the Buyer, enforceable against
the Buyer in accordance with their respective terms, except to the extent that
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
creditors rights generally and application of general principles of equity.
5.3 No Violation or Conflict. The execution, delivery and performance of
------------------------
this Agreement by the Buyer does not and will not conflict with or violate the
articles of incorporation or bylaws of the Buyer or conflict with, violate or
result in a breach of the terms, conditions or provisions of, or material
agreement, document or instrument to which Buyer is a party or by which Buyer is
bound.
5.4 Financial. Buyer has obtained a commitment for financing sufficient
---------
to pay the Seller the purchase price in immediately available funds at time of
Closing.
5.5 Buyer's 401(k) Plan. With regard to Buyer's 401(k) Plan (as defined
-------------------
in Section 6.6), Buyer warrants and represents that: (i) Buyer's 401(k) Plan
is, and through the Transfer Date will be, a qualified plan pursuant to Section
401(a) of the Code and the trust under Buyer's 401(k) Plan is exempt from
taxation pursuant to Section 501(a) of the Code; (ii) Buyer's 401(k) Plan has
been, and through the Transfer Date will be, administered in material compliance
with ERISA and the Code, and any applicable collective bargaining agreement; and
(iii) Buyer has materially performed, and through the Transfer Date shall
materially perform, all of its duties and obligations under Buyer's 401(k) Plan
and shall make all contributions through the Effective Date.
5.6 Broker. The Buyer has not employed any broker or finder nor incurred
------
any liability for any broker fee, commission or finder fee in connection with
the transactions contemplated herein.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Access; Confidentiality. Seller agrees that Buyer and its authorized
-----------------------
agents, officers and representatives shall have full access to the properties,
assets, books and records of the Business so that Buyer may familiarize itself
with the Business and its properties, assets and financial conditions and make
such investigations in conducting due diligence as Buyer deems desirable.
Seller also agrees to furnish to Buyer or its representatives all such existing
information concerning the Purchased Assets and the conduct of the Business by
Seller as Buyer shall reasonably request. If the transactions provided for
herein are not consummated, the Buyer agrees on its behalf and on behalf of its
respective officers, agents and representatives, under penalty of injunction and
damages, to hold in strict confidence and not to use in any manner any
17
<PAGE>
information obtained from Seller, its officers, agents or representatives and
Buyer agrees to promptly return to the Seller all documents obtained from Seller
and to destroy copies thereof as well as notes and records of Buyer, its
officers, representatives and agents made or based upon information supplied by
Seller; except such information or document which (i) is in the public domain;
(ii) was in fact known to the buyer prior to disclosure to the Buyer by the
Seller; (iii) is disclosed or furnished to the buyer by a third party without
breach of any obligations to Seller; or (iv) thereafter, through an act or
failure to act on the part of the Seller, becomes information generally
available to the public. Information shall not be deemed to be in the public
domain (i) merely because it is embraced by more general information in the
prior possession of Buyer or of others, or (ii) merely because it is expressed
in public literature in general terms not specifically in accordance with the
information.
6.2 Conduct. From the Effective Date to the Closing Date, Seller shall
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continue to operate the Business, not as agent for the Buyer, but as proprietor
of the Business. The designation of the Effective Date is solely for the
purposes of (i) fixing the economic rights and obligations of Seller and Buyer
as of the Effective Date and (ii) allocating to Buyer certain items of profit,
loss, income, deduction and credit with respect to events, transactions and
occurrences in the Business from and after the Effective Date as provided in
this Agreement. During the period from the date hereof to Closing, Seller
shall:
(a) diligently carry on its business in the ordinary and usual course
as carried on prior to the date of this Agreement and shall not make any
material changes in the operations of the Business or institute any unusual or
novel methods of manufacture, purchase, sale, lease, management, accounting or
operations or make any bulk transfer or discounted sale;
(b) continue its normal policies and procedures regarding suppliers
of goods and services to the business and sales to customers;
(c) maintain the Plant, including buildings, machinery and equipment
in as good working order and condition as it was upon the date on which it was
inspected by Buyer and its agents and representatives, normal wear and tear
excepted;
(d) perform all of its current obligations under all contracts to
which it is a party or by which it is bound;
(e) not increase the salaries or other compensation or benefits of
any employee of the Business, except in accordance with Seller's standard
policies and procedures;
(f) use its best efforts to assist Buyer to obtain the services of
the current employees of the Business after Closing;
(g) do all things necessary to comply with the covenants and
conditions set forth in this Agreement; and
(h) preserve its goodwill and customers and suppliers.
18
<PAGE>
6.3 Notification of Certain Matters. Seller shall give prompt notice in
-------------------------------
writing to the Buyer of: (i) any notice or other communication relating to any
asserted default or event which, with notice or lapse of time or both, would
become a default, received by Seller prior to the Closing Date, under any
agreement, indenture or instrument, material to the financial condition,
properties, businesses or results of operations of the Business; (ii) any notice
or other communication from any third party alleging that the consent of such
third part is required in connection with material transactions contemplated by
this Agreement; an (ii) any material averse change in the financial condition,
properties, businesses, results of operations or prospects of the Business.
6.4 Taxes. Any and all governmental sales and use taxes payable in
-----
connection with the sale, assignment, transfer, or conveyance of Purchased
Assets from the Seller to Buyer shall be the responsibility of Seller. Property
taxes shall be allocated at the Closing on the basis that Ohio has a lien date
of December 31, 1996 for personal property taxes and a lien date of January 1,
1997 for real property taxes both covering the period January 1, 1997 through
December 31, 1997.
6.5 Non-Compete. Seller covenants that, for a period of five years from
-----------
the Closing Date, the Seller and its affiliates shall not engage, directly or
indirectly, in competition with the Buyer or any of its affiliates in the
manufacture or sale of products currently produced by the Business, in the
United States of America or in any other country where the Business is currently
conducted by Seller or its subsidiaries or affiliates.
6.6 Employment Matters.
------------------
(a) Employment by the Buyer. (i) Buyer agrees to hire all hourly
-----------------------
employees of the Business. Buyer further agrees to be the "successor" for all
purposes under the Collective Bargaining Agreement and to provide all
compensation and benefits required under the Collective Bargaining Agreement for
the contract period; (ii) Buyer agrees to offer to all salaried employees of the
Business (except up to two such persons whom Buyer may at its discretion choose
not to hire, in which event Buyer shall indemnify, defend and hold Seller
harmless from any claims, loss, damage, cost, expense or liability solely
arising out of, relating to, or as a consequence of Buyer's exercise of this
discretion) who are, on the Effective Date, not on sick leave, short-term or
long-term disability, a severance or salary continuation program, or leave of
absence, employment in a similar capacity to their employment with Seller before
the Closing, at substantially the same compensation, as well as participation in
employee benefit plans substantially similar to those currently maintained by
Buyer for its present salaried employees; provided, however, that in the event
Buyer terminates any salaried employee who formerly worked for Seller within six
months of the Effective Date, Buyer shall furnish such terminated salaried
employee the severance package described in Schedule 6.6. Any salaried employee
of the Business on sick leave, short-term or long-term disability, or leave of
absence on the Effective Date shall be offered employment by Buyer when such
leave or absence ends (but only if such leave or absence ends within 2 years of
the Effective Date or as otherwise required by applicable law). For those
salaried employees who, on or after June 26, 1997, but prior to the Effective
Date, retire from Seller with an entitlement to retiree medical coverage, and
then go to work for Buyer on the Effective Date, Buyer's active medical benefits
plan shall provide primary coverage so long as the
19
<PAGE>
individual is actively employed with Buyer. Nothing in this Section 6.6 shall
create any continuing obligation on Buyer to continue the employment of any or
all of the salaried employees, nor to prohibit Buyer from materially changing
any or all terms and conditions of such employment (including wages and
benefits) at any time after the Effective Date, except only that Buyer shall be
obligated to provide those benefits specified in this Section 6.6.
(b) Collectively Bargained Pension Benefits. Buyer will establish a
---------------------------------------
qualified defined benefit pension plan in compliance with the terms of the
Collective Bargaining Agreement for the benefit of the represented employees of
the Business who have become Buyer's employees ("Buyer's Union Pension Plan").
Buyer's Union Pension Plan shall recognize service with Seller for purposes of
eligibility to participate, eligibility for benefits, and vesting purposes. For
purposes of benefit accrual: (i) Buyer's Union Pension Plan shall recognize
service with Buyer at $20 per month through April 18, 1999 and at $21 per month
from April 19, 1999 forward; and (ii) it shall only recognize service with
Seller to the extent that benefits under any future Collective Bargaining
Agreement increase above $21.00 per month and Seller's 1950 Pension Plan shall
have no responsibility for any such increases. Seller shall amend its 1950
Pension Plan to vest all of the represented employees of the Business, to
recognize service with Buyer for purposes of determining eligibility for any
benefit under the 1950 Pension Plan based upon periods of service, such as
unreduced early retirement benefits and, effective April 19, 1999, to increase
the benefit rate for the represented employees of the Business for service with
Seller from $20 per month to $21 per month for the transferred employees still
actively employed by Buyer on April 19, 1999. Seller shall provide to Buyer
such information regarding benefit and vesting service for Seller as Buyer may
reasonably request. Buyer shall provide Seller such information regarding
service and employment with Buyer as Seller may reasonably request. Neither
Seller, nor Buyer, shall have any liability, responsibility or obligation under
any pension plan maintained by the other for the benefit of the represented
employees of the Business.
(c) Collectively Bargained 401(k) Benefits. Buyer will either
--------------------------------------
establish a separate qualified defined contribution plan in compliance with
Section 401(k) of the Code and the terms of the Collective Bargaining Agreement
for the benefit of the represented employees of the Business who have become
Buyer's employees or amend the Cambridge Industries, Inc. 401(k) savings Plan as
in effect on June 1, 1997 to accomplish this same purpose ("Buyer's 401(k)
Plan"). Buyer's 401(k) Plan shall recognize service with Seller for purposes of
eligibility to participate, eligibility for benefits, and vesting purposes.
Seller shall provide to Buyer such information regarding such service for Seller
as Buyer may reasonably request. Seller shall amend The Goodyear Tire & Rubber
Company Employee Savings Plan for Bargaining Unit Employees Plan to vest all of
the represented employees of the Business as of the Effective Date. Neither
Seller, nor Buyer, shall have any liability, responsibility or obligation under
any 401(k) plan maintained by the other for the benefit of the represented
employees of the Business.
(d) Retiree Medical Benefits for Hourly Workforce. Buyer will
---------------------------------------------
establish a plan in compliance with the terms of the Collective Bargaining
Agreement for the benefit of the represented employees of the Business who have
become Buyer's employees to provide retiree medical benefits in accordance with
the terms of the Collective Bargaining Agreement. Seller will have the
liability and responsibility as described in the Collective Bargaining Agreement
to provide retiree medical benefits to former employees of the Business who have
retired prior to the
20
<PAGE>
Effective Date; provided that, for those employees who retire from Seller prior
to the Effective Date and then go to work for Buyer, Buyer's active medical
benefit plan shall provide primary coverage, but only for so long as the
individual is actively employed with Buyer. Seller will reduce the purchase
price by an amount equal to the accumulated post retirement benefit obligation
for all represented employees of the Business who become Buyer's employees as of
the Effective Date and who were either not eligible to retire prior to the
Effective Date or were eligible but elected not to retire prior to the Effective
Date determined in accordance with, and using the same methods and assumptions
used in, Seller's Accounting Procedures as applied in preparing Seller's
consolidated financial statements as of December 31, 1996, with the exception of
the mortality table and discount rate. With respect to such determination, the
1983 Group Annuity Mortality Table, shall be utilized and the discount rate
shall be 7-7/8 %. Eligibility for benefits under any Seller medical benefit plan
shall be based solely on service with and retirement from Seller prior to the
Effective Date.
(e) Salaried Employee Benefits. The salaried employees of the
--------------------------
Business who become Buyer's employees shall be eligible to participate in
Buyer's 401(k) Plan provided that:
(i) Buyer's 401(k) Plan shall be amended to recognize service
with Seller, subject to Seller's break-in-service rules, for purposes of
eligibility and vesting. Seller shall provide to Buyer such information
regarding such service for Seller as Buyer may request;
(ii) The salaried employees of the Business shall receive a 50%
Matching Contribution on amounts contributed up to 6% of such employee's
eligible Compensation contributed as elective contributions; and
(iii) Regardless of the Business profitability during the
following years, Buyer's 401(k) Plan shall be amended to provide for a Profit
Sharing Contribution, as defined in said Plan, on behalf of the salaried
employees of the Business in the following amounts for the Plan Years set forth
below:
<TABLE>
<CAPTION>
Plan Years Ending
December 31
-----------
<S> <C>
1997 $ 91,250.00
1998 $182,500.00
1999 $182,500.00
2000 $ 91,250.00
</TABLE>
Buyer shall undertake all action permitted under applicable law to accomplish
the foregoing commitments. To the extent Buyer is unable under the
discrimination rules of applicable law to provide the benefits described in
Sections 6.6(e)(ii) and (iii) through Buyer's 401(k) Plan, Buyer shall establish
a Top Hat plan for the benefit of those employees not receiving such benefits
through the 401(k) Plan. Seller shall amend The Goodyear Tire & Rubber Company
Employee
21
<PAGE>
Savings Plan for Salaried Employees to vest all of the salaried employees of the
Business as of the Effective Date.
(f) Gains Sharing/Bonus Pool. Buyer shall establish, on behalf of
------------------------
the salaried employees of the Business, a gain sharing and/or bonus plan to
which it shall contribute the sum of One Hundred Thirty-Two Thousand Five
Hundred Dollars ($132,500.00) per plan year for the first three plan years
following the Effective Date.
(g) Seller's Defined Benefit Plan for Salaried Employees. No assets
----------------------------------------------------
will be transferred by Seller to Buyer on account of Seller's Retirement Plan
for Salaried Employees (the "Salaried Plan") and Seller will retain sole and
exclusive control and administration of the Salaried Plan. The interest of each
employee of Seller who is a participant in the Salaried Plan prior to Closing
shall become vested on the Effective Date if not otherwise vested. The
eligibility for benefits to which each employee will be entitled under the
Salaried Plan will be based on continuous service as of the Effective Date. The
amount of the retirement benefit will be determined under the Salaried Plan as
in effect on the Effective Date. Accrual of continuous service and benefits
under the Salaried Plan shall cease effective as of midnight on the Effective
Date. The employees shall terminate their service with Seller and cease to be
"Employees" under the Salaried Plan as that term is defined therein as of
midnight on the Effective Date. Salaried employees of Seller who have not
retired prior to midnight on the Effective Date or their beneficiaries will be
entitled to either a Deferred Vested Pension as defined in the Salaried Plan or
preretirement death benefit provided under the Retirement Equity Act of 1984.
(h) Miscellaneous Employee Agreements. The Plant Manager of the
---------------------------------
Business, Robert Tinker, will remain an employee of Seller following the
Effective Date. Seller shall make his services available to Buyer after the
Effective Date pursuant to the terms of a Consulting Agreement between Buyer and
Seller pursuant to which Buyer shall reimburse Seller for Mr. Tinker's salary
and the cost of providing fringe benefits while such services are provided to
Buyer.
(i) Participation in Benefit Plans and Programs. Employees shall be
-------------------------------------------
given credit for all service with Seller or any of its affiliates under all
employee welfare benefit plans and arrangements of Buyer to the same extent as
if such service were rendered to Buyer for purposes of eligibility and vesting.
The Buyer shall cause any pre-existing condition limitation under its welfare
plans that might otherwise apply to an employee to be waived. Buyer shall
recognize or cause to be recognized the dollar amount of all expenses incurred
by employees during the 1997 calendar year up to the Effective Date for
purposes of satisfying the 1997 calendar year deductibles and co-payment
limitations under relevant benefit plans of Buyer provided that Seller
furnishes, in a form reasonably acceptable to Buyer, complete data concerning
copayments and deductibles satisfied while covered under Seller's plans. The
obligation to pay claims for services rendered prior to the end of the Effective
Date for each employee of the Business including, without limitation, claims for
health, dental, life, accidental death and disability and related benefits
incurred with respect to such employee, his or her spouse, dependents or
beneficiaries shall remain the responsibility of Seller or of the employee.
Buyer or its carrier shall be responsible for payment of all claims for the
above types of enumerated services rendered after the Effective Date for each
such employee which are incurred with respect to such employee or his or
22
<PAGE>
her spouse, dependents or beneficiaries under Buyer's plans. Seller shall not be
liable for any costs related to medical conditions which existed prior to, but
for which medical services were rendered for eligible employees or dependents
after the Effective Date regardless of whether Seller had knowledge of any such
conditions as of the Effective Date. For the purposes of this subparagraph (i),
only, a service rendered in connection with or during an inpatient hospital
confinement shall be considered rendered on the date the hospital confinement
began. Buyer acknowledges that Seller's intent is that Seller shall have no
liability under Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985 (P.L. 99-272) (COBRA), with respect to any continuation coverage under any
medical and health plans of Seller for hourly and salaried employees of Buyer,
their spouses, dependents and beneficiaries with respect to Qualifying Events
(as defined in COBRA) occurring on and after both the Effective Date and the
date such employee or, in the case of a dependent, the employee with respect to
whom the dependent is enrolled for benefits commences employment with the Buyer.
The parties expressly agree that it is their intent that Seller is and shall
continue to be obligated to administer COBRA for all qualified beneficiaries
whose original Qualifying Event occurred prior to the Effective Date.
Seller shall transfer to Buyer's Cafeteria Plan established under Section
125 of the Code any unexpended amounts less any deficit balances (where claims
have exceeded deferrals) in Seller's Cafeteria Plan on the Effective Date
relating to flexible spending accounts for health care expenses and dependent
care expenses maintained in said Plan on behalf of the transferred salaried
employees who become Buyer's employees as of the Effective Date and shall
provide to Buyer such information as Buyer may reasonably request concerning
such accounts. Buyer shall maintain and administer any such funds transferred
to Buyer for the benefit of the transferred employees.
(j) Vacation. Buyer will recognize and honor the existing vacation
--------
entitlements of both the hourly and salaried employees of the Business who go to
work for Buyer as of the Effective Date as expressed in the Collective
Bargaining Agreement and Seller's salaried personnel policies respectively.
Seller will transfer to Buyer sufficient amounts on account of the hourly
employees who go to work for Buyer as of the Effective Date to fund 1997
vacation entitlement earned in 1996 but not taken prior to the Effective Date.
Seller will pay to the salaried employees of the Business amounts due for banked
and deferred vacation under Seller's personnel policies. Seller will pay to
Buyer sufficient amounts on account of the salaried employees who go to work for
Buyer as of the Effective Date to fund 1997 vacation entitlement earned in 1996
but not taken prior to the Effective Date. Buyer will be responsible for 1998
vacation entitlements earned during 1997. During January 1998, Buyer will
provide Seller with employment information reflecting which of the transferred
employees of the Business remained in Buyer's employ through year end. Seller
will pay to Buyer sufficient amounts on behalf of those employees who remained
with Buyer through year end to fund vacation entitlements for 1998 vacation
earned during 1997 up to midnight on the Effective Date. Buyer will not be
responsible for any vacation entitlement earned prior to midnight on the
Effective Date except to the extent funds for such entitlement are transferred
to Buyer from Seller pursuant to this paragraph.
(k) Seller shall, within sixty (60) days after the Closing Date
transfer, in accordance with the Code and ERISA, to Buyer's 401(k) Plan, and
Buyer's 401(k) Plan shall accept, the accounts of the transferred Employees
under Seller's 401(k) Plans. Seller shall, at that
23
<PAGE>
time, provide Buyer with the information reasonably necessary to the
administration of such accounts.
6.7 Receivables.
-----------
(a) Recoverable Tooling. During the 180-day period immediately
following the Closing Date, Buyer shall exercise all reasonable efforts to
collect or obtain a written commitment for payment of the Recoverable Tooling of
the Business consistent with Seller's past practices. As of the end of each
monthly accounting period during such 180-day period, Buyer shall furnish to
Seller a list of its Recoverable Tooling which remain unpaid and without a
written commitment for payment. If Seller has not received on or prior to the
Closing Date and Buyer has not received within 180 days after the Closing Date
either payment of or a written commitment (in the form of a purchase order or
other written document) for payment of any Recoverable Tooling existing as of
the Closing Date, Buyer shall furnish to Seller a detailed list of such
outstanding Recoverable Tooling that remain unpaid and for which no written
commitment has been received (the "Redeemable Recoverable Tooling") showing (i)
the name and last known address of the account debtor or customer; (ii) the
amount owing and aging of the Recoverable Tooling; (iii) the aggregate
outstanding dollar amount of all such Recoverable Tooling; and (iv) as to each
item of Recoverable Tooling, a general notation by Buyer as to why Buyer
believes that no written commitment has been obtained, and why the account is
unpaid or is disputed, if any dispute exists with respect to an account. Within
15 days after Seller's receipt of the foregoing list of Redeemable Recoverable
Tooling, Seller shall purchase the Redeemable Recoverable Tooling from Buyer as
follows: (i) Buyer shall assign to Seller all of Buyer's right, title and
interest in the Redeemable Recoverable Tooling by instrument acceptable to
counsel for Seller and Buyer; (ii) Buyer shall, to the extent reasonably
available, deliver to Seller all instruments, documents and agreements
evidencing Buyer's right and interest in the Redeemable Recoverable Tooling; and
(iii) Seller shall pay to Buyer an amount equal to the aggregate amount
outstanding in respect of the Redeemable Recoverable Tooling. If Buyer receives
any payment of cash or property in respect of the Redeemable Recoverable Tooling
after the same have been transferred to Seller, Buyer shall promptly remit such
payment to Seller. If Buyer receives any written or other commitment to pay in
respect of the Redeemable Recoverable Tooling after the same has been
transferred to Seller, Buyer shall promptly assign all of its rights thereunder
to Seller.
(b) Other Receivables. Seller shall buy back any accounts and notes
receivable of the Business (other than Recoverable Tooling) existing as of the
Effective Date and uncollected by Buyer within 120 days following the Closing
Date, provided Buyer promptly tenders return of such receivables at the end of
that period.
(c) Notwithstanding the foregoing, to the extent Recoverable Tooling
(both billed and unbilled) as of the Effective Date exceeds an aggregate of
$5,000,000, Seller will retain receivables other than Recoverable Tooling in an
amount equal to the amount by which the Recoverable Tooling exceeds $5,000,000,
and the purchase price shall be adjusted accordingly.
6.8 Filings; Other Actions. Subject to the terms and conditions herein,
----------------------
Seller and Buyer shall use all reasonable efforts to promptly make all necessary
filings and take, or cause to be taken, all necessary actions and do, or cause
to be done, all other things necessary, proper to
24
<PAGE>
appropriate to consummate and make effective the transactions contemplated in
this Agreement by the scheduled Closing Date.
6.9 Title Insurance. Prior to the Closing Date, the Seller shall deliver
---------------
to the Buyer at the sole cost and expense of the Seller, a standard leasehold
policy of title insurance or a commitment to issue such a policy at Closing at
Seller's cost, insuring Buyer with respect to the Real Property in an amount not
less than $750,000, with no exceptions to such title other than the Permitted
Liens or such other exceptions as Buyer shall determined, upon review of the
commitment to issue such policy, do not materially adversely affect the Real
Property or Buyer's rights to use it to conduct a business comparable to the
Business of Seller. Buyer shall pay all premiums attributable to any additional
coverage or endorsements Buyer desires and shall bear the cost of recording
fees. The costs of any documentary or transfer taxes will be borne by the
parties equally.
6.10 Post-Closing Access to Records. From and after the Closing Date,
------------------------------
Buyer and Seller will make available to each other, and their respective agents
and employees, all books, records and documents relating to the Business which
is in their possession or under their control to the extent they are reasonably
necessary for the purpose of (i) preparing tax returns and financial statements
and responding to tax audits and conducting tax litigation, or (ii)
investigating, preparing for the defense or prosecution of, prosecuting or
defending any litigation, proceeding or investigation pending, threatened or
anticipated which is based on, arises out of or otherwise is in respect of the
Business. Such access shall be made during regular business hours and shall not
unreasonably interfere with the normal operations of Buyer and Seller.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Each and every obligation of the Buyer to be performed on the Closing Date
shall be subject to the fulfillment of the following conditions at or prior to
Closing.
7.1 Representations; Warranties; Agreements; Covenants. The
--------------------------------------------------
representations and warranties of the Seller contained in this Agreement shall
have been true and correct in all respects material to the Business and
consummation of this transaction at the date hereof on the Effective Date and as
of the Closing with the same force and effect as if made on such dates, and the
Seller shall have complied with all agreements and covenants required by this
Agreement to be performed by it at or prior to the Closing.
7.2 No Restraint or Litigation. All necessary pre-merger notifications
--------------------------
and filings shall have been made under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the waiting period shall have expired or been
terminated. No litigation, investigation, suit, action or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks the restraint or prohibition of the consummation of the transactions
contemplated by this Agreement.
25
<PAGE>
7.3 Board Resolution. At the Closing, Seller shall have furnished Buyer
----------------
with a copy of a resolution duly adopted by its Board of Directors authorizing
the execution and delivery of this Agreement and all other necessary or proper
corporate action to enable Seller to comply with the terms of this Agreement,
such resolution to be certified by the corporate Secretary or an Assistant
Secretary.
7.4 No Adverse Change. During the period from the date hereof to the
-----------------
date of Closing, there shall not have occurred and there shall not exist on the
Closing Date, any condition or fact which is or may be materially adverse to the
Purchased Assets or the business to be conducted by Buyer using the Purchased
Assets.
7.5 Labor Matters. No strike or other labor disturbance of the employees
-------------
shall exist, or to the Seller's knowledge, be threatened, which would prevent or
impair the ability of the Buyer to use the Purchased Assets and to operate the
Business after the Closing Date.
7.6 Consents. Necessary consents to assignment or transfer of all
--------
material contracts, agreements and leases and those in the aggregate material to
the Business shall have been obtained.
7.7 No Defaults. There shall have been no material defaults or any event
-----------
which, after notice or passage of time or both, could constitute a material
default under contracts, agreements and leases material to the Business.
7.8 Seller's Purchase Orders, Transition Agreement and Tax Withholding
------------------------------------------------------------------
Agreement. Seller shall have assigned Seller's Purchase Orders to Buyer, and
- - ---------
Buyer and Seller shall have entered into the Transition Agreement and the Tax
Withholding Agreement.
7.9 Financing. Buyer shall have obtained financing to consummate the
---------
transactions contemplated in this Agreement on terms satisfactory to Buyer in
its sole discretion.
7.10 Consents and Estoppel Certificates. Seller shall obtain consents and
----------------------------------
estoppel certificates from each lessor under any lease or sublease with respect
to the Real Property, certifying the applicable lease or contract and all
amendments thereto and stating that (i) such lease is in full force and effect,
(ii) there are no uncured defaults thereunder, (iii) the date through which
lease payments or any other applicable payments thereunder have been paid, and
(iv) the amount of any security deposit held thereunder.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Each and every obligation of Seller to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
26
<PAGE>
8.1 Representations; Warranties; Agreements; Covenants. The
--------------------------------------------------
representations and warranties of Buyer contained in this Agreement shall have
been true and correct in all respects material to consummating this transaction
at the date hereof and shall be true and correct as of the Closing with the same
force and effect as if made at and as of the Effective Date and the Closing
Date, and Buyer shall have performed or complied with all agreements and
covenants required by this Agreement to be performed or complied with by it at
or prior to the Closing.
8.2 No Restraint or Litigation. All necessary pre-merger notifications
--------------------------
shall have been made under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the waiting period shall have expired or terminate. No litigation,
investigation, suit, action or other proceeding shall be threatened or pending
before any court or governmental agency that seeks the restraint or prohibition
of the consummation of the transactions contemplated by this Agreement.
8.3 Board Resolution. At the Closing, Buyer shall have furnished Seller
----------------
with a copy of a resolution duly adopted by its Board of Directors authorizing
the execution and delivery of this Agreement and all other necessary or proper
corporate action to enable it to comply with the terms of this Agreement, such
resolutions to be certified by the corporate Secretary or an Assistant
Secretary.
8.4 Assumption. Buyer shall execute at time of Closing an assumption of
----------
Seller's accounts payable and of all contracts, agreements and leases (and where
necessary to effect transfer, subleases from Seller) of the Business undertaking
Seller's obligation to perform and discharge such contracts with respect to
obligations intended under the contracts to be performed after Closing and
agreeing to indemnify, defend, hold and save Seller harmless from any claim due
to Buyer's performance or non-performance thereafter.
8.5 Funds. Buyer shall deliver to Seller the Purchase Price at Closing by
-----
wire transfer in immediately available funds.
ARTICLE IX
INDEMNIFICATION
9.1 Environmental Covenant and Indemnity.
------------------------------------
(a) Seller shall indemnify, defend and hold Buyer harmless from and
against any and all costs, claims, expenses, liabilities, damages, fines,
penalties, interest expenses, injuries to person or property, contributions,
settlements or fees (including attorneys', consultants', laboratory and experts'
fees), but not including any losses or damages for lost profits, interruption of
business or other consequential damages, but including such costs as overtime,
equipment moving expenses and similar direct or out-of-pocket costs
("Indemnifiable Losses") relating to or arising out of the matters identified or
described in Schedule 9.1(a) or any fines or penalties arising from the conduct
of the Business prior to the Closing Date including, without limitation, all
licensing, permitting, filing, record-keeping and reporting requirements.
27
<PAGE>
(b) In addition to Seller's obligations under Section 9.1(a), and
subject to the limitations of this Article IX, Seller shall reimburse Buyer
monthlywithin thirty (30) days following receipt of written notice of amounts
paid by Buyer for all further investigations necessary at, on, under or about
the Real Property to identify, study and, temporarily (at Buyer's option) and
permanently, repair the cause or causes or sources of any Known Contamination in
soils, sediments, surface water or groundwater at, on, under or about the Real
Property (the "Source Control Measures")a; provided, however, that Seller's
-----------------
obligation to reimburse for the costs of the Source Control Measures shall be
limited to $1,000,000. Buyer shall provide Seller with reasonable opportunity to
review, discuss and approve a work plan to perform the Source Control Measures,
which approval shall not be unreasonably withheld.
(c) [BLANK LINE APPEARS HERE]
(i) After completion of the Source Control Measures (or, at
Seller's option if such measures are not then completed, eighteen (18) months
after the Closing Date), Seller shall commence and diligently pursue with
contractors reasonably acceptable to Buyer the remediation of the Known
Contamination and any additional or described in the Environmental Reportsareas
required to be investigated or remediated by the applicable regulatory agency.
The contractor shall expressly permit the Buyer to rely on its work product and
report, shall maintain not less than $1,000,000 in errors and omissions
insurance coverage and shall not limit its liability to Buyer to less than its
insurance limits in any of its contractual documents. The remediation shall be
conducted in accordance with a proposed plan of remediation prepared by Seller
(and if required by law) submitted to, and approved by, the appropriate
regulatory agency (the "Remediation Plan"). Seller will coordinate any further
investigatory, monitoring, containment, clean-up, restoration or remediation
activities with Buyer under the Remediation Plan in order to minimize any
disruption of Buyer's business. Seller shall provide to Buyer copies of all
correspondence and submissions to, and correspondence and inquiries from, the
applicable regulatory agency and/or contractors with respect to the remediation
of the Real Property and the Remediation Plan and reasonable notice of all
meetings with any applicable regulatory agency so as to provide Buyer with an
opportunity to attend such meetings and to give any comments that Buyer may have
to such applicable regulatory agency. Seller shall retain final responsibility
for design and implementation of the Remediation Plan and shall be solely
responsible for all costs and expenses of preparing and performing the
Remediation Plan. Seller agrees to reimburse Buyer for any Indemnifiable Losses
caused by Seller or its agents in the course of performing the Remediation Plan,
said reimbursement to be in addition to any other provisions of this Section
9.1(c).
(ii) Buyer agrees to reasonably cooperate with Seller in
obtaining the most cost-effective remedy for any necessary remediation
consistent with Buyer's present and intended uses of the Real Property as an
industrial facility. Buyer agrees to permit Seller to develop reasonable
institutional controls, such as fencing, provided such controls do not adversely
impact Buyer's present and intended uses of the Real Property as an industrial
facility and provided further that Seller obtains Buyer's written consent to
such institutional controls, which consent shall not be unreasonably withheld.
Buyer further agrees that it will make reasonable efforts to obtain a
restriction in the deed to the Real Property permanently limiting its use to
industrial purposes provided Seller bears all costs of obtaining such a
restriction and provided
28
<PAGE>
further that the failure to obtain a deed restriction shall not affect Seller's
obligations under this Article IX. Provided Seller complies with all of its
material obligations under this Agreement, Seller shall not be liable for any
adverse impact on the value of the Real Property that may result from such use
restrictions or any residual materials remaining on or under the Real Property.
(iii) Seller shall make reasonable efforts to obtain a covenant
not to sue for the Known Contamination pursuant to the Voluntary Action Program
in OAS Chapter 3746 and regulations thereunder ("Ohio's Voluntary Action
Program"). The remediation shall be deemed complete, and Seller's indemnity
obligations respecting the Known Contamination shall end, when Seller has
obtained on Buyer's behalf a covenant not to sue under Ohio's Voluntary Action
Program, or, for any portions of the Known Contamination that are not eligible
for Ohio's Voluntary Action Program, other assurance reasonably satisfactory to
Buyer that additional remediation of Known Contamination is not required by
Environmental Laws in effect on the Closing Date. Until such covenant or
assurance is obtained: Seller shall continue to defend, indemnify and hold Buyer
harmless from all Indemnifiable Losses relating to or arising out of the Known
Contamination and any other areas required to be investigated or remediated by
the applicable regulatory agency in order to delineate the extent of the Known
Contamination; and, in any claim by Seller that any Indemnifiable Losses under
this Section 9.1(c) are not Seller's obligation because new or additional
contamination was caused after the Closing Date, Seller shall bear the burden of
proving by clear and convincing evidence that any Indemnifiable Losses were
caused by the new or additional contamination occurring after the Closing Date
and, notwithstanding such proofs, Seller shall be responsible in any event to
pay or reimburse Buyer for Indemnifiable Losses in the amount of the greater of
(a) $500,000.00 or (b) the amount of the $1,000,000.00 not reimbursed to Buyer
under Section 9.1(b) of this Agreement.
(iv) If Seller materially defaults in its obligation to perform
the Remediation Plan in accordance with this Agreement, Buyer may (but shall not
be obligated to) cause the Remediation Plan to be performed. In such event,
Seller shall pay or reimburse Buyer for all Indemnifiable Losses incurred by
Buyer in connection with performing the Remediation Plan.
(d) Subject to the limitations noted below, Seller agrees to
indemnify, defend and hold Buyer harmless from and against any and all costs,
claims, expenses, liabilities, damages, fines, penalties, interest expenses
injuries to person or property, contributions, settlements or fees (including
attorneys', consultants', laboratory and experts' fees)Indemnifiable Losses
relating to or arising out of any violations of applicable Environmental Laws in
effect on the Closing Date not identified or described in Schedule 9.1(a) and
any unknown contamination at, on, under or about the Real Property in excess of
Environmental Laws in effect on the Closing Date. (the "Unknown Environmental
Claims"). Seller's obligations under this subparagraph with respect to all such
Unknown Environmental Claims shall terminate three years following the Closing
Date and shall further be subject to the following limitations: Buyer shall be
liable for the first $250,000 in the aggregate of all such Unknown Environmental
Claims; once the aggregate amount of indemnifiable losses for Unknown
Environmental Claims exceeds $250,000, Seller shall be liable for all such
losses exceeding $250,000 until the aggregate amount of all such losses exceeds
$1,250,000; once the aggregate amount of all such losses exceeds $1,250,000,
Seller shall be liable to indemnify Buyer for 80% of such losses in excess of
$1,250,000 until the
29
<PAGE>
aggregate amount of all such losses exceeds $3,125,000. Buyer shall be liable
for all such losses in excess of $3,125,000.
(e) Seller's indemnities of Buyer under Article IX of this Agreement
shall be fully assignable or transferable by Buyer.
9.2 Buyer's Sole Environmental Remedy and Release of Seller. The rights
-------------------------------------------------------
and remedies provided Buyer under Section 9.1 of this Agreement shall be Buyer's
sole and exclusive rights and remedies for any and all environmental claims
covered by Section 9.1 (it being acknowledged that liability for offsite
disposal prior to the Closing Date is not covered by Section 9.1). Except for
Seller's obligations pursuant to Section 9.1 of this Agreement, Buyer hereby
waives, releases, forever discharges and indemnifies Seller from any and all
remedies, claims or causes of action which Buyer, or any third party, has or may
have against Seller, including, but not limited to, all remedies, claims or
causes of action under the Environmental Laws, including, but not limited to,
contribution, strict liability, negligence, trespass or nuisance, on account of,
in any way arising out of, in connection with, incident to, resulting in any way
from, or relating in any way to any physical characteristics or condition of the
Plant, including, without limitation, soil conditions, subsurface conditions,
waste, and hazardous or toxic substances or materials on, under, or related to
the Plant, or contamination of or other adverse effects on the environment.
9.3 Buyer's Environmental Indemnity to Seller. Buyer agrees to indemnify,
-----------------------------------------
defend, hold and save Seller harmless from any and all costs and expenses of any
environmental claim by a third party, governmental or otherwise, relating to the
plant which may arise after the Closing Date, except as provided in Section 9.1
of this Agreement.
9.4 Indemnity to Buyer for Excluded Liabilities. Seller agrees to
-------------------------------------------
indemnify, defend, hold and save the Buyer harmless from any and all costs and
expenses from any third party claim based on occurrences or events in the
conduct of the Business or use of the Purchase Assets prior to the Closing
which may arise from any Excluded Liability, subject to limitations imposed by
Sections 9.1 and 9.2.
9.5 Indemnity to Seller for Assumed Liabilities. Buyer agrees to
-------------------------------------------
indemnify, defend, hold and save the Seller harmless from any and all costs and
expenses which may arise from any third party claim related to an obligation or
liability of Seller assumed by the Buyer or breach of any covenant or agreement
herein undertaken by Buyer.
9.6 Release and Indemnity to Seller Post Closing. Except as provided in
--------------------------------------------
Section 9.1, the Buyer herewith releases the Seller from any claim for
consequential damages which may arise after Closing from the use, operation or
failure of the Plant, machinery, equipment or other Purchased Assets and the
Buyer agrees to both release Seller and to indemnify, defend, hold and save the
Seller harmless from any and all costs and expenses of any and all third party
claims for personal injury or property damage which may arise relative to such,
from accidents or occurrences which occur after Buyer has taken possession of
the Purchased Assets.
9.7 Indemnity for Product Produced by Seller; Cooperation. Seller agrees
-----------------------------------------------------
to indemnify, defend, hold and save the Buyer harmless from any and all costs
and expenses for any
30
<PAGE>
third party claim for personal injury, property damage, or consequential damages
from any product manufactured prior to Closing, upon Buyer notifying Seller of
such claim within a reasonable time after receipt. The Buyer shall have no right
to elect to defend or settle such claims, but shall tender such claims to
Seller. Buyer agrees to cooperate with Seller in defense of such claims by
providing such staff support and information as is reasonably requested by
Seller for purpose of such defense and will otherwise cooperate with Seller in
such defense, provided, that Seller shall reimburse the Buyer for providing such
information, assistance and cooperation. This provision shall not apply to the
extent the product produced by Seller and purchased by Buyer is thereafter
modified by Buyer or sold for use in an improper application.
9.8 Bulk Sales Waiver and Indemnity. Buyer waives compliance with
-------------------------------
applicable bulk sales statutes and in return Seller agrees to indemnify, defend,
hold and save Buyer harmless from any and all costs and expenses of any third
party claim based on non-compliance with such laws.
9.9 Indemnity to Seller for Permits. Effective upon the Effective Date,
-------------------------------
Buyer agrees to defend, hold harmless and indemnify Seller from and against any
and all actions, suits, claims, expenses, obligations, damages, costs, payments,
liabilities, fines and penalties, including, without limitation, costs and
expenses of litigation (including costs of investigation) and reasonable
attorneys' and experts' fees, that are asserted against, imposed upon or
incurred by Seller which are caused by, arise out of, or are attributable to,
any and all violations occurring after the Effective Date of any and all
permits, registrations, applications, licenses and other authorizations relating
to the Plant which are in Seller's name and under which Buyer is operating the
Plant pursuant to the agreement provided in Section 3.2(l), except for those
violations which occur within three (3) months after the Closing Date and which
could not have been reasonably cured by Buyer and which arise out of conditions
existing at the Plant prior to the Effective Date.
9.10 Indemnity for Benefit Plans. Except as otherwise expressly provided
---------------------------
to the contrary in this Agreement, Seller and Buyer shall each hold the other
harmless of, from and against any and all duties, liabilities or obligations
arising under or pursuant to any of their respective Benefit Plans.
9.11 Mechanic's Lien Indemnity. Seller shall indemnify, defend and hold
-------------------------
Buyer harmless from and against any and all liability, obligations, costs,
damages, and expenses arising out of or in connection with the claim set forth
in the Affidavit for Mechanic's Lien filed on behalf of NCI Building Components
and the claim set forth in the Affidavit for Mechanic's Lien filed on behalf of
Chillicothe Mechanical Corp.
9.12 Limitation under Indemnities and for Recovery of Damages. Each party
--------------------------------------------------------
hereto shall be fully liable for reimbursement to the other under the
indemnities provided herein and for any and all damages suffered as a result of
any breach of representations, warranties or covenants contained in this
Agreement; provided, however, the liability of either party to the other under
this Agreement and at law shall not exceed in the aggregate the sum of
$2,250,000, and both parties hereto hereby contractually accept this provision
and the provision set forth in Sections 9.1 and 9.3 as an absolute limitation on
recovery under the indemnities and for damages under this Agreement and at law
for the transactions contemplated thereby. Notwithstanding the foregoing,
31
<PAGE>
the limitations set forth in this Section 9.12 should not apply to
indemnifications described in Sections 9.1, 9.3, 9.4, 9.10 or 9.11.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. This Agreement, the Schedules hereto and the
----------------
documents referred to or delivered pursuant to this Agreement and hereby
incorporated herein by reference, constitute the full understanding and the
entire agreement between the parties pertaining to the subject matter hereof and
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions of the parties on the subject, whether oral or written and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement, except as specifically set
forth herein. No amendment, supplement, modification, or waiver of any
provision of this Agreement shall be binding unless executed in writing by both
parties hereto, or in the case of a waiver, by the party for whom the benefit
was intended. Otherwise, each party hereto shall remain fully obligated to the
other to consummate the transactions contemplated by this Agreement at the
Closing, provided the conditions precedent are satisfied, unless both parties
mutually consent to rescission of this Agreement.
10.2 Survival. The representations, warranties, covenants and agreements
--------
included herein shall survive for three years from the Closing Date, at which
time they shall terminate, other than (i) the representations and warranties
contained in Sections 4.1, 4.2, 4.4 and 4.8, which shall survive for the periods
of their respective applicable statutes of limitation, (ii) the period of the
agreement not to compete set forth in Section 6.5, (iii) any obligation to Buyer
by Seller then remaining under the indemnity in Section 9.1, and (iv) Buyer's
obligations to Seller under Section 9.3.
10.3 Termination. In the event the sale and purchase of the Purchased
-----------
Assets has not taken place by July 15, 1997 despite the best efforts of the
parties and through no fault of either party, then, either party may, upon
written notice to the other party, terminate this Agreement and the parties
hereto will have no further obligation or liability under this Agreement, except
for obligations previously assumed with regard to confidentiality under Section
6.1. In the event, however, all of the conditions precedent to Buyer's
obligations under this Agreement have been satisfied prior to such date, and the
transactions contemplated in this Agreement are not consummated by such date as
a result of Buyer's refusal to close the transaction, Buyer shall pay Seller, as
liquidated damages, an amount equal to $4,300,000.
10.4 Expenses. Whether or not the transaction contemplated by this
--------
Agreement are consummated, each of the parties hereto shall pay the fees and
expenses of its respective counsel, accountants and other experts, agents and
representatives incident to the negotiation and preparation of this Agreement,
consummation of the transactions contemplated by this Agreement or disputes
between the parties hereto arising out of the transactions contemplated by or
carried out by virtues of this Agreement.
32
<PAGE>
10.5 Successors and Assigns; Third Parties. This Agreement shall be
-------------------------------------
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns; provided, however, Buyer shall not assign or
otherwise transfer its obligations and liabilities, nor assign or transfer its
right to indemnity under this Agreement, without the prior written consent of
Seller. This Agreement is not intended to and shall not confer upon any third
party, other than the permitted assigns of the parties hereto, any rights or
remedies.
10.6 Income Tax Position. Neither the Buyer nor the Seller shall take any
-------------------
position for income tax purposes which is inconsistent with the allocation of
the Purchase Price to be agreed to by the parties and made an addendum to this
Agreement as Schedule 10.6 and Buyer and Seller will complete IRS Form 8594
based on such Purchase Price allocation.
10.7 Severability. If any provision, clause or part of this Agreement or
------------
the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement or the application of such provision, clause or part
under other circumstances, shall not be affected thereby.
10.8 Notice. Any notice or communication given or required pursuant to
------
this Agreement by either party to the other party shall be deemed properly given
if in writing and delivered or mailed by registered or certified mail, postage
prepaid, return receipt requested or by other delivery service which provides
valid evidence of delivery to the following:
If to Seller to: Secretary,
The Goodyear Tire & Rubber Company
1144 East Market Street
Akron, OH 44316
If to Buyer to: Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, Michigan 48071
Attention: Richard S. Crawford, Chairman
With Copy to: Jaffe, Raitt, Heuer & Weiss, P.C.
One Woodward Avenue, Suite 2400
Detroit, Michigan 48226
Attention: Robin H. Krueger, Esq.
or to such other address as shall hereafter be furnished in writing by either
party to the other party.
10.9 Alternative Dispute Resolution. Except for the procedures set forth
------------------------------
in Section 2.6 with respect to the agreement as to purchase price adjustments,
any and all disputes between the parties arising out of any provision of this
Agreement shall be resolved in accordance with the Alternative Dispute
Resolution procedures set forth in Exhibit A to this Agreement; provided,
however, that a party may seek a preliminary injunction or other provisional
judicial relief if in its
33
<PAGE>
judgment such action is necessary to avoid irreparable damage or to preserve the
status quo. Despite such action, the parties will continue to participate in
good faith in the procedures set forth in Exhibit A.
10.10 Transitional Use of Trade Name. Buyer shall have the right to use
------------------------------
the Goodyear logo - Goodyear (and Winged Foot Design) - on packaging materials
existing on the Closing Date for a period of three (3) months after Closing
Date, at which time any remaining Goodyear packaging shall be destroyed. Buyer
shall acquire no rights in or to the Goodyear logo. Buyer shall not have any
other rights to use the trade names, trademarks and/or service marks of Goodyear
(See Section 1.10(a)). Any provision of this Section 10.10 to the contrary
notwithstanding, Buyer shall have the right to represent that it is conducting
the Business as the successor of Seller from and after the Closing Date. All
existing Goodyear packaging labels, business cards, letterhead, sales aids and
sales literature shall be destroyed immediately following Closing. Buyer agrees
to remove and destroy or remit to Seller the Goodyear signage on the Plant
facility when Buyer replaces it with Buyer's signage.
10.11 Governing Law. This Agreement is made and entered into and shall be
-------------
construed and enforced in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
ATTEST: THE GOODYEAR TIRE & RUBBER COMPANY
By: By:
--------------------------- --------------------------------------
Assistant Secretary Title:
-----------------------------------
WITNESS: CAMBRIDGE INDUSTRIES, INC.
/s/ [SIGNATURE APPEARS HERE] By: /s/ John M. Colaianne
- - ------------------------------ --------------------------------------
Title: CFO
-----------------------------------
- - ------------------------------
34
<PAGE>
judgment such action is necessary to avoid irreparable damage or to preserve the
status quo. Despite such action, the parties will continue to participate in
good faith in the procedures set forth in Exhibit A.
10.10 Transitional Use of Trade Name. Buyer shall have the right to use
------------------------------
the Goodyear logo - Goodyear (and Winged Foot Design) - on packaging materials
existing on the Closing Date for a period of three (3) months after Closing
Date, at which time any remaining Goodyear packaging shall be destroyed. Buyer
shall acquire no rights in or to the Goodyear logo. Buyer shall not have any
other rights to use the trade names, trademarks and/or service marks of Goodyear
(See Section 1.10(a)). Any provision of this Section 10.10 to the contrary
notwithstanding, Buyer shall have the right to represent that it is conducting
the Business as the successor of Seller from and after the Closing Date. All
existing Goodyear packaging labels, business cards, letterhead, sales aids and
sales literature shall be destroyed immediately following Closing. Buyer agrees
to remove and destroy or remit to Seller the Goodyear signage on the Plant
facility when Buyer replaces it with Buyer's signage.
10.11 Governing Law. This Agreement is made and entered into and shall be
-------------
construed and enforced in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
ATTEST: THE GOODYEAR TIRE & RUBBER COMPANY
By:/s/[SIGNATURE APPEARS HERE] By:/s/ [SIGNATURE APPEARS HERE]
--------------------------- --------------------------------------
Secretary Title: V.P. Business Development
-----------------------------------
WITNESS: CAMBRIDGE INDUSTRIES, INC.
By:
- - ----------------------------- --------------------------------------
Title:
-----------------------------------
- - -----------------------------
35
<PAGE>
EXHIBIT 10.33
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of April 25, 1997 by and between Erpe Ernst Pelz Vertriebs GmbH, a
corporation organized and existing under the laws of the Republic of Germany
(the "Seller"), and Cambridge Industries, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Purchaser").
RECITALS
--------
A. Seller owns twenty-five thousand (25,000) shares of Class B Common
Stock (the "Stock") of CE Automotive Trim Systems, Inc., a Michigan corporation
("CEATS"), which represents all of the issued and outstanding Class B Common
Stock CEATS.
B. The Seller desires to sell the Stock to the Purchaser, and the
Purchaser desires to purchase the Stock on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
contained herein, the parties agree as follows:
1. Sale and Purchase of the Stock. The Seller hereby sells the Stock to
------------------------------
the Purchaser, and the Purchaser hereby purchases the Stock from the Seller.
2. Purchase Price. The aggregate purchase price for the Stock to be
--------------
purchased by the Purchaser is Twenty-five Thousand United States Dollars
($25,000.00), payable by wire transfer to such bank account as shall be
identified for such purpose in writing by Seller or its counsel.
3. Termination of Joint Venture Agreement. The parties hereto and Empe
--------------------------------------
Ernst Pelz GmbH & Co. KG hereby agree that the Joint Venture Agreement dated as
of March 4, 1994 among them (the "Joint Venture Agreement") is hereby terminated
without residual obligation of any party to the others except the
confidentiality obligations of Section 3.5(C) thereof and such other
obligations as are expressly contemplated to survive the termination of the
Joint Venture Agreement; provided, that the dissolution of CEATS shall not be
required in connection with the termination of the Joint Venture Agreement.
4. Representations and Warranties of Seller. Seller hereby represents and
----------------------------------------
warrants to the Purchaser that:
(a) The Stock represents all of the issued and outstanding shares of
Class B Common Stock in CEATS;
(b) The Stock is owned solely by the Seller and is free and clear of
any options, liens, claims, charges or other encumbrances; and
Stock Purchase Agreement dated April 25, 1997
Page 1 of 3
<PAGE>
(c) The seller has full capacity, power and authority to enter into
this Agreement and to sell the Stock to the Purchaser in
accordance with the terms and conditions of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser hereby
-------------------------------------------
represents and warrants to the Seller that the Purchaser has full capacity,
power and authority to enter into this Agreement and to purchase the Stock from
the Seller in accordance with the terms and conditions of this Agreement.
6. MISCELLANEOUS PROVISIONS.
------------------------
(a) This Agreement shall be governed by, and construed and enforced
in accordance with the laws of the State of Michigan.
(b) All of the terms contained herein shall survive the consummation
of the transactions contemplated herein, and shall be binding
upon and inure to the benefit of and be enforceable by and
against, the parties hereto and their respective successors,
assigns, legal representatives and estates.
(c) This Agreement and any other documents executed in connection
herewith together constitute the full and entire understanding
and agreement among the parties with respect to the transactions
herein contemplated, and shall supersede all prior understandings
or agreements relating thereto, whether written or oral, all of
which are declared to be null and void and of no further force or
effect.
(d) This Agreement may only be amended or modified, and any of the
terms, conditions, covenants, representations or warranties
contained herein may only be waived, by a written instrument duly
executed by the parties hereto.
(e) This Agreement may be executed in counterparts, each of which
shall be deemed an original. Executed copies may be delivered by
telefacsimile, with original copies sent by airmail.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
STOCK PURCHASE AGREEMENT DATED APRIL 25, 1997
Page 2 of 3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
SELLER:
Erpe Ernst Pelz Vertriebs GmbH,
a German corporation
By: ____________________________
Its: ____________________________
PURCHASER:
Cambridge Industries, Inc.,
a Delaware corporation
By: /s/ Kevin J. Alder
-----------------------------
Its: President & Chief Operating Officer
-----------------------------------
The undersigned hereby agrees to be
bound by Paragraph 3 above:
Empe Ernst Pelz GmbH & Co. KG,
a German corporation
By: _______________________________
Its: _______________________________
Stock Purchase Agreement dated April 25, 1997
Page 3 of 3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
SELLER:
Erpe Ernst Pelz Vertriebs GmbH,
a German corporation
By: /s/ G. Siekmann /s/ W. Daniel
G. SIEKMANN W. DANIEL
--------------------------------
Its: MANAGING MANAGING
DIRECTOR DIRECTOR
--------------------------------
PURCHASER:
Cambridge Industries, Inc.,
a Michigan corporation
By: ________________________________
Its: ________________________________
The undersigned hereby agrees to
be bound by Paragraph 3 above:
Empe Ernst Pelz GmbH & Co. KG,
a German corporation
By: /s/ G. Siekmann /s/ W. Daniel
G. SIEKMANN W. DANIEL
--------------------------------
Its: MANAGING MANAGING
DIRECTOR DIRECTOR
--------------------------------
Stock Purchase Agreement dated April 25, 1997
Page 3 of 3
<PAGE>
ASSIGNMENT SEPARATE FROM CERTIFICATE
------------------------------------
FOR VALUE RECEIVED, Erpe Ernst Pelz Vertriebs GmbH ("Assignor") hereby
assigns, transfers and sets over to Cambridge Industries, Inc. ("Assignee")
twenty-five thousand (25,000) shares (the "Shares") of the issued and
outstanding Class B Common Stock of CE AUTOMOTIVE TRIM SYSTEMS, INC., A Michigan
corporation (the "Corporation"), standing in the name of Assignor on the books
of the Corporation represented by Certificates No. B-1.
-----
Assignor irrevocably appoints Richard S. Crawford, President of the
Corporation, as Assignor's attorney-in-fact to transfer the Shares on the books
of the Corporation with full power of substitution.
ASSIGNOR:
Erpe Ernst Pelz Vertriebs GmbH,
a corporation organized and existing under
the laws of the Republic of Germany
/s/ G. Stekmann /s/ W. Daniel
By: G. STEKMANN W. DANIEL
---------------------------------
MANAGING MANAGING
Its : DIRECTOR DIRECTOR
---------------------------------
<PAGE>
RESIGNATION OF DIRECTOR
OF CE AUTOMOTIVE TRIM SYSTEMS, INC.
In connection with the sale by Erpe Ernst Pelz Vertriebs GmbH of
twenty-five thousand (25,000) shares of Class B Common Stock in CE Automotive
Trim Systems, Inc., a Michigan corporation ("CEATS") to Cambridge Industries,
Inc., GERD SIEKMANN hereby resigns his position as a Director of CEATS effective
immediately.
Dated:
25 APRIL 1997 /s/ Dr. Gerd Siekmann
- - ------------------------ ----------------------------
Dr. Gerd Siekmann
<PAGE>
RESIGNATION OF DIRECTOR
OF CE AUTOMOTIVE TRIM SYSTEMS, INC.
In connection with the sale by Erpe Ernst Pelz Vertriebs GmbH of twenty-
five thousand (25,000) shares of Class B Common Stock in CE Automotive Trim
Systems, Inc., a Michigan corporation ("CEATS") to Cambridge Industries, Inc.
WERNER DANIEL hereby resign his position as a Director of CEATS effective
immediately.
Dated:
25 April 1997 /s/ Werner Daniel
- - --------------------------- -----------------------------
Werner Daniel
<PAGE>
EXHIBIT 10.34
JOINT VENTURE AGREEMENT
-----------------------
THIS JOINT VENTURE AGREEMENT (the "Agreement") is made as of this 4th day
---
of March, 1994, by and between Cambridge Industries, Inc., a corporation
-----
organized and existing under the laws of the State of Michigan ("Cambridge"),
Erpe Ernst Pelz Vertriebs GmbH, a corporation organized and existing under the
laws of the Republic of Germany ("Erpe") and Empe Ernst Pelz GmbH & Co. KG, a
corporation organized and existing under the laws of the Republic of Germany
("Empe") (Empe and Erpe are sometimes jointly and severally referred to herein
as "Empe/Erpe" and Cambridge and Empe/Erpe are sometimes individually referred
to herein as a "Party" and collectively as the "Parties").
WITNESSETH:
----------
WHEREAS, the Parties desire to establish a corporate joint venture for the
purposes specified herein; and
WHEREAS, the Parties are entering into this Agreement to evidence their
respective promises, covenants and undertakings in respect of such joint
venture.
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants and undertakings set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Cambridge and Empe/Ernst hereby agree as follows:
1. FORMATION OF THE JOINT VENTURE.
------------------------------
1.1 Name and State of Incorporation. As soon as practicable after the date
-------------------------------
of this Agreement, the Parties shall cause a corporation to be incorporated
under the laws of the State of Michigan, the name of which shall be "CE
Automotive Trim Systems, Inc," or such other name as shall be agreed upon by the
Parties (the "Corporation"). The Corporation may adopt such other assumed names
as shall be determined by its Board of Directors pursuant to Section 1.6F
hereof.
1.2 Articles of Incorporation. The Articles of Incorporation of the
-------------------------
Corporation shall be in substantially the form of Exhibit A to this Agreement
(the "Articles of Incorporation"). The Articles of Incorporation may be amended
as provided in the Michigan Business Corporation Act, as amended (the "MBCA").
1.3 Bylaws. The Bylaws of the Corporation shall be in the form of Exhibit
------
B to this Agreement (the "Bylaws"). The Bylaws may be amended only by the
shareholders of the Corporation as provided in the Bylaws.
1.4 Purposes of the Corporation. The purposes of the Corporation shall be
---------------------------
solely to:
<PAGE>
A. Market on a global basis the fibre and plastics interior trim
components, subsystems and systems of each of the Parties in both North America
and Europe. As a part of this process educate the North American market about
the benefits of Empe's/Erpe's fibre technology and introduce European OEM's to
Cambridge's plastic technology.
B. Develop new products, processes and technologies based on
Empe's/Erpe's fibre expertise and Cambridge's plastic expertise using the most
appropriate material and manufacturing processes to meet the customer's design
and engineering requirements for interior trim components, systems and
subsystems.
C. Develop the ability to manufacture fibre mats in North America in
response to OEM's concerns about lack of capacity and the very limited North
American supply base.
D. Conduct such other business activities as may be agreed upon in
writing by the Parties from time to time.
1.5 Capitalization.
--------------
A. The Corporation shall have an authorized capitalization of 50,000
shares of Common Stock ("Common Stock") which shall be divided equally into two
classes: Class A Common Stock ("Class A Stock") and Class B Common Stock ("Class
B Stock"). The Common Stock shall have the relative voting, distribution,
dividend, liquidation and other rights, preferences and limitations as stated in
the Articles of Incorporation.
B. Cambridge hereby subscribes for 25,000 shares of Class A Stock
and Erpe hereby subscribes for 25,000 shares of Class B Stock. The subscription
price paid by each such Party for such shares of Common Stock shall be $1.00
(USD) per share (an aggregate of $25,000.00 (USD)). Each such Party shall pay to
the Corporation the aggregate subscription price as promptly as practicable
after the Corporation is incorporated.
C. No Party shall have any obligation to make any further capital
contributions or to provide any financing of any character whatsoever except as
it may otherwise agree in writing from time to time.
D. Each Party hereby represents, warrants and agrees that the
subscription and purchase of Common Stock by such Party set forth in Section
1.5B is for its own account and for investment purposes only and not with a view
toward resale or other distribution. Each Party hereby further acknowledges and
agrees that the shares of Common Stock to be issued to such Party will not have
been registered or qualified under the Securities Act of 1933, the Michigan
Uniform Securities Act or the securities laws of any state, and may not and will
not be assigned, transferred, sold or disposed of unless so registered or unless
an appropriate exemption from such registration is available. Appropriate
legends to the foregoing effect will be set forth on the certificates
representing
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<PAGE>
all shares of Common Stock of the Corporation. A notation of the foregoing
restrictions will be placed in the records of the Corporation.
E. Each Party further represents and warrants that (i) it has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of an investment in the Corporation and it is
capable of making an informed investment decision with respect to this
investment; (ii) it has been furnished with all information that it has
requested and which it deems necessary and appropriate to enable it to make an
informed decision concerning an investment in the Corporation; (iii) it has been
afforded the opportunity to ask questions concerning the investment and it has
read and understands all information provided to it relating it to such
investment; (iv) its financial condition is such that it is able to bear the
risks of an investment in the Corporation for an indefinite period of time; and
(v) the Common Stock has not been offered or sold by means of any general
advertising or general solicitation.
1.6 Board of Directors.
------------------
A. The Board of Directors of the Corporation shall at all times be
comprised of an even number of directors of not less than two (2) nor more than
eight (8) as determined from time to time by the holders of the Class A Stock
and the Class B Stock. The holder of the Class A Stock and the holder of the
Class B Stock, each voting separately as a class, shall at all times each be
entitled to elect an equal number of directors to the Board of Directors of the
corporation.
B. The initial Board of Directors shall consist of the following
four (4) directors who shall be elected by the incorporators of the Corporation
but who, for the purpose of this Agreement and the Bylaws of the Corporation,
shall be deemed to have been elected by the indicated holders of Common Stock:
Richard S. Crawford and Richard Warnick, each of whom shall be deemed to have
been elected by Cambridge as holder of the Class A Stock, and P.F. Strohmaier
and H.P. Scheuer, each of whom shall be deemed to have been elected by Empe/Erpe
as holder of the Class B Stock. The initial directors shall serve in such
capacity, until the next annual meeting of shareholders of the Corporation and
until their respective successors shall have been duly elected and qualify, or
until earlier death, resignation or removal.
C. In the event a vacancy in the Board of Directors is created by
death, resignation, removal or otherwise, such vacancy shall be filled only as
provided in the Articles of Incorporation. Directors can be removed, with or
without cause, only by the holder of the class of Common Stock who elected such
director.
D. The Board of Directors of the Corporation shall hold meetings at
such times as specified in, and in accordance with, the Bylaws of the
Corporation.
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<PAGE>
E. A majority of the directors then in office (which must include at
least one director elected by the holder of each class of Common Stock) shall
constitute a quorum of the Board of Directors for the transaction of business.
The affirmative vote of a majority of the directors then in office (which must
include the affirmative vote of at least one director elected by the holder of
each class of Common Stock) shall constitute action by the Board of Directors.
F. Except as otherwise provided in this Agreement, the business and
affairs of the Corporation shall be managed by the Board of Directors. Without
limiting the generality of the foregoing, none of the following actions shall be
taken by the Corporation unless approved by the Board of Directors (and such
additional approvals as may be required of the shareholders of the Corporation
under the MBCA):
(i) Adoption or amendment of the operating plans and forecasts
of the Corporation prepared in accordance with Section 2.2
hereof;
(ii) Declaration or payment of dividends or other distributions;
(iii) Transactions between the Corporation and either of the
Parties or their Affiliates and transactions between the
Corporation and any member of the Board of Directors or
officer of the Corporation;
(iv) Appointment or termination of, or determination of or change
in the terms of employment or compensation of, or entry
into, amendment or termination of any employment agreement
with, any employee of the Corporation, or the adoption,
amendment or termination of any employee benefit plan;
(v) Any contract or commitment resulting in an obligation or
expenditure in the aggregate in excess of $10,000(USD), or
any material amendment thereof, which has not been expressly
provided for in the operating plan prepared in accordance
with Section 2.2 hereof and adopted by the Board of
Directors of the Corporation in accordance with subsection
(i) of this Section;
(vi) Any borrowing of money or other commitment of the credit of
the Corporation other than indebtedness to trade creditors
incurred in the ordinary course of business;
(vii) Any voluntary prepayment of debt or extension of debt
incurred by the Corporation;
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<PAGE>
(viii) Any assignment, transfer, pledge, compromise or release of
any claim or debt due the Corporation in excess of
$10,000(USD) except upon full payment thereof;
(ix) Any technical cooperation, technology transfer, license or
similar agreement between the Corporation and any other
Person;
(x) Determination of the coverage, terms and conditions of
workers' compensation, general liability, product liability
and casualty and other insurance for the Corporation;
(xi) The acquisition, construction, lease, mortgage, pledge,
sale, disposition or subjection to any lien of any material
personal or real property unless such transactions have been
provided for in the operating plan prepared in accordance
with Section 2.2 hereof and adopted by the Board of
Directors in accordance with subsection (i) of this Section;
(xii) The acquisition of shares or other securities of any other
Person, the entry into any joint venture, partnership or
similar transaction with any other Person, the purchase or
redemption by the Corporation of any of its Common Stock, or
the issuance of Common Stock or any options, warrants,
rights or other securities convertible into, exercisable or
exchangeable for, or which otherwise relate to the Common
Stock;
(xiii) Adoption or changing of financial, accounting or
organizational procedures, appointment of the Corporation's
independent auditors, and approval of annual financial
statements;
(xiv) Commencement or settlement of any litigation, arbitration or
similar proceeding (1) which involves claims in excess of
$10,000 (USD) or (2) which might (if adversely decided) have
a material adverse effect on the financial condition,
business or operations of the Corporation;
(xv) The setting of investment guidelines regarding Corporation
funds;
(xvi) The making of any charitable contributions or donations;
-5-
<PAGE>
(xvii) Approval of minutes of meetings of the Board of Directors;
(xviii) Appointment of officers of the Corporation, except as
otherwise contemplated in Section 1.7 hereof;
(xix) Adoption of an assumed name by the Corporation; and
(xx) Adoption or approval of any plan of merger or plan of share
exchange;
(xxi) The establishment and determination of the duties, powers
and authority of any committee of the Board of Directors;
(xxii) Determination of products to be developed and/or sold by the
Corporation; and
(xxiii) Any other matter that would require consent or approval of
directors under the MBCA.
1.7 Officers of the Corporation.
---------------------------
A. Promptly after the incorporation of the Corporation shall have
been completed pursuant to Section 1 hereof, the Parties shall cause the Board
of Directors of the Corporation to appoint the following individuals to the
offices of the Corporation set forth opposite their names, and such individuals
shall hold such offices until the next Organizational Meeting of the Board of
Directors and until their respective successors shall have been duly elected and
qualified, or until earlier resignation or removal:
P.F. Strohmaier Chairman of the Board
Richard S. Crawford President
Richard Warnick Treasurer
H.P. Scheuer Secretary
B. The Board of Directors of the Corporation shall appoint annually
at its Organizational Meeting held as provided in the Bylaws a Chairman of the
Board, President, Secretary and Treasurer. The Parties shall cause their
representatives on the Board of Directors to appoint such officers in such a
manner so that for the remainder of 1994 and for a period of two (2) fiscal
years thereafter a person designated by the holder of the Class A Stock shall be
the President and Treasurer of the Corporation and a person designated by the
holder of the Class B Stock shall be the Chairman of the Board and Secretary of
the Corporation, unless such holder otherwise agrees in writing. After such
period and every following two (2) fiscal year periods, the designation of
persons to hold the offices of President and Treasurer and of Chairman of the
Board and Secretary shall alternate to the holder of the other class of Common
Stock and the Parties shall cause their
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<PAGE>
representatives on the Board of Directors to appoint to such offices the persons
designated by the holders of such classes of Common Stock.
C. The Board of Directors may also appoint such vice presidents,
assistant vice presidents, assistant treasurers and assistant secretaries as
shall be determined by the Board of Directors of the Corporation from time to
time. The President shall be designated as the Chief Executive Officer of the
Corporation.
2. FINANCIAL MATTERS.
-----------------
2.1 Borrowing by the Corporation. If the Board of Directors of the
----------------------------
Corporation determines that the Corporation requires funds in addition to those
funds received by the Corporation pursuant to the share subscriptions described
in Section 1.5 hereof, the Corporation will first attempt to obtain such funds
through additional capital contributions or loans to the Corporation by either
or both of the Parties. If such funds are not so obtained, the Corporation may
borrow funds from sources and upon such terms and conditions as the Board of
Directors of the Corporation authorizes and permits pursuant to Section 1.6F
hereof.
2.2 Operating Plans.
---------------
A. Attached as Exhibit C hereto is the initial operating plan for
the Corporation which operating plan sets forth the business objectives and
plans of the Corporation which operating plan sets forth the business objectives
and plans of the Corporation. As promptly as practicable the Board of Directors
will prepare and adopt, pursuant to Section 1.6F, a forecast with respect to the
first fiscal year of the Corporation and the following fiscal year, setting
forth, in reasonable detail the projected profits or losses, expenses and
liabilities of the Corporation and will submit such forecast to the Parties.
B. Thereafter, at least ninety (90) days prior to the first day of
each fiscal year of the Corporation, the Board of Directors of the Corporation
shall submit to the Parties an operating plan with respect to such fiscal year,
which shall have been adopted by the Board of Directors pursuant to Section
1.6F hereof and which plan shall set forth in reasonable detail the business
objectives and plans of the Corporation, and a forecast with respect to such
fiscal year and the following fiscal year, which forecast shall set forth in
reasonable detail the projected profits or losses, expenses and liabilities of
the Corporation.
2.3 Accounting Principles. The Corporation shall keep books and records of
---------------------
account in accordance with United States generally accepted accounting
principles consistently applied, except as the Board of Directors of the
Corporation may otherwise determine. The Corporation shall adopt such
accounting systems and make such tax elections as the Board of Directors deems
appropriate.
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<PAGE>
2.4 Financial Statements. The Corporation shall prepare and distribute to
--------------------
the Parties annual audited financial statements within a reasonable period of
time subsequent to the close of each fiscal year of the Corporation and
unaudited monthly financial statements within a reasonable period of time
subsequent to the end of each month, unless the Parties agree otherwise in
writing.
2.5 Fiscal Year. The fiscal year of the Corporation shall be as determined
-----------
by the Board of Directors from time to time.
2.6 Inspection of Books and Records. Each of the Parties, and their
-------------------------------
authorized representatives, shall at all times have the right during usual
business hours and upon reasonable advance written notice to the Corporation to
inspect and copy, without specifying any proper purpose, the Corporation's stock
ledger, a list of shareholders and all other books and records of the
Corporation.
3. ANCILLARY MATTERS.
-----------------
3.1 Manufacturing and Related Arrangements. All products to be developed
--------------------------------------
and/or sold by the Corporation will be determined by the Board of Directors of
the Corporation pursuant to Section 6.2F on a case by case basis. The Parties
intend that initially any products developed and/or sold by the Corporation will
be manufactured by one of the Parties or an Affiliate (as defined in Section
4.5) of a Party as determined by the Board of Directors of the Corporation on a
case by case basis, which determination will be made after consideration of all
appropriate factors, including, by way of example and not of limitation, (a)
manufacturing costs, (b) location and preference of customers, and (c)
engineering, technology and service requirements and capabilities of each of the
Parties. The Parties also intend that the Party which will not (and whose
Affiliates will not) be the manufacturer of the particular product developed
and/or sold by the Corporation will receive license fees, royalties or other
compensation with respect to such product as may be determined by the Board of
Directors of the Corporation on a case by case basis. It is further intended
that the Parties (or their Affiliates, as applicable) and the Corporation will
enter into such definitive agreements and arrangements as may be appropriate
from time to time to fully define their business relationships and to put into
place and give effect to the foregoing provisions of this Section 3.1.
3.2 Right of Last Refusal. The Parties further intend that each will grant
---------------------
to the other a right of last refusal upon such terms and conditions as may be
agreed upon by the Parties from time to time and set forth in definitive
agreements between the Parties (or Affiliates of the Parties) to supply any
components to the other Party that are not produced by such other Party or its
Affiliates.
3.3 Representation Arrangements. It is intended that the Corporation will
---------------------------
be a representative of interior trim components manufactured by Cambridge and
its Affiliates for sale to customers
-8-
<PAGE>
located in Europe for use in Europe and that the Corporation will be a
representative of interior trim components manufactured by Empe/Erpe and its
Affiliates for sale to customers located in North America for use in North
America other than (a) wood trims for automotive ornamentation and (b) decorated
technical surfaces finished on aluminium clad to a supporting plastic injection
molding, in each case pursuant to definitive agreements to be entered into by
the Parties with the Corporation.
3.4 Compliance with Applicable Laws. All business relationships and
-------------------------------
definitive agreements and arrangements referred to in Sections 3.1 - 3.3 hereof
shall be structured to comply with all applicable laws.
3.5 Non-Competition.
---------------
A. Cambridge covenants and agrees with Empe/Erpe and the
Corporation as follows:
(i) neither it nor any of its Affiliates will, until the earlier
to occur of its sale or other disposition of the Class A
Stock owned by it pursuant to the provisions of this
Agreement or the dissolution of the Corporation (without the
prior written consent of the Corporation and Empe/Erpe),
directly or indirectly, (1) sell to customers located in
Europe for use in Europe any fibre based interior trim
components other than through the Corporation as its
representative or (2) manufacture or sell any new product
that is the same, or substantially the same, as may
hereinafter be developed and manufactured by the Corporation
to customers located in North America or Europe for use in
North America or Europe in any manner whatsoever. By way of
example and not of limitation, Cambridge and its Affiliates
will not, either individually or in partnership or jointly,
or in conjunction with any other Person as principal, agent,
shareholder, partner, employee, consultant, independent
contractor, licensor or in any other manner whatsoever,
carry on or be engaged in the management, operation or
control of, or lend money to or guarantee the debts or
obligations of, or permit its name or any part thereof to be
used by any Person engaged in, or license or grant any right
to any third party with respect to technology or other
intellectual property for use in, any business actively not
permitted to Cambridge under this Section (except for any
equity investment in a public company whose shares are
listed on a recognized stock exchange or the National
Association of
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<PAGE>
Securities Dealers Inc. Automated Quotation System where
such investment does not in the aggregate exceed 5% of the
issued equity shares of such company).
(ii) neither it nor any of its Affiliates will, until the earlier
to occur of its sale or other disposition of the Class A
Stock owned by it pursuant to the provisions of this
Agreement or the dissolution of the Corporation (without the
prior written consent of the Corporation and Empe/Erpe)
knowingly entice away or otherwise attempt to obtain the
withdrawal of any employee of the Corporation.
B. Empe/Erpe covenant and agree with Cambridge and the Corporation
as follows:
(i) neither of them nor any of their respective Affiliates will,
until the earlier to occur of Erpe's sale or other
disposition of the Class B Stock owned by it pursuant to the
provisions of this Agreement or the dissolution of the
Corporation (without the prior written consent of the
Corporation and Cambridge), directly or indirectly, (1) sell
to customers located in North America for use in North
America any interior trim components other than through the
Corporation as its representative other than (a) wood trims
for automotive ornamentation and (b) decorated technical
surfaces finished on aluminum clad to a supporting plastic
injection molding, or (2) manufacture or sell any new
product that is the same, or substantially the same, as may
hereinafter be developed and manufactured by the Corporation
to customers located in Europe or North America for use in
Europe or North America in any manner whatsoever. By way of
example and not of limitation, Empe/Erpe and their
respective Affiliates will not, either individually or in
partnership or jointly, or in conjunction with any other
Person as principal, agent, shareholder, partner, employee,
consultant, independent contractor, licensor or in any other
manner whatsoever, carry on or be engaged in the management,
operation or control of, or lend money to or guarantee the
debts or obligations of, or permit its name or any part
thereof to be used by any Person engaged in, or license
(other than the license already granted to Findlay, Inc.) or
grant any right to any third party with respect to
technology or other intellectual property for use in, any
business
-10-
<PAGE>
activity not permitted to Empe/Erpe under this Section
(except for any equity investment in a public company whose
shares are listed on a recognized stock exchange or the
National Association of Securities Dealers Inc. Automated
Quotation Systems where such investment does not in the
aggregate exceed 5% of the issued equity shares of such
company).
(ii) neither of them nor any of their respective Affiliates will,
until the earlier to occur of Erpe's sale or other
disposition of the Class B Stock owned by it pursuant to the
provisions of this Agreement or the dissolution of the
Corporation (without the prior written consent of the
Corporation and Cambridge) knowingly entice away or
otherwise attempt to obtain the withdrawal of any employee
of the Corporation.
C. Confidentiality. All confidential records, material and
---------------
information and copies thereof, and all trade secrets (and without restricting
the generality to the foregoing, including inventions, discoveries, methods of
processing and production and all data collection and data processing
techniques) concerning the business or affairs of the Corporation (collectively
"Proprietary Information") shall remain the exclusive property of the
Corporation. While a shareholder of the Corporation or at any time thereafter, a
Party shall not divulge the contents of such Proprietary Information to any
Person (except the Corporation and the qualified employees, auditors and lawyers
of such Party) and each Party shall not, at any time, use the contents of such
Proprietary Information for any purposes whatsoever, except for the exclusive
benefit of the Corporation.
For purposes hereof, "confidential records, material and information"
includes confidential proprietary information of the Corporation related to its
business, including but not limited to, any formula, design, prototype,
compilation of information, data, database, software, program, code, method,
technique or process, information relating to the customers of the Corporation
and their respective markets and marketing plans (present and future),
information about or relating to their potential business ventures, financial
information of all kinds relating to their activities and all information
relating to their inventions, ideas and related materials.
Notwithstanding the foregoing, a Party shall have no confidentiality
obligation with respect to Proprietary Information:
(a) which is or becomes a matter of public knowledge through no breach of
this clause by such Party;
(b) where disclosure is required by law; or
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<PAGE>
(c) where disclosure is required in any action between the Parties or a
Party and the Corporation.
D. Enforcement. The covenants made in this clause are made by each
-----------
Party acknowledging that it has specific knowledge of the affairs of the
Corporation. If any of the covenants contained in this Section 3 shall be held
unreasonable by reason of the area, duration or type or scope of service covered
by the said covenant, then the said covenant shall be given effect to in such
reduced form as may be decided by any court of competent jurisdiction. Each
Party hereby acknowledges that all restrictions hereinbefore contained are
reasonable and valid and all defenses to the strict enforcement of all or any
portions thereof are hereby waived. In the event that any clause or any portion
of any such covenant should be unenforceable or declared invalid for any
reason whatsoever, such unenforceability or invalidity shall not affect the
enforceability or validity of the remaining portions of the covenant or of this
Agreement and such unenforceable or invalid provisions shall be severable from
the remainder of this Agreement.
E. Remedies. In the event a Party commits a breach, or threatens to
--------
commit a breach, of this Agreement, the Corporation and/or the other Party shall
have the right and remedy, without the necessity of posting any bond or other
surety, to have the provisions of this Agreement enforced by any court of
competent jurisdiction by injunction, restraining order, specific performance or
other equitable relief in favor of the Corporation and/or such other Party, it
being acknowledged by each of the Parties that any breach or threatened breach
by a Party of any of the provisions of this Agreement will cause irreparable
injury to the Corporation and to the other Party and that money damages, in
themselves, will not provide an adequate remedy. No failure by the Corporation
or a Party to exercise any right or remedy hereunder or under applicable law
shall affect such right or remedy, nor shall any single or partial exercise
thereof preclude any further exercise thereof or the exercise of any other right
or remedy hereunder or under applicable law. The rights and remedies of the
Corporation and the Parties hereunder are cumulative to all rights and remedies
under applicable law.
F. Conflict. Each of the Parties understands that the other Party
--------
may be interested, directly or indirectly, in various other businesses and
undertakings not included in the Corporation. Each Party understands that the
conduct of the business of the Corporation may involve business dealings with
such other businesses or undertakings if approved by the Board of Directors of
the Corporation. Each of the Parties hereby agrees that the formation of the
Corporation and the assumption by each of the Parties to its duties hereunder
shall be without prejudice to such Party's rights to have other such interests
and activities and each Party waives any rights it might otherwise have, if any,
to share or participate in such other interests or activities of the other
Party, provided that the same are not in violation of Section 3.5 hereof.
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<PAGE>
4. TRANSFER OF SHARES.
------------------
4.1 Restrictions on Transfer. Shares of Common Stock may not be sold,
------------------------
assigned, pledged, encumbered or otherwise disposed of by either Party without
the other Party's written consent except pursuant to Sections 4.2 or 6 hereof.
The share certificates issued by the Corporation shall bear a legend
acknowledging the aforementioned restriction and all other restrictions upon the
transfer of shares of Common Stock of the Corporation.
4.2 Rights of First Refusal. In no event may a Party sell any shares of
-----------------------
the Common Stock owned by such Party prior to the third anniversary of the date
of this Agreement unless the other Party shall consent thereto in writing. In
the event that either Party shall desire to sell all, but not less than all, of
the Common Stock of the Company now owned or hereafter acquired by such party
(the "Offered Shares") on or after the third anniversary of the date of this
Agreement, such Party (the "Offering Shareholder") must first obtain an Offer
(as defined in Section 4.5A below) to purchase the Offered Shares and deliver
written notice of the Offer to the other party (the "Non-Offering Shareholder").
The written notice of the Offer must comply with the requirements of Section
4.2F hereof. Thereafter, the following rights shall accrue:
A. The Non-Offering Shareholder shall have the right to purchase the
Offered Shares and if a Non-Offering Shareholder elects to exercise such right
then the Offering Shareholder shall sell such shares to the Non-Offering
Shareholder for a purchase price equal to the purchase price for such shares set
forth in the Offer. The Non-Offering Shareholder shall give written notice to
the Offering Shareholder of his election to exercise his right under this
Section 4.2A, if at all, within ninety (90) days after the date the Non-Offering
Shareholder receives written notice from the Offering Shareholder of the Offer
(the "Exercise Period").
B. Each Party hereby agrees that it will not sell the Offered Shares
until the expiration of the Exercise Period (or the Non-Offering Shareholder has
waived in writing his right of first refusal provided for in this Section 4)
and, in the event the Non-Offering Shareholder exercises its co-sale rights
under Section 4.4 hereof, each Party agrees that it will not sell the Offered
Shares unless the Offeree agrees to purchase the Non-Offering Shareholder's
shares as provided in Section 4.4.
C. The purchase price of the Offered Shares shall be payable by the
Non-Offering Shareholder in the exercise of his rights set forth in Section 4.2
(i) at the option of the Non-Offering Shareholder either (a) upon substantially
equivalent terms to the terms set forth in the Offer, or (b) in cash (by
certified or cashier's check), or (ii) upon such other terms as may be mutually
agreed by the Offering Shareholder and the Non-Offering Shareholder. The closing
of the purchase and sale by the Non-Offering Shareholder under this Section 4
shall occur on a mutually agreeable date within thirty days after the expiration
of the
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<PAGE>
Exercise Period, but may occur on any other mutually agreeable date. Such thirty
day period shall be extended as necessary until receipt of all governmental
approvals and the expiration of all waiting periods provided that the
Non-Offering Shareholder shall take reasonable actions as may be required to
obtain such approvals.
D. A refusal or failure to exercise any right of first refusal under
Section 4.2 shall not constitute a waiver or refusal of such rights with respect
to any other or subsequent Offer.
E. In the event that the Offered Shares are not sold pursuant to the
Offer within ninety (90) days after the expiration of the Exercise Period, then
the Offer shall thereupon be deemed to be a new Offer for the purposes of
Section 4.2 and the procedures specified herein must be satisfied as to such new
Offer before the Offered Shares may be sold, assigned, pledged, encumbered or
otherwise disposed of by the Offering Shareholder, unless the Non-Offering
Shareholder otherwise agrees in writing.
F. For the purposes of this Section 4.2, the written notice of an
Offer must be a notice in writing complying with the further requirements of
this Section 4.2F, signed by the Offering Shareholder and sent to the
Non-Offering Shareholder in one of the ways prescribed in 8.5 hereof. The
written notice must contain a true and complete copy of the Offer setting forth
the price and all terms and conditions of the Offer and the name, address and a
description of the business or other occupation of the offerer. Any notice that
does not contain all of the information required in this Section 4.2F or which
otherwise does not comply with the requirements of this Section shall not
constitute "written notice of the Offer" for the purposes of Section 4.2. The
Offering Shareholder agrees to cause the offeror to give the Non-Offering
Shareholder such additional information concerning the Offer and the offeror as
may be reasonably requested by the Non-Offering Shareholder.
4.3 Restrictions Applicable to Transferees. Any Common Stock of the
--------------------------------------
Corporation sold, assigned, pledged, encumbered or otherwise disposed of to any
Person, whether the initial transferee or a subsequent transferee and whether or
not a party to this Agreement, shall be and remain subject to the restrictions
on transfer and encumbrance, rights of first refusal, noncompetition,
confidentiality and all other obligations of this Agreement to the same extent
as those provisions are applicable to the Parties, provided, however, that no
-------- -------
such transferee (other than a transferee who is at the time of the transfer a
Party hereto) shall be deemed to have the rights and privileges of the Parties
hereunder unless such transferee shall execute such agreements, amendments,
undertakings and documents, and do such other acts and things, as the
Corporation and the non-transferring Party shall reasonably request to further
bind the transferee to the terms and conditions of this Agreement.
-14-
<PAGE>
4.4 Take-Along. In the event that the Non-Offering Shareholder elects not
----------
to exercise his right of first refusal set forth in this Section 4, then the
Offering Shareholder, at the request of a Non-Offering Shareholder, which
request shall be made in writing during the Exercise Period, shall cause the
Offer to be extended to the Non-Offering Shareholder for the purchase of all
Common Stock then owned by it on the same terms and conditions set forth in the
Offer.
4.5 Certain Definitions.
-------------------
A. For the purposes of this Agreement, the word "Offer" shall mean a
legally enforceable bona fide offer in writing, made and signed by an offeror
who (i) is not an Affiliate (as defined below) of the Offering Shareholder and
(ii) is a Person financially capable of carrying out the terms of the Offer.
B. For the purposes of this Agreement, the word "Affiliate" means,
with respect to any Person, a director or executive officer of such Person or
member of the immediate family of such director or executive officer, or any
other Person or group acting in concert in respect of the Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under the common control with such Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person or group of Persons, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
C. For the purposes of this Agreement, the word "Person" means any
entity, whether an individual, trustee, corporation, partnership, joint stock
company, trust, unincorporated organization, business association or firm, joint
venture, a government or any agency or instrumentality or political subdivision
thereof, or otherwise.
5. TERM, TERMINATION AND DISSOLUTION.
---------------------------------
5.1 Term. This Agreement shall be effective as of the date first above
----
written and shall remain in full force and effect until the earlier of: (a) its
termination pursuant to Section 5.2 hereof; or (b) dissolution of the
Corporation, whether such dissolution occurs pursuant to Section 5.2 hereof or
otherwise.
5.2 Termination and Dissolution. This Agreement shall be terminated, and
---------------------------
the Corporation shall be dissolved upon the occurrence of any one of the events
that follows:
(a) Upon the written consent of all Parties;
-15-
<PAGE>
(b) Upon the sale, exchange, disposition, destruction, condemnation
or foreclosure of all or substantially all of the assets of the Corporation;
(c) Upon the election of a Party upon the occurrence and continuation
of any of the following events:
(i) The other Party is the subject of an order for relief
by a bankruptcy court, or admits in writing its inability to pay
its debts as they mature, or is generally not paying its debts as
those debts become due, or makes an assignment for the benefit of
creditors; or the other Party applies for or consents to the
appointment of any receiver, custodian, or similar officer for it
or for all or any part of its property; or the other Party
institutes or consents to any bankruptcy, insolvency, or similar
proceeding relating to it or to all or any part of its property
under the laws of any jurisdiction; or
(ii) Any receiver, custodian, or similar officer is
appointed for the other Party without the application or consent
of such other Party, and the appointment continues undischarged
or unstayed for 60 calendar days; any bankruptcy, insolvency, or
similar proceeding relating to the other Party or to all or any
part of its property is instituted under the laws of any
jurisdiction without the consent of such other Party and
continues undismissed or unstayed for 60 calendar days; or any
warrant of attachment or execution or similar process is issued
or levied against all or any substantial part of the property of
the other Party and is not released, vacated, or fully bonded
within 20 calendar days after its issue or levy; or
(iii) any part of the Common Stock of the other Party is
seized by a creditor of such Party, and the same is not released
from seizure or bonded out within sixty (60) days from the date
of notice of seizure; or
(iv) the other Party fails to perform any covenant or
agreement contained in this Agreement and the same continues for
a period of sixty (60) days after notice thereof is given to such
Party by the Corporation or a Party; or
(v) any representation or warranty by the other Party
shall have been inaccurate in any material respect when made.
-16-
<PAGE>
(d) The occurrence of any event which shall make it unlawful for a
Party to be a shareholder of the Corporation or a party to this Agreement;
(e) Upon the inability of the Corporation to continue its operations
as provided for in this Agreement as a result of validly issued orders of any
governmental authority or court of competent jurisdiction;
(f) At the election of a Party, if an Event of Force Majeure (as that
term is defined below) or other event that makes the continued operation of the
Corporation in accordance with the purpose of the Corporation set forth in this
Agreement not viable and if any such event lasts for a period of 120 days and
the Parties fail to resolve the course of action to be taken therefor within a
period of 120 days from the date either Party asserts the application of this
subsection by written notice to the other (for the purposes of this Agreement,
an "Event of Force Majeure" means riots, storms, fires, earthquakes, explosions,
embargoes, government directives or any other law or regulation or labor
disputes, acts of God, war, or any other cause which is beyond the reasonable
control of either Party);
(g) At the election of a Party, if (i) the directors of the
Corporation, or the Parties hereto, as shareholders, are unable to agree by the
requisite vote on material matters respecting management of the Corporation's
affairs, or the Parties, as shareholders, fail to elect successors to any
director whose term has expired or would have expired upon the election and
qualification of his successor, and (ii) as a result of a condition stated in
(i) above, the Corporation is unable to function effectively in the best
interests of its creditors and the Parties, as shareholders; or
(h) At the election of a Party pursuant to Section 6 hereof.
5.3 Dissolution and Liquidation.
---------------------------
A. Upon termination of this Agreement pursuant to Section 5.2, each
Party shall vote its shares of Common Stock in favor of, and cause its nominees
to the Board of Directors to vote in favor of, the dissolution and liquidation
of the Corporation, and shall direct the officers of the Corporation to execute
and file a certificate of dissolution with the Corporation and Securities Bureau
of the Michigan Department of Commerce (the "Corporation Bureau") pursuant to
and as provided in the MBCA. In addition, or in the alternative, a Party
electing to terminate this Agreement as provided in Section 5.2 may execute and
file a certificate of dissolution with the Corporation Bureau.
B. The Corporation, after dissolution as herein provided, shall
continue its corporate existence but shall not carry on business except for the
purpose of winding up its affairs as provided in the MBCA. The assets of the
Corporation shall be
-17-
<PAGE>
liquidated by the Corporation, as directed by the Board of Directors, and
distributed as provided in the MBCA.
5.4 Survival of Rights and Obligations. The rights and obligations of the
----------------------------------
Parties under Sections 5.3, 8.1, 8.2, 8.3 and 8.14 of this Agreement shall
survive the termination of this Agreement. The rights and obligations of the
Parties under any other agreement between the Parties and/or the Corporation and
any Party shall survive termination of this Agreement in accordance with the
terms of any such other agreement.
6. ELECTION TO TERMINATE AGREEMENT OR PURCHASE SHARES HELD BY OTHER PARTY.
----------------------------------------------------------------------
A. At any time a Party (the "First Party") may elect to terminate
this Agreement and dissolve the Corporation pursuant to Section 5.2(h) hereof by
delivering written notice of such election (a "Termination Election") to the
other Party (the "Second Party") not less than 90 days prior to the effective
date of termination and dissolution or may deliver to the Second Party a written
election (a "Purchase Election") to purchase all, but not less than all, of the
shares of Common Stock held by the Second Party. A Purchase Election, if made,
shall specify the purchase price for such shares, which purchase price shall be
payable in cash at the closing. Whether or not the First Party shall have
delivered a Purchase Election to the Second Party pursuant to the preceding
sentence, the Second Party may, but shall have no obligation, to deliver a
written counterelection (a "Purchase Counterelection") to the First Party for
the purchase by the Second Party of all, but not less than all, of the shares of
Common Stock held by the First Party, which Purchase Counterelection must
specify a purchase price of not less than three percent (3%) greater than the
purchase price set forth in the First Party's election if one is made (which
purchase price shall be payable in cash at the closing). The Purchase
Counterelection shall be delivered to the First Party, if at all, within fifteen
(15) days after the Second Party shall have received the Termination Election or
Purchase Election, as the case may be, from the First Party.
B. Each Party (including the First Party whether or not it shall
have delivered a Purchase Election pursuant to Section 6A) shall thereafter be
entitled, but shall not be obligated, to deliver further Purchase
Counterelection(s) to the other Party provided that each such Purchase
Counterelection shall be at a purchase price not less than three percent (3%)
greater than the purchase price of the last Purchase Counterelection delivered
by the other Party and shall be delivered to the other Party, if at all, within
fifteen (15) days after the date the last Purchase Counterelection was received
from the other Party. If a Party fails to make a Purchase Counterelection
pursuant to this Section within such time, the other Party (the "Purchasing
Party") shall purchase from such Party (the "Selling Party") and the Selling
Party shall sell and deliver to the Purchasing Party all, but not less than all,
of the shares of Common Stock owned by the Selling
-18-
<PAGE>
Party at the purchase price specified in the last Purchase Counterelection made
by the Purchasing Party.
C. All elections and counterelections under this Section 6 shall be
irrevocable unless the Parties shall otherwise agree.
D. The closing of any purchase and sale under this Section 6 shall
occur on a mutually agreeable date within thirty (30) days after the earlier to
occur of the last date the Selling Party could have made a Purchase
Counterelection under this Section 6 or the date the Selling Party shall have
delivered written notice to the Purchasing Party that it would not make a
Purchase Counterelection under this Section 6. Such thirty day period shall be
extended as necessary until receipt of all governmental approvals and the
expiration of all waiting periods, provided that the Purchasing Party shall take
all reasonable actions as may be required to obtain such approvals.
D. If neither Party shall make a Purchase Election or Purchase
Counterelection, as the case may be, under this Section 6, this Agreement shall
be terminated and the Corporation shall be dissolved pursuant to Section 5.2
hereof effective as of the date specified in the Termination Notice. If a
Purchase Election or Purchase Counterelection is made under this Section 6, this
Agreement shall not terminate and/or the Corporation shall not dissolve unless
and until the Purchasing Party, after the closing of the purchase and sale
provided for herein, as the sole holder of all shares of Common Stock, shall so
elect.
7. REPRESENTATIONS AND WARRANTIES.
------------------------------
Each Party represents and warrants to the other Party that:
A. Such Party is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, and
has the full power and authority to own its properties and to carry out its
business as now conducted.
B. Such Party has all requisite corporate power and authority to
enter into, execute, deliver and perform its obligations under this Agreement.
The entry into, execution, delivery and performance of this Agreement has been
duly and validly authorized by all necessary corporate action on such Party's
part, and is the legal, valid and binding obligation of such Party enforceable
against it in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, or other similar laws
relating to the enforcement of creditors' rights and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).
-19-
<PAGE>
C. Neither the execution and delivery of this Agreement nor the
consummation of transactions contemplated herein will constitute or cause a
breach or violation of or any default under (in each case whether with or
without notice, passage of time or both), any provisions of any law,
ordinance, or regulation applicable to such Party or its business or of the
Articles of Incorporation of Bylaws (or comparable governing documents) of
such Party or any indenture, mortgage, lease, deed or trust, or other
instrument, contract, or other covenant or obligation binding upon such
Party or affecting any of such Party's properties, or any order, judgment,
arbitration award or decree to which such Party or any of its properties is
bound. No authorization, consent or approval of or filing by such Party
with, or notification to, any non-governmental body is required to
consummate the transactions contemplated by this Agreement.
D. No approval, authority or consent of, or filing by such Party
with, or notification to, any foreign, federal, state or local court,
authority or governmental or regulatory body or agency is necessary to
authorize the execution and delivery of this Agreement by such Party or the
consummation by such Party of the transactions contemplated by this
Agreement.
E. There is no action, suit, proceeding or investigation pending or,
to the best knowledge of such Party, threatened or contemplated which
questions the legality, validity or propriety of this Agreement or the
transactions contemplated hereby.
F. No broker, finder, agent has been retained or is entitled to be
paid by such Party in connection with the transactions contemplated in this
Agreement and no brokerage or finder's fee or agent's or other commission
has been paid or agreed to be paid by such Party for or on account of any
of the transactions contemplated in this Agreement.
8. MISCELLANEOUS.
-------------
8.1 English Language. This Agreement is in the English language only,
----------------
which language shall be controlling in all respects. No translation of this
Agreement into German or any other language shall be of any force or effect in
the interpretation of this Agreement or in a determination of the intent of
either of the parties hereto.
8.2 Relationship of the Parties. This Agreement is not intended to
---------------------------
constitute, nor shall it be construed to constitute, the Parties as partners of
each other or of the Corporation and nothing contained herein shall constitute
either Party or the Corporation an agent of either Party or of the Corporation.
Neither Party shall have the authority to act on behalf of the other Party, nor
shall the Corporation have the authority to act on behalf of either Party.
-20-
<PAGE>
8.3 Necessary Measures. The Parties shall in a timely manner and as
------------------
required from time to time take all such actions as may be necessary or
appropriate to cause the Corporation and its directors, officers and employees
to implement the transactions contemplated in this Agreement, to give full
effect to the provisions of this Agreement, and to abstain from taking any
actions which would contravene the intent of the provisions of this Agreement,
including, but not limited to, casting their votes as shareholders of the
Corporation and causing their nominees to the Board of Directors of the
Corporation to implement the provisions of this Agreement.
8.4 Survival and Assignment. This Agreement shall be binding on the
-----------------------
Parties and the successors and permitted assigns of each of them. Neither party
may assign its rights, duties or interests hereunder in whole or in part without
the prior written consent of the other party.
8.5 Notices. All notices, requests, demands or other communications
-------
hereunder shall be in writing and shall be given by personal service, by prepaid
registered airmail (return receipt requested), or by facsimile transmission to
the respective Party at the address set forth below. All notices shall be
effective upon receipt.
If to Cambridge:
5281 Miller Road
Dearborn, MI 48126
Attention: Richard S. Crawford
Facsimile: 313 496-8451
with a copy to:
John J. Collins, Jr., Esq.
Miller, Canfield, Paddock and Stone
150 West Jefferson
Suite 2500
Detroit, MI 48226
Facsimile: 313 496-8541
If to Empe/Ernst:
Dieselweg 10
82538 Geretsried
Germany
Attention: P.F. Strohmaier
Facsimile: 08171/381-207
with a copy to:
Astrid Mayer-Krumenacker, Assessorin
-21-
<PAGE>
Dieselweg 10
82523 Geretsried
Germany
Facsimile: 08171/381-359
8.6 Waivers and Amendments. No failure or delay by either Party in the
----------------------
exercise of any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude an additional or further
exercise thereof or the exercise of any other right. To be effective, each
waiver of any right hereunder must be in writing and signed by the party waiving
its right, and such waiver may be made subject to any conditions specified
therein. Any amendment to this Agreement shall be in writing and signed by both
Parties.
8.7 Entire Agreement. This Agreement and the documents referred to herein
----------------
represent the entire agreement between the parties hereto and supersede any
prior commitments, agreements or understandings (written or verbal) between the
Parties with respect to the subject matter.
8.8 Clause Headings. The clause headings in this Agreement are inserted
---------------
for convenience only and shall be ignored in construing this Agreement.
8.9 Conflict with Articles of Incorporation or Bylaws. In the event of
-------------------------------------------------
any conflict between any provision of this Agreement and the Articles of
Incorporation or Bylaws, the provisions of this Agreement shall be deemed to
prevail, to the extent permitted by law.
8.10 Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.11 Severability. If any term or provision of this Agreement, or the
------------
application thereof to any circumstances, shall, to any extent and for any
reason, be held invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to circumstances other than those to
which it is held to be invalid or unenforceable, shall not be affected thereby
and shall be construed as if such invalid or unenforceable term or provision had
never been contained herein, and each term and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
8.12 Governing Law. This Agreement shall be governed by and construed,
-------------
interpreted and enforced in accordance with, the laws of the State of Michigan
(other than principles of conflicts of law). Any and all actions concerning any
dispute arising under this Agreement may be filed and maintained only in any
state or federal court of competent jurisdiction sitting in the State of
Michigan. EACH PARTY HEREBY SUBMITS TO THE JURISDICTION OF ANY STATE OR
-22-
<PAGE>
FEDERAL COURT SITTING IN THE STATE OF MICHIGAN AND EACH WAIVES ANY RIGHT TO
------------------------
TRIAL BY JURY AND ANY OBJECTION TO JURISDICTION OR VENUE BASED ON FORUM NON
- - -------------
CONVENIENS OR SIMILAR CLAIM.
8.13 No Third Party Beneficiaries. Except as otherwise expressly provided
----------------------------
in this Agreement, nothing is intended to confer, and nothing in this Agreement
shall confer, any rights or benefits to any Person other than the Corporation,
the Parties and their respective successors and permitted assigns.
8.14 Arbitration.
-----------
A. Any controversy or claim arising out of or relating to this
Agreement or any changes, amendments, additions or modifications of this
Agreement, or the breach, termination or invalidity of any of the foregoing,
shall be settled by arbitration in accordance with Title 9 of the United States
Code, as the same may be from time to time amended or recodified (the "Code")
and the then current Commercial Arbitration Rules (the "Rules") of the American
Arbitration Association ("AAA") to the extent that the Code and the Rules do not
conflict with any provisions of this Section.
B. The arbitration shall be held at the offices of AAA located in
Southfield, Michigan (as the same may be from time to time relocated). The
arbitration shall be held before three arbitrators (unless otherwise agreed by
the Parties), one arbitrator being selected by each of the Parties and the third
arbitrator selected by the other two from a panel of persons identified by AAA.
C. Any arbitration proceeding hereunder must be instituted within
two (2) years after the Party asserting the controversy or claim first obtained
knowledge thereof. Failure to institute an arbitration proceeding within such
period shall constitute an absolute bar to the institution of any arbitration,
judicial or other proceedings respecting such controversy or claim, and a waiver
thereof.
D. Neither Party hereto shall institute an arbitration proceeding
hereunder unless, at least thirty (30) days prior thereto, such Party shall have
furnished to the other written notice of its intent to do so and of the basis
therefor in detail.
E. The arbitrators shall interpret the Agreement in accordance with
the internal laws of the State of Michigan.
F. Any award, order or judgment pursuant to such arbitration shall
be deemed final and shall be entered and enforced in any state or federal court
sitting in the State of Michigan. Each Party agrees to submit to the
jurisdiction of any such court for purposes of the enforcement of any such
award, order or judgment.
-23-
<PAGE>
G. Any award of damages pursuant to such arbitration shall be
included in a written decision.
H. In any arbitration proceeding hereunder, the arbitrators are
authorized to award reasonable attorneys' fees and other arbitration-related
costs to the prevailing party.
I. Any arbitration proceeding hereunder shall be conducted on a
confidential basis.
J. No provision of, or the exercise of any rights under, this Section
shall limit the right of any Party to seek and obtain provisional or ancillary
remedies, such as injunctive relief or other remedies (including, for example,
any remedies available under Section 3.5E hereof), from any court having
jurisdiction before, during or after pendency of an arbitration proceeding under
this Section. The institution and maintenance of any such action or proceeding
shall not constitute a waiver of the right of any Party, including the Party
taking such action or instituting such proceeding, to submit a dispute,
controversy or claim to arbitration under this Section.
K. The interpretation and construction of this Section, including, but
not limited to, its validity and enforceability, shall be governed by the Code,
notwithstanding the choice of law set forth in Section 8.12 of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives in Dearborn, Michigan as of the day and
year first above written.
CAMBRIDGE INDUSTRIES, INC.
By /s/ Richard S. Crawford
------------------------
Its President
--------------------
ERPE ERNEST PELZ VERTRIEBS GMBH
By /s/ H.P. Scheuer
------------------------
Its Chairman of the Board
-----------------------
EMPE ERNEST PELZ GMBH & CO. KG
By /s/ H.P. Scheuer
------------------------
Its Secretary
--------------------
-24-
<PAGE>
EXHIBIT 10.35
[LETTERHEAD APPEARS HERE]
March 13, 1997
Erpe Ernst Pelz Vertriebs GmbH Via Facsimile
Empe Ernst Pelz GmbH & Co. KG (08171/381-207)
Dieselweg 10
82538 Geretsried
Germany
Attention: Dr. Gerd Siekmann
Re: Purchaser Election by Cambridge Industries, Inc.
Dear Dr. Siekmann:
Reference is made to the Joint Venture Agreement dated as of March 4, 1994 among
Cambridge Industries, Inc. ("Cambridge"), Erpe Ernst Pelz Vertriebs GmbH
("Erpe") and Empe Ernst Pelz GmbH & Co. KG ("Empe") (the "Joint Venture
Agreement").
Pursuant to Section 6.A. of the Joint Venture Agreement, Cambridge hereby makes
the following Purchase Election: Cambridge elects to purchase all of the
outstanding shares of CE Automotive Trim Systems, Inc., a Michigan corporation
("CEATS"), held by Erpe and Empe, or either of them, for a purchase price of
$25,000.00 (representing Empe and Erpe's capital contribution in CEATS),
payable in United States funds in cash at closing.
Please contact me or Peter Hermann at your earliest convenience to make
arrangements to complete this transaction.
Respectfully,
CAMBRIDGE INDUSTRIES, INC.
/s/ Richard S. Crawford
Richard S. Crawford, Chairman of the Board
cc: Astrid Mayer-Krumenacker, Assessorin
Dieselweg 10
82538 Geretsried
Germany
Facsimile 08171/381-359
<PAGE>
EXHIBIT 10.36
[LETTERHEAD OF EMPE HOLDINGS Gmbh]
EMPE HOLDING Gmbh
Geschansfuhrung
VIA REGISTERED AIRMAIL & FACSIMILE: (810) 616-0530
- - ---------------------------------------------------
March 28, 1997
Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
USA
Attention: Richard S. Crawford
Dear Mr. Crawford:
We hereby accept the purchase election described in your letter of March 13,
1997, in connection with which we are prepared to proceed with the closing on
the earliest possible date. Please arrange for your counsel to contact our U.S.
counsel, Michael Doherty of Morgan, Lewis & Bockius, LLP, telephone (212)
309-6376, to schedule and arrange the procedural details with respect to the
closing.
Sincerely,
/s/ Dr. Gerd Siekmann
- - --------------------------------
Dr. Gerd Siekmann, acting for
Empe Autoteile GmbH and
Erpe Ernst Pelz Vertriebs GmbH
/s/ Werner Daniel
- - --------------------------------
Werner Daniel, acting for
Empe Autoteile GmbH and
Erpe Ernst Pelz Vertriebs GmbH
cc: John J. Collins, Jr., Esq.
Miller, Canfield, Paddock and Stone
150 West Jefferson, Suite 2500
Detroit, MI 48226
<PAGE>
EXHIBIT 10.37
[LETTERHEAD OF EMPE HOLDING GmbH]
EMPE HOLDING GmbH
Geschaltsluhrung
VIA REGISTERED AIRMAIL & FACSIMILE: (810)616-0530
- - -------------------------------------------------
February 6, 1997
Cambridge Industries, Inc.
555 Horace Brown Drive
Madison Heights, MI 48071
USA
Attention: Richard S. Crawford
Dear Richard:
Reference is made to that certain Joint Venture Agreement, dated as of March 4,
1994 (the "JV Agreement"), among Cambridge Industries, Inc. ("Cambridge"), Empe
Ernst Pelz GmbH & Co. ("Empe") and Erpe Ernst Pelz Vertriebs GmbH ("Erpe").
This will serve as notice to Cambridge by Empe and Erpe under Section 6.A. of
the JV Agreement that Empe/Erpe hereby elect to terminate the JV Agreement and
dissolve CEATS pursuant to Section 5.2(h) of the JV Agreement, effective as of
the date which is 90 days from the date hereof .
Sincerely,
/s/ Gerd Siekmann
- - ------------------------------
Dr. Gerd Siekmann, acting for
Empe Ernst Pelz GmbH & Co. and
Erpe Ernst Pelz Vertriebs GmbH
cc: John J. Collins, Jr., Esq.
Miller, Canfield, Paddock and Stone
150 West Jefferson
Suite 2500
Detroit, MI 48226
<PAGE>
Exhibit 12.1
Statement Regarding Computation of Earnings to Fixed Charges
For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as income before income taxes, plus fixed charges. Fixed charges
consist of interest expense on all indebtedness (including amortization of
deferred debt issuance costs) and a portion of operating lease rental expense
that is representative of the interest factor. A pro forma ratio of earnings to
fixed charges to reflect the effect of the Initial Offering and Credit Agreement
was not presented as the effect of such transactions did not change the
historical ratio by ten percent or more.
<TABLE>
<CAPTION>
Year Ended Six Months Ended
December 31, June 30,
- - ------------------------------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Earnings (Income before income taxes) $ 164 $ 913 $ 10,673 $ 14,533 $ 1,674 $ 2,455
Fixed Charges
Interest Expense (including amortization $ 538 $ 1,769 $ 6,161 $ 12,388 $ 23,190 $ 11,781
of deferred debt issuance costs)
Interest factor of operating lease
rental expense 39 59 94 110 167 90
------------------------------------------------------------- ---------
Total Fixed Charges $ 577 $ 1,828 $ 6,255 $ 12,498 $ 23,357 $ 11,871
============================================================= =========
Total Earnings and Fixed Charges $ 741 $ 2,741 $ 16,928 $ 27,031 $ 25,031 $ 14,326
============================================================= =========
Ratio of Earnings to Fixed Charges 1.28 1.50 2.71 2.16 1.07 1.21
</TABLE>
<PAGE>
EXHIBIT 21.1
List of All Subsidiaries of Cambridge Industries, Inc.
(1) Voplex of Canada, Inc.
(2) CE Automotive Trim Systems, Inc.
(3) Dong Yang Eagle-Picher Ltd.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Cambridge Industries,
Inc. on Form S-4 of our report dated March 28, 1997 (July 10, 1997 as to Note
18) on the consolidated financial statements of Cambridge Industries, Inc. and
Subsidiaries and our report dated September 15, 1995 on the financial
statements of Centralia Plant and Butler Polymet, Inc., both appearing in the
Prospectus, which is part of this Registration Statement, and to the reference
to us under the heading "Experts" in such Prospectus.
Our audits of the financial statements of Cambridge Industries, Inc. referred to
in our aforementioned report dated March 28, 1997 (July 10, 1997 as to Note 18)
also include the financial statement schedule of Cambridge Industries, Inc.
listed in Item 21. The financial statements schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly,
in all materials respects, the information set forth therein.
/s/ Deloitte & Touche LLP
Detroit, Michigan
August 14, 1997
<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Cambridge Industries, Inc. of our report
dated March 27, 1997, except as to the last paragraph of Note 11, which is as of
July 10, 1997, relating to the financial statements of The Goodyear Tire &
Rubber Company - Jackson Plant, which report appears in such Prospectus.
We also consent to the use in such Prospectus of our report dated April 24, 1996
relating to the financial statements of GenCorp Inc. - Reinforced Plastics
Division, which report appears in such Prospectus. We also consent to the
application of such report to the Financial Statement Schedule relating to
GenCorp Inc. - Reinforced Plastics Division listed under Item 21(b) of this
Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included such schedule.
We also consent to the references to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Detroit, Michigan
August 18, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5 EXHIBIT 27.1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CAMBRIDGE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS
OF DECEMBER 31, 1996 AND 1995 AND FOR THE THREE YEARS IN THE PERIOD ENDED
DECEMBER 31, 1996 AND AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> JUN-30-1997 DEC-31-1996
<CASH> 7,255 11,942
<SECURITIES> 0 0
<RECEIVABLES> 47,282 48,985
<ALLOWANCES> 2,855 3,821
<INVENTORY> 20,200 21,287
<CURRENT-ASSETS> 105,423 109,739
<PP&E> 131,509 133,324
<DEPRECIATION> 54,866 44,232
<TOTAL-ASSETS> 255,399 262,230
<CURRENT-LIABILITIES> 79,240 72,210
<BONDS> 220,958 233,192
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (60,604) (62,141)
<TOTAL-LIABILITY-AND-EQUITY> 255,399 262,230
<SALES> 186,631 346,026
<TOTAL-REVENUES> 186,631 346,026
<CGS> 159,626 294,742
<TOTAL-COSTS> 159,626 294,742
<OTHER-EXPENSES> 12,769 26,420
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 11,781 23,190
<INCOME-PRETAX> 2,455 1,674
<INCOME-TAX> 920 565
<INCOME-CONTINUING> 1,535 1,109
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,535 1,109
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
